How Recent 401(k) Developments Could Transform Retirement Investing

Originally published in Forbes. 

For years, the vast potential of private market investments has largely been out of reach for the everyday investor. Not only are these opportunities potentially lucrative (while not without risk), they are also the engines of innovation. Access to private markets, where companies mature and grow before ever hitting public exchanges, have typically been reserved for large institutions and the ultra-wealthy. But recent developments signal a potentially game-changing shift: private market investments may soon become more widely available within 401(k) retirement plans.

This marks a significant moment for individual accredited investors, particularly those exploring pre-IPO investment opportunities.

The Policy Shift: Opening the Gates to Private Markets in 401(k)s

On August 7, 2025, the Trump administration signed an executive order aimed at expanding access to private market investments within U.S. retirement plans, including 401(k)s. This order directs the Department of Labor, Secretary of the Treasury and the Securities and Exchange Commission to reexamine guidance, clarify how employers and plan administrators can prudently incorporate these assets, and facilitate access to alternatives in participant-directed defined-contribution retirement savings plans. This could broaden access to alternatives for up to 90 million Americans who participate in these plans. 

This isn't an entirely new conversation. However, the renewed order underscores a persistent belief within the private fund industry that individuals deserve access to the same growth avenues as institutional investors. This belief is also held by SEC Commission Paul Atkins who has also publicly emphasized the need for broader democratization of private market investments. 

Why This Matters: Tapping into the Private Market Advantage

At EquityZen, we've long championed the democratization of private markets. It is the reason I started our business over a decade ago. The move towards private markets access via 401(k)s directly aligns with our mission to connect accredited investors with high-growth, pre-IPO companies. Here's why this development is so compelling:

• A Natural Fit for Long-Term Horizons: Retirement accounts like 401(k)s are inherently long-term investment vehicles, designed for capital appreciation over decades. This aligns with the nature of private market investments, which typically have longer holding periods (often 5-10 years or more) and are less liquid than publicly traded stocks. This "patient capital" approach allows private companies the time to innovate, execute long-term strategies, and grow without the constant pressure of quarterly public market reporting.
  
  Investors who invest in illiquid assets with longer time horizons expect to be rewarded with a liquidity premium, which can drive meaningful returns over the long term, in exchange for the heightened risk from illiquidity. The strategic alignment between the long-term nature of retirement savings and the growth cycles of private companies makes a compelling case for their inclusion.

• Tax-advantages for asymmetric upside: Unlike public companies, the expectation of private market investments is that they typically have an exit (e.g. IPO).¹ Timing of exits is unpredictable, so if a private market investment matures and exits via a merger or acquisition, the result may be an unexpected tax bill. Retirement accounts that defer taxes provide tax-advantaged status compared with investing in private companies from a typical brokerage account.
• Accessing Untapped Value Creation: Companies are staying private longer than ever before. In fact, the number of publicly traded companies has reached a 50-year low.² Private equity funds now manage over $8.2 trillion, double the amount they did in 2018³, providing ample funding for more companies while private. With no urgency to go public, a significant portion of more companies’ growth and innovation occurs before they ever go public. For investors looking for access to value creation in industries like artificial intelligence and fintech, the private market is increasingly essential.
• Diversification Beyond Traditional Assets: As BlackRock's Larry Fink noted, the future standard portfolio may look more like "50/30/20 — stocks, bonds, and private assets."⁴ Our research echoes this, showing that financial advisors increasingly leverage alternative investments for diversification (78%), downside risk mitigation (57%), and enhanced return opportunities (45%).⁵ Private market exposure offers a vital avenue to achieve better risk-adjusted returns while complementing traditional portfolios.⁶
• Investing in the Heart of Innovation: The private markets are home to the companies defining our future. From artificial intelligence to cybersecurity, these innovators are flourishing outside public scrutiny. There are currently over 1,200 unicorn companies globally, collectively valued at an astonishing $4.4 trillion.⁷ AI startups alone received $50 billion in global venture capital in Q2 2025.⁸ Many of these companies are earlier in their lifecycles and likely years away from becoming publicly traded.  Because of this, more investors are flocking to the private markets to access this innovation.

What This Means for Accredited Investors

While the specifics of the executive order and subsequent guidance are still being ironed out, the direction is clear: the private markets are becoming more accessible than ever - and investors don’t need to wait. Self-directed IRAs (SDIRAs) are already unlocking the value of private markets for retirement investors. EquityZen has enabled pre-IPO investments for thousands of investors via SDIRAs since 2014.⁹ These products offer a unique opportunity to integrate pre-IPO investments into long-term retirement strategies, capturing previously unattainable growth. 

As the lines between public and private markets continue to blur, staying informed and strategically positioned will be key. This potential expansion into 401(k)s marks another pivotal step towards a more inclusive investment landscape, empowering more individuals to participate in the growth of the world's most innovative private companies.

EquityZen has been at the forefront of this market democratization for years, facilitating over 46,000 company-approved transactions and serving over 450 companies since 2013. Over 770,000+ private market enthusiasts come to EquityZen to learn about, buy and sell the private companies shaping the future.

Interested in exploring? Join us at www.equityzen.com.