'Buyer beware': Legal expert says private equity funds could pose big risk to your 401(k). Here's what you need to know

Core Viewpoint - The executive order signed by President Trump in August 2025 allows 401(k) account holders to invest in private equity assets, expanding investment options for American workers [1][2]. Group 1: Implications for 401(k) Account Holders - Traditionally, 401(k) plans have offered publicly traded mutual funds, providing transparency in pricing and fees, and allowing easy movement of funds [4]. - Private equity investments differ significantly, involving long-term commitments where funds may be locked for years, complicating access to returns [5]. Group 2: Support and Criticism - Supporters argue that economic growth is increasingly occurring in private markets, with estimates suggesting that adding private assets could enhance long-term returns by approximately 0.50% annually, leading to about 15% more savings over a 40-year career [6]. - Critics highlight the complexity of private equity funds, emphasizing the need for significant expertise and resources for due diligence, which most individual savers and plan committees may lack [7].