Your 401(k) Is About to Change

0:05 For most of your life, your 401k has only been allowed to hold things like mutual funds and index funds. Public, liquid, transparent. That's all about to change. The Department of Labor is finalizing a rule that would let your 401k hold private equity, private credit, real estate, and even crypto. This is one of the biggest structural shifts to retirement investing in decades, and most account holders have no idea it's coming. I'm your host, Geil Thompson, and this is Faith in Finance. So what's actually changing? Here's the background. Last August, the president signed an executive order directing federal regulators to open up 401k plans. the accounts most working Americans use for retirement, to what's called alternative assets. That means private equity, private credit, real estate, infrastructure funds, and actively managed crypto vehicles. And in March of this year, 2026, the Department of Labor released its actual proposed rule. It doesn't force any plan to add these investments. It gives plan fiduciaries a safe harbor, a defined process they can follow to include alternative assets without as much fear of getting sued for it later.

1:37 That detail matters because for years, the biggest reason 401k plans avoided private equity wasn't that it was necessarily a bad investment. It was litigation risk for the employers offering it. Why does this matter to you specifically? Because private equity, private credit, and similar assets behave completely different than the mutual funds that you may be used to. They're illiquid, meaning you can't just sell on demand the way you can with a public stock or a fund. Their valuations are harder to verify because there's no public market setting the price every day.

2:23 And the fee structures tend to be significantly higher than a typical index fund. There's a real live legal case worth knowing about here too. So I do want you to go do your research and research this. The Supreme Court agreed this year in 2026 to hear a case involving Intel's 401k plan, where participants argued that including private equity and hedge funds hurt them through higher fees and worse performance compared to a simple public index fund. That case is a direct preview of the tension this new rule creates. access to potentially higher returns versus complexity and costs that may not benefit the average participant.

3:16 So what does this mean for you and your actual decisions? So I want you to think about it this way. If your plan at your job adds these options in the next year or two, because you may see them when you log in to look at your 401k plan. Here's what actually matters when you're deciding whether to use them. First, understand what you're giving up for liquidity. Private market investments often lock up your money for years if you need to rebalance or if your circumstances change, meaning you may want to take a loan or even a withdrawal. You may not be able to move quickly the way you could sell out of mutual fund or selling shares. Listen, second, I want you to know this. Fees compound just like returns do.

4:12 A fund with a much higher expense ratio has to significantly outperform a low -cost index fund just to break even for you over time. That math needs to be run explicitly, not assumed. So know your fees. Third, and this is the part people skip, just because something is now available in your 401k doesn't mean it's appropriate for your specific allocation. A retirement plan menu having an option doesn't function as an endorsement that you should personally use it. So let's discuss what the scripture already has to say about something like this. There's a passage that speaks exactly to this kind of decision making. And it's more specific than people usually realize. Ecclesiastes chapter 11 opens with the writer telling his audience to send their resources out and not hold everything back waiting for certainty. But then it gets more precise. He tells them to divide their portion among seven or even eight ventures.

5:26 That's called diversification. Because in his words, no one knows what disaster might happen on earth. The passage goes on to say that a farmer who does wait for perfect wind and perfect weather before planting or harvesting and I'll add diversifying will end up doing neither. Listen, if you read this plainly, this passage is about diversification. and about the danger of paralysis while waiting for certainty that never comes. We've talked about this time and time again, trusting in a Babylonian system, or I don't want to call it a Babylonian system, but trusting in a system that is not kingdom -based. The Bible says that you should trust in nothing but God. It doesn't say put everything into one bold venture and trust it'll work out. It says spread it out.

6:25 specifically because the future is unknowable, which is about as directly relevant to a conversation about adding new, less familiar assets into your retirement account as any verse in scripture can get. Here's how I'd apply it to this exact moment into my life. The Ecclesiastes principle isn't avoiding anything new or unfamiliar. It's don't put everything into one thing, especially when you can't fully see what's ahead. So I understand this may be a new opportunity. It may be an exciting opportunity for you to be engaged or invested in asset structures that you've never seen before.

7:07 But the Bible also talks about that nobody goes to war and does not count the cost. Understand the product that you're investing in. Understand the expenses associated with it. And also understand if there are any lockup periods that you should be aware of. See, a retirement account holding several straightforward, low -cost liquid funds is already living out a version of that wisdom. But adding in private equity allocations isn't automatically wrong. So don't misunderstand me. But adding it as a large concentrated bet without fully understanding it, without fully understanding its fees and its illiquidity can ruin you. Listen, it runs against this very principle in this passage that we're describing. So all I'm saying is, is be safe. Be smart and always, listen, the Bible says people perish for lack of knowledge.

8:07 So make sure that you understand what it is that you're investing in before you get invested. Diversification isn't a modern invention. Wall Street came up with, okay? It's a very old idea showing up here in a very old book. For the same reason it showed up in a modern portfolio. Nobody can see far enough ahead to bet everything just on one outcome. Listen, new options in your 401k aren't automatically good or bad. They're just new variables in a decision that was always supposed to be made carefully, not automatically. Spread out, not all in, exactly the way this has been understood for a very long time. If you're ready to begin your investment journey, or maybe if you have a 401k, an IRA, or assets that you're looking for a trusted advisor, I ask that you consider Joseph Wealth Management. Call our team.

9:07 Our phone number is 800 -807 -2881 or email us at info at josephwealthmanagement .com. If you have a question for Faith and Finance, Call that same number and ask to be transferred to our voicemail system. Tell us your name and the city and state you're calling from. Who knows? Your question might be featured on an upcoming episode. Thank you for listening to Faith and Finance, and I look forward to seeing you next time. The Faith and Finance podcast is intended for educational, informational, and entertainment purposes only. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect those of Joseph Wealth Management, Joseph Eden Capital, or any affiliated entities. Nothing shared on this podcast should be construed as personalized, financial, legal, tax, or investment advice. All investing carries risk, including the potential loss of principal. Listeners are strongly encouraged to consult with a licensed financial We'll be right back. We'll be right back.