A new Trump executive order could lead to changes in how Americans invest for retirement through their 401(k) accounts. CBS MoneyWatch correspondent Kelly O'Grady reports.

Washington

President Trump has signed an executive order instructing the Department of Labor and other agencies to review and potentially expand the definition of qualified assets for 401k retirement accounts. This move could eventually allow individuals to invest portions of their 401k in cryptocurrencies such as Bitcoin, as well as private equity and real estate, though regulatory changes will take time to implement.

In related financial news, Trump has appointed Stephen Meehan, a current White House economic council member, to fill a recent vacancy on the Federal Reserve Board. Meehan will serve until the end of the departing member's term, with the possibility of reassessment at that time. The appointment is seen as a traditional choice, with expectations that Meehan may support the administration's interest in lowering interest rates.

Trump executive order could lead to new retirement investment options

A potential big change is coming to your 401k. A new executive order from the president allows companies to expand the types of investments you can use, opening the door to crypto and other non-traditional investments. So let's get to CBS News Money Watch correspondent Kelly O'Grady. Kelly, happy Friday to you. Can you help us break this down? Yes, so just first and foremost, this is something that's going to take a while. It is not like tomorrow you're going to be able to take some of your 401k and invest in these different spaces. But essentially what this executive order does is it directs the labor department and other agencies to redefine what is considered a qualified asset for your 401k. There are a number of strict regulations around that. And essentially these employers, they are required by law to allow retirement options that are in the best interest of the employees, not Wall Street. And so traditionally you're able to put your 401k in a different combination of stocks, bonds, commodities, very known, traditional, safer assets, and you can change your 401k portfolio in terms of how risky you want to be. So what this would do though, is once these regulations are rewritten, is it would allow an individual to put some of their 401k in cryptocurrency investments. Bitcoin, of course, has been the most popular one. You could also look at putting it in private equity investments and real estate. And the push behind this is to allow individuals as financial assets that landscape changes to have more options. Mugu, you and I have talked about this a lot. Cryptocurrency, especially Bitcoin, this was a major factor in the election for the first time, because one in five Americans own some type of cryptocurrency. This younger generation is much more forward in terms of where they feel comfortable putting their money, right? People are not just saying, yep, I'm gonna go buy my bonds and my safe assets. They're also looking at cryptocurrency as something that they want to invest in. And so the president has signed this EO, this executive order, in order to reflect that. I see, okay. Let's switch gears here and talk about the Federal Reserve, because President Trump, he needs to fill a Fed board vacancy after a recent resignation. So what do we know about that? The seat has been filled. So yesterday, the president came out and said that this would be filled by Stephen Meehan. And he is on an economic council already at the White House. So this is someone from the Trump administration. I will say this is a pretty traditional move. You often see folks on this economic council, especially the chairs, move over into Federal Reserve governor positions. The most sort of famous one that comes to mind is Ben Bernanke. So not out of the ordinary that you would see someone fill this position. But what I did find interesting in the language when the president announced this is that this would be someone that would serve until the end of the departing member's term. And that is up in January of 2026. And then they would reassess from there. And so a lot of investors I spoke to were expecting the president to pick someone that he would see on the Federal Reserve Board of Governors beyond that term. Doesn't necessarily raise any alarm bells. It's not a bad idea to reassess in January. But I think the bigger thing is this person that the president has picked likely would favor the president's push to cut interest rates. So we've got that big meeting coming up next month. And we already know some members of the Federal Reserve already voted last time to cut interest rates. So you would expect they would have at least one more in their ranks that would agree with them. Yeah, someone else who actually does wanna see that happen. Okay, Kelly O'Grady, thank you so much.

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New York

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Breakdown