In my time as state representative, I realized the importance of our local businesses and the vital role they play in creating our community what it is today. That is why it is important that our government leaders support small business owners and their employees in any way they can. One such way is through modernizing the 401k retirement framework.
President Trump recently signed an executive order that opens up 401(k) plans to “alternative assets” that previously were not broadly available for typical retirement accounts, such as private equity plans. The goal is simple: Hardworking Americans deserve to have access to 401(k) plans that will ensure retirement security and help build wealth to achieve the American dream. These types of investments have typically only been available to institutional or wealthy investors. Having this option available to the average worker ensures fairness and equal opportunity.
Over the past few years, more small businesses have been adopting 401(k) plans. In 2024, 54 percent of businesses employing fewer than 50 employees offered access to a defined contribution plan, such as a 401(k). In 2020, that percentage stood at 47 percent. It is apparent that more workers are attempting to save for their retirement, and we need to give them the best chance to do that.
Furthermore, there is an appetite for a variety of different investment options that diversify retirement plans, reduce risk, and increase returns. According to a survey released by Schroders, about “45% of investors participating in 401(k), 403b or 457 workplace retirement savings plans say they would invest in private equity and private debt investments.” In 2024, that number was 36%. Interest is growing.
There are clear benefits to including private market investments, such as private equity and real estate, in 401(k) plans. According to Mark Uyeda, one of the commissioners at the Securities and Exchange Commission (SEC), “these investments can offer meaningful diversification and long-term growth potential.” Commissioner Uyeda goes on to say that with the proper safeguards put in place by the Department of Labor (DOL) and SEC, employees can “obtain higher risk-adjusted returns on investments and build more resilient retirement portfolios.” He also talks about how these investments are regulated by federal laws that aim to prevent fraud, allow independent valuation of assets, and prohibit “false and misleading statements.” This adds a strong layer of safety for employees.
Now that the executive order has been issued, the next steps are fairly straightforward. The DOL can write a formal rulemaking that provides the steps businesses can take to offer 401(k) plans with private market investments safely and securely. A rule is the best action the DOL can take, as employers will be more confident in relying on a rule to limit liability.
Business owners in Mohave County and across the country can build upon their accomplishments by building retirement plans that offer real security. The DOL can provide the tools needed for small businesses to improve their employees’ retirement plans. The momentum is growing. Now it is time to get the President’s vision across the finish line.
Regina Cobb is a former State Representative for District 5.
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