{"id":161862,"date":"2025-09-16T22:54:16","date_gmt":"2025-09-16T22:54:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/161862\/"},"modified":"2025-09-16T22:54:16","modified_gmt":"2025-09-16T22:54:16","slug":"what-trumps-executive-order-on-401ks-means-for-workers-who-hope-to-retire","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/161862\/","title":{"rendered":"What Trump\u2019s Executive Order on 401(K)s Means for Workers Who Hope to Retire"},"content":{"rendered":"

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A new Trump executive order has opened the door for 401(K) holders to invest in private equity, cryptocurrency, and other alternative assets. Why did Trump make this decision? Is this a beneficial \u201cpublic policy\u201d for common people preparing for retirement? Gerald Epstein, a leading expert on finance and financial crises, warns that Trump\u2019s executive order on retirement accounts not only comes with high risks, but the so-called alternative assets deliver, at best, average returns. Epstein is professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts Amherst. His latest book is Busting the Bankers\u2019 Club: Finance for the Rest of Us.<\/a><\/p>\n

C. J. Polychroniou: On August 7, 2025, U.S. President Donald Trump signed an executive order titled \u201cDemocratizing Access to Alternative Assets for 401(K) Investors.\u201d Trump\u2019s executive order defines alternative assets in a very broad manner to include private equity and private credit, real estate, commodities, and cryptocurrencies. At any rate, with nearly $9 trillion<\/a> being currently held in 401(K) plans, this executive order represents a historic shift that could potentially reshape how people save for retirement and have indeed major effects on the economy. Why would Trump open the door for 401(K) retirement plans to invest in private equity and crypto? It\u2019s hard to imagine Trump being interested in expanding access to these assets because he cares about economic security and the future of the average U.S. worker.<\/p>\n

Gerald Epstein: You are right: Trump signed an executive order<\/a> on August 7, 2025, which, like so many of the Trumpian orders, has an Orwellian title: \u201cDemocratizing Access to Alternative Assets for 401(K) Investors.\u201d It is Orwellian because, in effect, it will allow and indeed encourage more Americans, desperate to put away savings for their retirement, to open themselves up to exploitative and misleading investment advisors, brokers, and asset managers on the false promise that they will get higher returns from so-called \u201calternative\u201d assets. It encourages the idea that, somehow, the common people are missing out on a great investment opportunity only open to the very rich. But in fact, this move is more like social dumping. The \u201csmart money\u201d \u2014 wealthy investors, pension funds, and university endowments \u2014 are starting to abandon some of these \u201calternative investments\u201d such as private equity. Private equity firms, increasingly desperate for investors, and who for years have been eyeing the \u201clittle guys\u2019\u201d 401(K) plans, will now have a chance to make up lost ground by trying to attract middle-class and working-class retirement funds. So, far from democratizing access, Trump\u2019s executive order will \u201cdemocratize\u201d exploitation.<\/p>\n

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The crypto interests and big finance are taking us into territory not seen since the 1920s: crony capitalism on steroids.<\/p>\n

And with respect to crypto \u2014 the new cool \u201calternative\u201d asset \u2014 this move is a payback to all the crypto pushers who dumped millions of dollars into Republican and friendly Democratic coffers in the 2024 election. And more to the point, it is a pay-forward to Trump, his family, and his cronies, who are making a fortune from the crypto business. David D. Kirkpatrick at The New Yorker<\/a>, using a very judicious approach, estimates that, so far, the Trump family has made a minimum of $3.4 billion from exploiting Trump\u2019s role as president. Of that, 70 percent ($2.4 billion) has come from crypto-related ventures. And these estimates were published in August. Since then, the Trumps have sealed crypto deal<\/a> after crypto deal<\/a>.<\/p>\n

So, like so much that passes these days for Trumpian \u201cpublic policy,\u201d the plan is to enrich friendly financiers and the Trumps themselves, at the expense of many people who were somehow convinced to vote for Donald Trump in the 2024 election.<\/p>\n

Related Story<\/p>\n


\n \"President
\n <\/a><\/p>\n

\n Trump and tech capitalists like Elon Musk are trying to become kingpins of a largely unregulated financial system.\n <\/p>\n

Would it be accurate to say that Trump\u2019s new 401(K) policy has the potential to offer bigger returns but also higher risks? As such, what could be the potential economic effects of this new policy, and could it actually undermine retirement security?<\/p>\n

There are two main types of assets that come under the rubric of \u201calternative investment\u201d: private equity and crypto assets. As Eileen Appelbaum and Rosemary Batt<\/a>, among others, have detailed, private equity refers to financial firms that have become famous for taking over everything from Toys \u2018R Us to Steward Health Care, running them into the ground by loading them up with debt, and generating billions for the private equity owners. According to Americans for Financial Reform<\/a>, private equity firms have been called a \u201cbillionaire factory\u201d for private equity managers, whose performance fees increased the number of multibillionaires in the U.S. sevenfold between 2006 and 2015. While the private equity partners make billions, some studies show the private equity investors make no more than average returns<\/a> but pay much higher fees and expenses, according to analyst Ludovic Phalippou<\/a> and others. As a result, as I said before, large investors, including some pension funds, are leaving private equity in droves.<\/p>\n

The other \u201calternative investment\u201d is crypto. As Tonantzin Carmona<\/a> of the Brookings Institution and law professor Hilary Allen<\/a>, among others, have shown, although there might be a few small investors who strike it rich, for most, crypto assets are highly risky with rates of return lower than those on other more regulated investments, such as index funds.<\/p>\n

Let\u2019s assume for a moment that the U.S. economy slips into a recession<\/a>, where the odds of that happening are now 50-50. What could a recession mean for alternative assets in 401(K)s?<\/p>\n

As I just indicated, these \u201calternative investments\u201d are highly risky with, at most, average returns. This question asks whether they are good hedges against negative shocks to the economy, such as recessions, or inflation. With respect to crypto, the answer is clearly no, despite many advocates\u2019 claim that it is. The problem with crypto is that it has no underlying real value, so it is highly speculative. Any significant shock is likely to spook investors, leading to a run on crypto-related assets, as we saw in 2023 with the runs on crypto-friendly banks<\/a> \u2014 Silicon Valley, Signature Bank, and First Republic.<\/p>\n

Private equity is more complicated but will also be at risk. So this means that small savers will lose.<\/p>\n

Clearly, a new regulatory regime has been established in Washington since Trump\u2019s reelection, which encourages all kinds of financial innovation. Are we witnessing a return to casino capitalism, or perhaps going even further beyond casino capitalism?<\/p>\n

Well, ever since the Clinton\/Greenspan gutting of the Glass-Steagall Act and other financial \u201creforms\u201d (all of which are discussed in my book Busting the Bankers\u2019 Club: Finance for the Rest of Us<\/a>), we have returned to a \u201ccasino capitalism.\u201d But now, under Trump 2.0, the crypto interests and big finance are taking us into territory not seen since the 1920s: crony capitalism on steroids.<\/p>\n

And look what happened then!<\/p>\n

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