Trump Just Shook Up Retirement Plans—Your 401(k) Could Soon Include Real Estate

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Big changes are coming to Americans’ retirement plans. Last week, President Donald Trump signed an executive order that could open the door for 401(k) holders to invest in private equity, cryptocurrency, real estate, and other alternative assets—options that have long been technically allowed but rarely accessible.

Currently, the process of adding these investments is so complex—and the legal risks for plan fiduciaries so high—that most employers avoid them entirely. Trump’s order has the stated goal of helping retirement savers achieve “the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement.”

The policy shift comes at a time when many Americans are behind on their retirement savings. From 2019 to 2023, the average 401(k) returned 9.7% annually. Over the same period, bitcoin’s value skyrocketed nearly 1,000%, and median U.S. home prices climbed more than 37%.

Supporters say adding such high-growth options could help savers close the gap. But experts warn that alternative assets come with steep trade-offs—illiquidity, higher fees, and unpredictable swings that could derail retirement plans.

What the new 401(k) rule does

Until now, 401(k) participants could technically invest in private equity, crypto, or real estate. However, in practice, it was almost impossible. Plan providers rarely offered these options because of the high administrative burden, legal exposure, and difficulty in valuing and managing such assets.

Trump’s new executive order aims to change that. It directs the Department of Labor and the Securities and Exchange Commission to revisit existing rules and issue updated guidance within 180 days. The goal is to give plan fiduciaries clearer legal protections—and potentially create new pathways—for adding alternative assets to retirement menus.

If implemented as envisioned, the changes could open access to investment opportunities that have long been common in public pension funds and institutional portfolios, but out of reach for most individual savers, the order states.

For now, these are just directives, but the new guidelines could be a game changer for those saving for retirement.

How it could boost real estate investment opportunities

If new rules take effect, 401(k) participants could gain access to a range of real estate–focused investments that aren’t typically available in workplace retirement plans. These could include private real estate funds that pool investor capital to buy and manage properties, a wider selection of real estate investment trusts (REITs) than most plans currently offer, and even direct stakes in property development projects.

Supporters say adding these options could help savers diversify beyond the traditional mix of stocks and bonds, tap into higher potential returns, and use real estate as a hedge against inflation.

“Investing in real estate with a 401(k) is a very smart idea to diversify your retirement and reduce risk of retirement only invested in the stock market,” says Todd J. Drowlette, veteran commercial real estate investor, broker, and founder of TITAN Realty Group.

Some even argue it could be especially impactful for workers approaching retirement who are behind on their savings. The thinking: Higher-growth investments could help close the gap more quickly than conventional 401(k) allocations.

The gains can be stark in comparison. A $4,000 investment in bitcoin in 2019 would be worth nearly $120,000 today, while the same amount in a typical 401(k) growing at the 10% average annual return over that period would have grown to just over $7,000.

For those who see real estate and alternative assets—whether a rental portfolio, commercial property, or cryptocurrency—as central to their financial future, expanded investment access through 401(k) tax-advantaged dollars could be transformative.

The risks—and how they could derail retirement property plans

While the prospect of owning real estate in your 401(k) might seem appealing, experts caution that alternative assets come with trade-offs that can upend even the best-laid retirement property plans.

For one, many private real estate funds require investors to lock up their money for years. If you’re counting on tapping your 401(k) soon, that money might be out of reach when you need it most.

And while that money is locked up, it can be harder to track, giving you less insight into whether you’re on track with your retirement savings. Unlike publicly traded stocks, private real estate investments aren’t priced daily. You might not know the true value of your holdings until they’re sold, making it harder to plan around a specific purchase goal.

Alternative asset prices are subject to far more volatility than traditional ones. For example, while U.S. home prices soared close to 18% in 2021, they’re expected to grow by only 3.7% this year, according to data from Realtor.com®. If you’re close to retirement, a sharp drop in property prices or even appreciation rate could mean a painful hit to your retirement balance.

Managing these assets can also carry steep management transaction fees, which can eat into returns, especially compared with low-cost index funds.

In short, the same qualities that make alternative assets like real estate a potentially high-reward investment also make it risky, especially for savers who need flexibility and stability.

Who this might benefit—and who should be cautious

Expanded 401(k) access to real estate could be a game changer, but only for the right kind of investor. Younger savers with decades before retirement are best positioned to benefit with the least downside, since they can ride out market downturns and wait for properties to appreciate.

Experienced investors who already understand the nuances of real estate might also see value in adding it to a tax-advantaged account, using it as a hedge against inflation and a way to diversify beyond stocks and bonds.

For others, the risks loom larger. Those nearing retirement who are planning to tap their 401(k) for a home purchase could find their money locked in illiquid property funds, unable to cash out when it matters most.

Those without other diversified assets face a similar problem: putting too much of a nest egg into a single, volatile asset class can backfire. Experts generally recommend keeping real estate and other alternative investments to no more than 5% to 10% of a retirement portfolio.

Likewise, if you’re not already well-versed in investment strategies, alternative assets might not be the best place to start.

“The devil is in the details,” says Drowlette. “You need to make sure you are investing with credible investors who have a proven track record and who are open and clear about management fees or other fees they will charge you for being an investor.”

Without that experience, it’s easier to overlook red flags—or worse, end up tied to a partner whose interests don’t align with your own.

Practical tips for incorporating real estate into retirement planning

Before adding real estate to your 401(k), it’s important to ask hard questions: How will this fit into your overall portfolio? Can you afford to have a portion of your retirement savings tied up for years without easy access? Understanding your liquidity needs is key, especially if you plan to use these funds for a major purchase like a home or investment property soon.

You’ll need to work with a recordkeeper or adviser who can balance long-term growth potential with your short-term needs. While direct real estate holdings or private funds can offer attractive returns, they also carry more risks that not all savers can weather.

It’s also worth remembering that a 401(k) isn’t the only way to gain real estate exposure. Taxable brokerage accounts, IRAs, and REIT exchange-traded funds (ETFs) can provide diversification with greater liquidity. For some investors, blending these approaches can deliver the benefits of real estate without locking up too much retirement capital.