Private Equity and Crypto Could Be Coming for Your 401k

Summary

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Episode Summary:

The Journal.
Episode: Private Equity and Crypto Could Be Coming for Your 401k
Date: August 21, 2025
Host: Oyen Adedoyan (guest host), with contributions from Jess and Anne Terkison
Main Theme:
This episode explores a new executive order issued by President Trump that could allow Americans to invest in riskier, alternative assets like private equity and crypto through their 401ks. The discussion covers the history of retirement accounts, what’s traditionally included in 401ks, and the potential impact—risks and benefits—of introducing alternative investments to mainstream retirement accounts.

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Overview

Purpose:
To examine how 401ks, a primary vehicle for American retirement savings, are changing in response to a new executive order potentially allowing private equity and crypto investments, and to unpack what this shift means for regular workers, employers, and the investment industry.

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Key Discussion Points & Insights

1. What’s a 401k—And How Did We Get Here?

[00:10–06:29]

• 401ks are tax-advantaged retirement savings accounts provided by many employers.
• Traditionally, 401ks offer investments in stocks and bonds, not riskier assets like private equity or crypto.
• Pensions, which preceded 401ks, were funded by employers for employees’ post-retirement living expenses but required long-term service at a single company and were expensive for companies.
• Accounting rule changes in the 2000s led to the decline of pensions and the rise of 401ks.
• 401ks, originally designed for executives, now serve as the primary retirement plan for most Americans.

Quote:
"At the beginning. It wasn't intended to be a plan for the masses. It was something that companies were hoping to offer to their executives..."
—Jess, [06:29]

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2. How Do 401ks Work for Today’s Worker?

[06:45–10:40]

• Employers work with companies like Fidelity or Vanguard to offer a menu of investment options.
• Employees can choose their level of risk, but if they don’t, employers select a default (often a “target date fund” that adjusts risk over time).
• Portability is a big advantage—401k assets stay with workers when they change jobs.
• Most people take a passive, hands-off approach to managing their 401ks; target date funds cater to this disengagement.

Quote:
"The big advantage of the 401k is that it’s portable... you don’t have to stay at a company for 25, 35 years in order to earn an adequate retirement income."
—Jess, [07:27]

• As stocks performed well, average 401k portfolios have become more stock-heavy and risk-exposed.

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3. Introducing Private Equity and Crypto: A New Executive Order

[12:00–16:14]

• President Trump’s executive order directs agency action to allow riskier asset classes—private equity, crypto, private real estate, etc.—into 401ks.
• Earlier Labor Department guidance paved the way by permitting private equity in target date funds.
• Private markets see 401ks as a $12 trillion opportunity and are eager for access.

Quote:
"The industry really wants in to 401s. I think the private markets industry sees a $12 trillion pot of money sitting there in 401s..."
—Jess, [13:36]

• Private equity investments are illiquid (money is locked up for years), which matches the long-term nature of retirement funds—but also increases complexity and risk.

Industry Movements:

• State Street and Apollo, as well as BlackRock, are teaming up to create target date funds that include private equity.

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4. Risks and Pushback: Costs, Lawsuits, and Skeptical Workers

[15:06–16:56]

• Employers are wary of adding alternatives due to legal risks—past lawsuits have centered on the high fees of alternatives.
  • Example: Intel faced a suit over private equity in retirement plans but ultimately prevailed.
• Private investments typically carry much higher fees than simple stock index funds; these fees can wipe out gains.

Quote:
"Almost inevitably, an employer that adds some kind of private markets exposure to its target date fund is going to pay more for that target date fund. That means the employees are going to pay more..."
—Jess, [15:57]

• Listener reactions are mixed—some are intrigued by the growth potential, but most voice concerns over risk and complexity.

Listener perspectives:
"I do not want my 401k to start investing in any private market or crypto-based investment vehicles. I kind of wish I could have it both ways, like the growth without any of the risks or downsides."
[16:38]

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5. Arguments For Alternatives: Advocates and Diversification

[17:04–17:52]

• Some proponents argue that allowing private market investments gives employees access to greater diversification and potentially higher returns.
• The basic idea: mixing more asset classes into your 401k could help hedge risk.

