401(k) Private Market Push Is Coming, Even if Adoption Starts Slow 

Private investments have been available in 401(k) plans for some time, so they are not entirely “new,” even if it seems that way. 

In fact, they have been available as far back as the Revenue Act of 1978, which helped ignite the defined contribution era. But an executive order expected to be issued by President Donald Trump, according to sources familiar with the matter, has helped set the industry ablaze, leading retirement plan providers and others scurrying to figure out how inclusion of the investments could work.  

Empower announced in May that it would offer private markets investments for retirement plans. BlackRock is set to offer a target-date fund that integrates private investments into defined contribution plans. Apollo, Franklin Templeton and Goldman Sachs are just a few that have drawn headlines for their plans to include private assets in retirement plans.  

While recent traction is evident, alternative investments are not yet widely adopted. With many anticipating an executive order directing government agencies to provide guidance for including such investments in retirement plans, it appears plan sponsors have already begun to increase their use. 

A Long Time Coming, to Some 

According to the 2025 PLANSPONSOR Recordkeeping Survey, 3.9% of plan sponsors offered alternative investments in their retirement plan in 2024, up from 2.2% one year earlier.  

Anne Lester, a speaker, author and non-executive board member of Partners Group, thought private investments had a place in retirement plans more than 20 years ago. In fact, during her nearly 30-year tenure at J.P. Morgan Asset Management, where she served as head of retirement solutions, J.P. Morgan’s SmartRetirement funds included exposure to private investments. 

While defined contribution plans, overall, offer little exposure to private markets, defined benefit plans have more broadly incorporated these investments for years—a point often cited by proponents advocating for wider adoption in DC plans  

“If it’s good enough for your DB plan, why on Earth isn’t it in your DC plan?” Lester asks.  

Private equity investments have delivered lower returns since interest rates rose, starting in 2022, but they have been less volatile than public equities, which have experienced major valuation swings largely driven by tariff-related trade agreements between the U.S. and other countries. 

“If you can get another 50 basis points [in returns] net of fees, that participant is going to have a materially better retirement,” Lester says. 

Tim Hoying, strategy lead for Accenture’s retirement practice in North America, suggests that the percentage of plan sponsors who offer alternatives in their retirement plans could hit the upper single digits over the next decade, with private credit, private equity and real estate being the most attractive classes. He says wider adoption is likely to take some time and could grow more slowly than other retirement products have in the past.  

“It may be easier, initially, to begin to see alternative assets take a role in managed accounts. I think over time, they’ll find their place a little bit more predominantly in target-date funds,” Hoying says. “A target-date fund, by definition, is a long-term investment, and alternative funds are all long-term investments. So, there is a nice, natural match there.” 

New Products Take Time in Retirement 

Although adoption is expected to continue to increase, industry insiders cite litigation risk as the concern most likely to slow adoption—followed by the need for funds with sufficient liquidity and reliable valuation. Another concern is the potential impact of a surge in simultaneous withdrawal requests, though insiders note it would take a substantial volume to trigger a meaningful liquidity event. 

Regardless of the concerns, any retirement product often takes time before it is widely adopted. Plan sponsors, wary of litigation, often wait for larger plans to offer new products, which, insiders say, will also be the case with private investments.  

Target-date funds, for example, which a 2024 Vanguard report stated are now offered by 96% of 401(k) plans, have existed for more than three decades. But adoption did not kick in significantly until the Pension Protection Act passed in 2006. The law provided a safe harbor for plan fiduciaries who automatically enroll participants into a DC plan and default their contributions into certain pre-selected investment options, known as qualified default investment alternatives. Target-date funds are widely used by DC plan sponsors as their funds’ QDIAs. 

While sources do not expect alternatives to play quite as large a role in retirement plans as TDFs, the same rules apply: “Everyone’s starting small. They’re starting with interval funds. Then it’s crawl, walk, run,” says Cheryl Nash, president of InvestCloud’s wealth platform, APL, which is currently working on creating investment funds for DC plans that include a mix of public and private investments.