US President Donald galaotega of the Department on Monday revealed a proposal that would accept private equity and cryptocurrency investments in the 401(k) plans of Americans, the culmination of an aggressive Wall Street lobby push to leave the savings of millions of retirees vulnerable to swings in the so-called “other assets.”
The proposed rule, which is currently subject to a public comment period, was issued in response to Trump’s executive order from last year that was known at the time as “the holy grail for private equity.”
In addition to giving employers the green light to include private equity and crypto investments in 401(k) plans provided to employees, the new law would create a “safe harbor” that allows retirement account managers to avoid legal action from employees who believe their funds were being managed in high-risk products.
“The legal protection created by this safe harbor will encourage financial advisors to invest in these toxic products, which will become time bombs in retirement accounts, which will undoubtedly cause significant losses,” warns Benjamin Schiffrin, director of security strategy at the advocacy group Better Markets. “There are good reasons why 401(k) plans are considered closed to the private markets and cryptocurrencies, and those reasons have not changed. The only thing that has changed is the regulatory support for these industries and the willingness of regulators to do what they want.”
“This is no reason to jeopardize the retirement savings of millions of Americans,” Schiffrin added.
Oscar Valdés Viera, senior policy analyst of Americans for Financial Reform, also warned that “opening 401 (k) to these products risks turning workers’ retirement funds into a Ponzi-like scheme that makes the industry look for new money.”
“This is not about advancing the interests of retirees, it’s about opening up a new profit center for crypto and Wall Street,” Viera said. “Retirement saviors should not be helping these industries at risk and subsidizing the Wall Street gang and crypto billionaires.”
“Private companies should not get a free pass to rob employees of their 401(k) retirement savings.”
Americans now hold more than $10 trillion in savings combined with 401(k) plans, a huge pool of wealth that the private equity industry has been working for years to achieve. The Labor Department has indicated that its proposed rule would apply to more than 720,000 retirement plans covering about 118 million workers.
The American Prospect reported Tuesday that managers of private equity firms “are already pressuring companies, third-party managers, and consultants who advise them to list their offers” among the options of the labor plan.
“An employee of the investment center who is not authorized to speak to the press told Anticipation about their main concern: private equity will hold their top companies in funds that continue only for 401 (k) plan owners, or ‘store investors,’ as they are known,” the agency continued. “I would be surprised if the industry doesn’t try to throw their trash in stores,” said the employee.
A recent analysis by the Private Equity Stakeholder Project (PESP) found that private equity funds for retail “publicly listed stock indexes were significantly underperforming” in 2025 while charging very high fees.
Jim Baker, executive director of PESP, said Monday that “privately owned companies should not get a free pass to rob employees of their 401(k) retirement savings.”
“The level of private equity inclusion in a 401(k) should be very high,” Baker said. “Private mutual funds have dropped out of the public market as they charge very high fees, and public pension funds are out of the asset class. Instead, this legislation could put more risk on workers who rely on their retirement income for long-term security.”
Sen. Elizabeth Warren (D-Mass.) also tore up the Labor Department’s legislation, saying “Americans facing an uncertain future in the Trump economy will now have more reason to question the security of their retirement savings—all so that Trump’s friends on Wall Street have another pile of money to play with.”
“Anyone who cares about the financial security of working people,” Warren said, “should oppose this proposed legislation.”
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