Quote:
"Hedging bets is exactly the idea."
—Jess, [17:52]

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Notable Quotes & Memorable Moments

• "We're all just walking around with these accidental retirement nest eggs."
  —Oyen Adedoyan, [06:45]

• "There's no safe investment in a 401k, but the idea is that if you mix these investments together, you can have some offsetting effects that are going to be helpful to the investor."
  —Jess, [17:34]

• "And already some big names are teaming up... State Street teamed up with the private equity firm Apollo Global Management to launch a target date fund."
  —Oyen Adedoyan, [14:39]

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Timestamps for Key Segments

• 00:10–01:00: Overview of 401ks and what’s typically included
• 04:09–06:20: History: From pensions to 401ks
• 07:27–08:50: Portability and passivity in 401k investing
• 09:13–09:23: Explaining target date funds and their popularity
• 12:00–13:32: Trump administration’s steps to include private markets in 401ks
• 15:06–15:57: Legal pushback and high fees as hurdles
• 16:14–16:56: Listener opinions on risk, reward, and complexity
• 17:04–17:52: Arguments for diversification and hedging risk

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Tone and Language

The episode is clear, conversational, and lightly skeptical, balancing policy details with relatable anecdotes. Quotes from listeners help ground the discussion in everyday experience, while Jess and Oyen keep the tone approachable and pragmatic.

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Takeaway

A major shift looms for America’s retirement savers: access to high-risk, high-reward assets like private equity and crypto through 401ks may soon move mainstream. The episode guides listeners through what’s at stake—more growth potential, more risk, and more decisions for regular workers—while highlighting the skepticism, legal hurdles, and industry incentives behind this change.

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Transcript

[Jess]

Hey, everyone, it's Jess. I'm here to say that my colleague Oyen Adedoyan will be guest hosting today's episode. Enjoy.

[Oyen Adedoyan]

These days, the majority of US employees have access to a 401k to save for their retirement, including many of our listeners.

[Listener/Caller]

My 401k is my retirement fund.

[CeeDee Lamb]

Yeah, we look at our 401 like it's our retirement.

[Listener/Caller]

Everything in the 401k is viewed as a retirement fund for me.

[Oyen Adedoyan]

401S are tax advantaged accounts where both employers and employees can set aside money to be invested for eventual retirement.

[Jess]

It's often well worth saving in a 401k if you have access to one.

[Oyen Adedoyan]

That's my colleague, Anne Terkison.

[Jess]

So you can choose whether to put the money in the stock market, the bond market, and if you don't make a choice, generally the employer will put your money into a portfolio that's a mixture of stocks and bonds.

[Oyen Adedoyan]

Generally, 401 s are made up of diverse investments that buffer against risk. They often include US Bonds, which are considered one of the safest investments in the world. The fund may go up and down with the markets, but the goal is to give the employees more money in retirement than they put in throughout the years. But Ann, aren't there a lot of things that aren't in 401 s usually?

[Jess]

Yes, exactly. Not on that list is crypto, private equity, hedge funds, these sort of alternative investments.

[Oyen Adedoyan]

But a few weeks ago, President Trump signed an executive order to change that.

[Jess]

A new executive order by President Trump opens the door for millions of Americans saving for retirement through a 401k who may soon be able to invest in high risk assets like private equity. There's a feeling that 401 investors are missing out by not having private equity available to them in their 401s. The argument is that you're depriving people of an opportunity to make money. In some of the areas where we've seen huge gains in recent years, these.

[Oyen Adedoyan]

Assets can potentially be lucrative, but also come with a new set of risks. For example, crypto markets can swing wildly. And private equity or shares of private companies instead of public ones is a less transparent industry, one that has traditionally only been available to wealthy investors.

[Jess]

Something like private equity, for example, there's a lot less liquidity. And the risks are that some of these investments are a lot more volatile even than US Stocks, so they can be a wild ride.

[Oyen Adedoyan]

Welcome to the Journal, our show about money, business and power. I'm Oyen adedoyan. It's Thursday, August 21st coming up on the do private assets and crypto belong in your retirement fund?

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[Oyen Adedoyan]

See mintmobile.com before the 401k became mainstream, there was the pension. So Ann, let's start with some history. Okay, My first understanding of retirement accounts came from pensions back in the day. Can you tell me a little bit about what the traditional pension was like and how it worked?

[Jess]

Oh yeah. So the pension was sort of a forced savings mechanism.

[Oyen Adedoyan]

Employers funded pension funds that often covered living expenses and retirement for employees. Here's an old General Electric ad.

[Listener/Caller]

I only contributed a small part of.

[Jess]

My earnings toward my pension.

[Listener/Caller]

The General Electric company contributed too, even.

[Jess]

More than I did.

[Oyen Adedoyan]

And as long as you stayed at the company, when you retired, you were basically guaranteed a pension. And often the longer you stayed, the larger your eventual pension was.

