Trump administration move could add 'significant risks' to retirement accounts
When it comes to a 401(k) account, most savers simply choose a target date fund and leave it that.
Now, thanks to a rule change from the Trump administration, those retirement vehicles could soon get a lot more complicated. It’s likely to lead to new risks (and perhaps new rewards) for savers.
Managers of 401(k) plans now have the ability invest in private equity. In other words, your 401(k) could soon take stakes in private companies.
The goal, according to Labor Secretary Eugene Scalia is to allow investors to “gain access to alternative investments” and “ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement.” The Department of Labor laid things out in a letter that says putting 401(k) money into private-equity funds would not “violate the fiduciary’s duties” of certain retirement plan sponsors.
But some experts see a big downside.
Barbara Roper, the Director of Investor Protection at the Consumer Federation of America, said the “significant risks” associated with private equity investments haven’t been adequately addressed.
“By the Department of Labor's own admission, these are investments that are more complex, more opaque, less liquid, more difficult to value, with often higher costs than the investments that are traditionally offered through retirement plans,” Roper said in an interview with Yahoo Finance.
https://finance.yahoo.com/news/trump-administration-move-could-add-significant-risks-to-retirement-accounts-115443201.html
What could go wrong?
Oh and that's the son of the late Supreme Court Justice.