Rep. Troy Downing, R-Mont., introduced legislation Tuesday that would give President Donald Trump's executive order on alternative investments in 401(k)s the force of law.
The bill, the Retirement Investment Choice Act, codifies as law Trump's executive order Democratizing Access to Alternative Assets for 401(k) Investors, which Trump signed on Aug. 7.
The order encourages participants in defined contribution plans like 401(k)s to invest in alternative assets — including private equity, real estate, cryptocurrency, commodities, infrastructure projects and lifetime income strategies.
“Alternative investments hold the transformative potential to supercharge the financial security of countless Americans saving for retirement,” Downing said Tuesday in a statement. “I applaud President Trump for his leadership to democratize finance and am proud to be leading the effort in Congress to codify his EO and enshrine this move for generations to come.”
The order gives the Labor secretary 180 days to examine existing guidance about investing in alternative investments, which includes private funds, and to consider writing new guidance.
The Securities and Exchange Commission is instructed under the order to work with Labor to consider revising existing SEC regulations and guidance relating to accredited investor and qualified purchaser status.
SEC Chairman Paul Atkins said on Sept. 26 that guardrails need to be put into place in making private investments available in 401(k) plans.
During a question and answer session at the Psaros Center for Financial Markets and Policy at Georgetown University's McDonough School of Business in Washington, Atkins said that the Labor Department and the SEC are in talks on how to move forward with President Donald Trump's executive order.
The SEC and Labor have "to work hand and glove," Atkins said, stating that he met with Labor Secretary Lori Chavez-DeRemer.
"Private markets aren't necessarily private, there's just not the liquidity necessarily and valuation issues are there in both private equity and private credit," Atkins continued. "You have issues of transparency and fees ... and layering of fees if you look at these types of ways to get exposure. All this needs to be put into policies; I don't think one size fits all, but it has to protect people ... to make sure that things that are not necessarily the highest grade gets stuffed down the retail chain."
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