[Jess]

They were pretty great for people who stayed at a company for their entire career. For example, my grandfather, he was at IBM for his whole career, and when he left the company, he was given a very nice pension. But the pension that he was given replaced probably decent amount of his monthly income.

[Oyen Adedoyan]

But pensions also have some downsides. Employees were stuck at one company if they wanted to see their full pension after retirement. And for employers, pensions were expensive because they were the ones funding most of the pensions. And generally they had to do so throughout the employee's retirement. In the 2000s, a new law made a different type of retirement plan more popular. Than ever.

[Jess]

The 401 new accounting rules came in in about 2006 that increased the funding requirements and made the amount that employers had to put in every year less predictable. So employers really just backed away from pensions. And I think that, you know, certainly as pensions became something that employers were less willing to offer, the 401 shifted into the mainstream.

[Oyen Adedoyan]

401S were attractive because the investment accounts came with certain tax advantages, but they weren't initiat designed with everybody in mind.

[Jess]

At the beginning. It wasn't intended to be a plan for the masses. It was something that companies were hoping to offer to their executives so that the executives could save their bonuses and their stock options in a tax kind of advantaged way.

[Oyen Adedoyan]

That's fascinating. So we're all just walking around with these accidental retirement nest eggs.

[Jess]

Yeah, kind of.

[Oyen Adedoyan]

A 401 works like this. An employer hires a 401k administrator like Fidelity and Vanguard, and working together, they offer employees a set of investment options, often called a 401k menu. Then employees decide, based on their appetite for risk, what kind of portfolio they want. More stocks, more bonds. It's up to the employee. And if the employee doesn't decide, the employer picks an investment option for them. And unlike pensions, 401k funds offer a lot more flexibility.

[Jess]

The big advantage of the 401k is that it's portable and when you leave the company, the money still is yours. And you don't have to stay at a company for 25, 35 years in order to earn an adequate retirement income. And I think that for employees, I think that is a huge benefit.

[Oyen Adedoyan]

Another big benefit is that 401ks can be set up for passive investing because many people, including some of our listeners, have very little idea how their 401k works.

[Listener/Caller]

So I've been participating in 401s for my past and current companies for probably the last decade now, and I really could not tell you a single thing about my 401k investment portfolio.

[Jess]

I'm not exactly sure where I'm invested for my 401k.

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I always assumed that the 401k meant $401,000.

[Oyen Adedoyan]

And I mean, I'll be honest with you, Ann, I cover this stuff now. But just like some of these listeners, I had no idea what was in my 401k until I switched jobs.

[Jess]

So, you know, I'm not sure that a lot of people do. Some people are very actively involved in their 401s. They, you know, they know a lot about the stock market. They get the right mix of stocks and bonds and, you know, they let it go. But I think these days the vast majority of people are very hands off.

[Oyen Adedoyan]

One way that 401ks allow people to be hands off is through something called target date funds.

[Jess]

When that 2006 law came along, it also sanctioned target date funds as the kind of receptacle for when you, when you automatically enroll someone. Payroll deductions will go into a target date fund, which is a mixture of stocks and bonds.

[Oyen Adedoyan]

Say, for example, you want to retire in the year 2065, you find a target date fund for that year, start out with riskier assets and reduce the risk.

[Jess]

Over time, they start out much more aggressively allocated to stock. So for say a 25 year old employee, they might be put into a target date fund with 90% in stocks. But as that 25 year old stays at, the company gets older, the target date fund is going to shift them so that they're more heavily exposed to bonds over time, less heavily exposed to stocks. So when they get close to retirement, they might have more like a 5050 portfolio inside the target date fund.

[Oyen Adedoyan]

As the stock market has gone up in recent years, 401k investors have raised their exposure to stocks, which are more volatile than bonds.

[Jess]

So interestingly, we have seen the percentage exposure to the stock market kind of inch up over the last couple years. I don't think that's necessarily unexpected. I mean, for one thing, when the stock market does really well, often people forget to rebalance and take some money out of stocks and put it into bonds. They'll sort of let things drift a bit with the market. But we have seen 401k investors taking more risk, stock market risk, in recent years.

[Oyen Adedoyan]

And now the Trump administration is paving a way for 401k investors to get access to potentially riskier investments. That's next.

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[Oyen Adedoyan]

Since 401 s are often the main ways that people save for retirement, they are tightly regulated. That's one of the reasons they're most typically made up of stocks and bonds and why alternative assets like crypto or private equity are not usually included in 401 s. But Ann says this guidance has started to shift under President Trump.

