Private equity investments used to be out of reach for most 401(k) participants. But now, things are changing. With more interest in alternative investments, there’s growing demand for private equity opportunities within 401(k) plans. But is it a good idea? Let’s dive in.
Private Equity: The Good, the Bad, and the Illiquid
Private equity sounds great, right? You get a piece of high-growth companies that haven’t gone public yet. But here’s the catch: these investments are often illiquid, meaning you can’t easily sell them off if you need access to your money.
For those close to retirement, the lack of liquidity could be a major risk. If you’re stuck with private equity investments and need cash quickly, you might be forced to sell at a loss or wait years for the company to go public.
Tokenization of Securities: The Next Frontier in 401(k) Investments
What if I told you that the future of private equity investing in 401(k)s might involve tokenization? By tokenizing private companies on the blockchain, 401(k) participants could buy and sell tokens representing ownership in private firms, giving them more liquidity and flexibility. It’s still in the early stages, but this could be a major game-changer for 401(k) plans.
Should You Consider Investing in Private Equity for Your 401(k)?
In theory, private equity in 401(k)s sounds great, but it’s important to understand that it comes with significant risks. If you’re in your 40s or 50s, this may be a gamble you want to avoid. But for younger investors with a long time horizon, it might make sense to take a small percentage of your 401(k) and diversify into private equity.
Private Equity Investments in 401(k)s Is Coming, But Proceed With Caution
Private equity could become more common in 401(k) plans. In August 2025, an executive order directed the Department of Labor to expand access to alternative assets, and the DOL withdrew its 2021 guidance cautioning plan fiduciaries against private equity. In March 2026, the DOL proposed a rule that would give fiduciaries a safe harbor for selecting these investments. As of September 2026, that rule had not been finalized, and private equity was not yet a common option in 401(k) plans. These investments may carry higher fees, limited liquidity, and valuation challenges, and they may not be appropriate for every investor.
Contact Langan Financial when you are looking for sound advice related to 401k investments or other investment options. We will look at your personal portfolio and come up with strategies tailored for your needs and goals.
About the Financial Author
Alexander Langan, J.D., is the Chief Investment Officer at Langan Financial Group. In this role, he manages investment portfolios, acts as a fiduciary for group retirement plans and consults with clients regarding their financial goals, risk tolerance and asset allocation.
With a focus on ERISA Law, Alex graduated cum laude from Widener Commonwealth Law School. He then clerked for the Supreme Court of Pennsylvania and worked in the Legal Office of the Pennsylvania Office of the Budget, where he assisted in directing and advising policy determinations on state and federal tax, administrative law, and contractual issues.
Alex is also passionate about giving back to the community and has helped establish The Foundation of Enhancing Communities’ Emerging Philanthropist Program, volunteers at his church, and serves as a board member of Samara: The Center of Individual & Family Growth. Outside of work and volunteering, Alex enjoys his time with his wife Sarah and their three children, Rory, Patrick, and Ava.
About Langan Financial Group
For everything you’ve built.
Your savings. Your business. Your family’s future. Each deserves thoughtful planning that starts with what matters to you.
Langan Financial Group provides financial planning and investment management for individuals, families, and business owners. With offices in Camp Hill and York, Pennsylvania, we serve clients throughout Central Pennsylvania.
We help you work through questions about retirement income, investment decisions, Social Security, and how taxes may affect your financial plan. Our approach starts with understanding your goals, your financial picture, and your comfort with investment risk. From there, we help you evaluate your options and develop a plan that can evolve as your life changes.
We also help businesses and organizations evaluate workplace retirement plans and understand their responsibilities as plan sponsors.
Disclosures
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information.
