Landlords could soon be able to include their property assets in their 401(k) retirement plans. The White House has confirmed that President Donald Trump plans to sign an executive order, dated Aug. 7, that will allow alternative assets, such as real estate, to be included in 401(k) retirement plans.
Modifying Existing 401(k) Plans
As first reported by Bloomberg and Reuters, a new White House order will modify existing 401(k) plans to allow alternative types of assets, such as real estate, cryptocurrency, and private equity, to be included in retirement savings accounts, which are typically reserved for stock assets.
Regarding real estate, a White House press release stated:
Sec. 3. Democratizing Access to Alternative Assets. (a) For purposes of this order, the term “alternative assets” means:
(ii) direct and indirect interests in real estate, including debt instruments secured by direct or indirect interests in real estate.
By including the terminology “direct or indirect interests in real estate,” the new order applies not to traditional REITs—which are traded on the stock market— but real estate holdings that are not traded publicly, such as private commercial or residential property investments.
This means 401(k)s could now hold nonpublic real estate assets—including those owned by individual (mom-and-pop) investors—if plan fiduciaries determine those investments are appropriate and allowable under the revised guidance.
$9 Trillion in Play
There still appears to be a certain amount of fine-tuning required to determine how private real estate holdings, such as rental properties, can be effectively…