[Jess]

During the first Trump administration, there was a Labor Department guidance. So this guidance basically said, it's okay with us if you want to offer private equity, but we want you to do it within a target date fund or, you know, some other kind of diversified fund. And then when Trump was reelected, private equity, private credit, private real estate, asset managers, there was a lot of momentum among all of those players to bring more private market exposure to the 401k plan. And then recently the White House issued an executive order ordering the Labor Department to work with other agencies to make this possible. And so the executive order just directs the Labor Department to consult with other federal agencies to figure out what kind of changes are needed to make it easier for private markets to be adopte within 401 s. And I think it also sends a signal right, to employers with 401k plans. Oh, gee, you know, the government is sort of signaling that this is okay.

[Oyen Adedoyan]

Ann says getting into 401s would be great for private markets.

[Jess]

The industry really wants in to 401s. I think the private markets industry sees a $12 trillion pot of money sitting there in 401s. And it's sort of thinking, well, gee, you know, why can't we get into that?

[Oyen Adedoyan]

So what's the case?

[Jess]

They're making, they make the argument that, like say with private equity, for example, you have to lock your money up for X number of years with those funds. You can't just put your money in and then tomorrow, oh, I forgot, I need that money because I have to make a down payment on a house. I'm going to pull it out. No, you can't do that. So with a 401k, that money is meant to be locked up, right, for three, four decades. You know, if you're 20 years old and 21 years old and you're starting out at a company, you're looking at four decades in which that money is, at least in theory, off limits to you so that is long term money. So the private equity private markets industry sees that as a very good fit.

[Oyen Adedoyan]

And already some big names are teaming up. State Street, a 401k asset manager, has teamed up with the private equity firm Apollo Global Management to launch a target date fund. BlackRock is also working on a target date fund that includes private equity. But Ann says that even if these players are on board, it ultimately comes down to whether employers want to include these assets in their 401s.

[Jess]

A lot of employers, certainly big companies, even medium sized companies, are very wary about getting sued.

[Oyen Adedoyan]

That's because in the past, some companies already offered private equity in their 401 plans and got sued. Intel was one of those companies. Why did intel get sued?

[Jess]

It's really focused on fees. Private equity, private credit, private real estate. These types of investments tend to come with significantly higher fees than, you know, just the S&P 500 index funds that are so dominant in 401 s right now.

[Oyen Adedoyan]

Intel eventually won its case, but the issue of higher fees and 401 s remains a big concern. Because the fees are so high, the investments need to earn higher returns to justify those fees.

[Jess]

Almost inevitably, an employer that adds some kind of private equity private markets exposure to its target date fund is going to pay more for that target date fund. That means the employees are going to pay more for that target date fund.

[Oyen Adedoyan]

Here's how some of our listeners responded when we asked how they were feeling about investing in private markets through a 401k.

[Listener/Caller]

Am I excited or worried about the potential to invest in new things like private equity? I think worried. I'm excited that 401ks could be opened.

[Jess]

Up to alternative assets.

[Oyen Adedoyan]

I'm not excited about private equity. I'm really excited to my 401k to.

[Listener/Caller]

Invest in things such as private equity. One thing I do know is that I do not want my 401k to start investing in any private market or crypto based investment vehicles. I kind of wish I could have it both ways, like the growth without any of the risks or downsides.

[Oyen Adedoyan]

Anne has talked to people who are excited about the growth opportunity that comes with adding more investment options to their 401k.

[Jess]

People who argue in favor of adding some private markets exposure to the 401k, they view it as a positive right. They're saying, you know, this sort of age old argument that diversification is good for investors, this is sort of the logical extension of it. And you know, to the extent that we can add more diversification to people's 401ks, they can benefit. Right.

[Oyen Adedoyan]

And as more and more people hear about private equity, she says, they may be more willing to take risks.

[Jess]

There's no safe investment in a 401k, but the idea is that if you mix these investments together, you can have some offsetting effects that are going to be helpful to the investor.

[Oyen Adedoyan]

Yeah, we can't really predict the future, but it's like, I guess, hedging our bets.

[Jess]

Hedging bets is exactly the idea.

[Oyen Adedoyan]

That's all for today. Thursday, August 21 the Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Miriam Gottfried. A big thank you to those who responded to our callout about 401ks, although we couldn't get them all in today's episode. We appreciate you sharing your stories with us. Thanks for listening. See you tomorrow.