As the demand for portfolio diversification grows among long-term savers, U.S. retirement plans may soon experience a fundamental shift. Historically limited to public equities, bonds, and mutual funds, retirement accounts like IRAs and 401(k)s are now being eyed as the next frontier for private market access.

In a move that could unlock over $13 trillion in investable capital, proposed legislation and evolving fiduciary guidance are paving the way for private equity, private credit, real estate, and other alternatives to become a mainstay in retirement investing.

This week, we examine how the integration of private assets into public retirement vehicles is unfolding—and how platforms like Capital Engine® are preparing to help providers stay compliant, efficient, and investor-friendly.

Key Insight: Retirement Meets Alternatives

Until recently, private investments were rarely available to retirement account holders due to liquidity concerns, complexity, and fiduciary hurdles. But that’s changing.

Following the 2020 DOL (Department of Labor) Information Letter, which provided ERISA-compliant plans with a green light to include private equity in diversified investment options, a wave of innovation has emerged. In 2025, a bipartisan bill titled the “Retirement Alternatives Expansion Act” was introduced to:

• Provide clear guidelines for private asset inclusion
• Encourage plan sponsors to offer diversified alternatives
• Expand retirement savers’ access to higher-return asset classes

If passed, the legislation would open the door for millions of American workers to invest in vetted private funds through employer-sponsored and self-directed plans.

Data Point: $13 Trillion Opportunity

According to the Investment Company Institute, IRAs and 401(k)s represent over $13 trillion in assets held by U.S. households—most of which are concentrated in traditional mutual funds, target-date portfolios, and index-based strategies.

If even 5–10% of this capital flows into alternatives over the next five years, that would represent $650 billion to $1.3 trillion in new capital for private markets—much of it from long-term, patient investors.

The Role of Capital Engine®

Private market platforms like Capital Engine® are uniquely positioned to facilitate this evolution. With a modular infrastructure designed for regulated investment environments, Capital Engine® can support:

• Qualified retirement accounts (SD-IRAs, 401(k) rollovers, pension-linked accounts)
• Fund managers seeking compliant access to long-term retail capital
• Plan administrators and advisors needing real-time oversight / participant-level data

Key features that enable compliance and ease of use include:

• Investor accreditation & suitability checks
• KYC/AML automation
• Multi-asset dashboards with liquidity windows
• Participant education modules embedded in offering portals
• Secure integrations with custodians and third-party administrators (TPAs)

These tools allow plan sponsors and investment professionals to confidently offer private market exposure while meeting fiduciary and reporting standards.

Retirement Capital Flow into Private Markets

• Total retirement AUM: $13 trillion
• Target capital for alts: $1.3 trillion (10%)
• Asset allocation breakdown: - 60% public equities - 25% fixed income - 10% alternatives (private equity, real estate, credit) - 5% cash or other

What to Watch Next

• Final SEC & DOL Guidance: Fiduciary safe harbors and plan-level due diligence rules
• Product Innovation: Private funds structured as retirement-eligible feeder funds, CITs (Collective Investment Trusts), or interval funds
• Advisor Education: RIAs and plan consultants will need training to guide clients through alternative options
• Platform Readiness: Tech infrastructure will be key to serving this long-dated, compliance-heavy channel

The Long-Term View

The convergence of private markets and public retirement savings is a game-changer—not only for capital markets, but for retirement security itself. By providing access to higher-return, less correlated assets, retirement savers may be better equipped to weather volatility and outpace inflation over time.

Capital Engine® is building the infrastructure to support this shift—bridging the gap between alternative investment providers and retirement plan participants with digital efficiency and regulatory integrity.

Private Markets This Month

Private Markets: A New Frontier for Retirement Savings the increased depth of private markets has allowed more companies the choice between public and private ownership, which has expanded the private markets investment opportunity set. READ MORE

TRS eyes threat of retail investors in private markets the private markets team at the Teacher Retirement System of Texas (TRS), the $211 billion Austin-based pension fund, is increasingly concerned about the amount of retail money flowing into real estate and private equity. READ MORE

Private Equity’s Deal Drought Is Creating Zombies Private equity firms are stuck in a vicious cycle — they aren’t finding the price they want for the businesses they own, so their clients aren’t getting money back to invest in the next round of funds. READ MORE

Trump Executive Order to Help Open Up 401(k)s to Private Markets President Trump is expected to sign an executive order in the coming days designed to help make private-market investments more available to U.S. retirement plans, according to people familiar with the matter. READ MORE

In the Engine Room Podcast

Up Next: Secondaries Go Digital: Retail Finds the Exit — How new platforms are unlocking liquidity for retail investors in private markets. If you missed any of the earlier issues, you can catch up at: www.capitalengine.io/newsletter

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