# President Trump is Right on 401(k) Retirement Reform, Oren Cass is Wrong Published: 2026-01-15 This week, American Compass’s Oren Cass published a [policy brief](https://americancompass.org/no-alternative-assets-in-tax-advantaged-retirement-accounts-2/) criticizing President Trump’s [Executive Order released this summer](https://www.whitehouse.gov/presidential-actions/2025/08/democratizing-access-to-alternative-assets-for-401k-investors/), titled “Democratizing Access to Alternative Investments for 401(k) Investors.” President Trump’s EO aims to give everyday 401(k) savers – the vast majority of working Americans – access to private market investments which have traditionally only been available to wealthy and institutional investors.   Cass, [a longtime critic of alternative investment](/the-point/assessing-an-attack-on-alternative-investments/) who called Trump’s landmark tax cuts “[an expensive failure](/the-point/broken-compass-vol-1-taxes/),” cherry-picks data on PE returns, provides a disingenuous reading of how tax deferrals work, and makes recommendations that would perpetuate an unlevel playing field for American retirement savers. - Misleading on PE Returns: By cherry-picking short-term data, Cass overlooks PE’s long-term outperformance of public markets. Indeed, according to [Investopedia](https://www.investopedia.com/ask/answers/040615/how-do-returns-private-equity-investments-compare-returns-other-types-investments.asp), “From 2000 to 2020, private equity outperformed the Russell 2000, S&P 500, and venture capital.” Looking at that 20-year period, PE nearly doubled public markets’ annual return for investors: “The U.S. Private Equity Index provided by Cambridge Associates shows that private equity produced average annual returns of 10.48% over the 20-year period ending on June 30, 2020. During that same time frame, the Russell 2000 Index, a performance-tracking metric for small companies, averaged 6.69% per year, while the S&P 500 returned 5.91%.” Further, CalPERS, the largest U.S. public pension fund, [reports](https://news.calpers.ca.gov/calpers-now-why-private-equity-is-important-to-your-pension/) PE as its top 20-year performer, beating public equity with a 14.3% FY 2024-25 return net of fees. CalPERS reports:  “Private equity is just one piece of the puzzle, but it’s an important one. It helps us grow the fund and keep your pension secure for the long term. The results speak for themselves: Private equity has been our strongest-performing asset classes for the last 20 years, delivering billions in profits that help strengthen the pension fund. This asset class has been CalPERS’ top performer over the last 20 years — outperforming public equity. Private equity delivered a 14.3% return in this most recent fiscal year… With [pensions comprising just 20%](https://www.stlouisfed.org/on-the-economy/2025/mar/pension-401k-retirement-plan-trends-us-workplace) of retirement assets versus 80% in defined contribution plans like 401(k)s, denying workers access to alternative asset classes perpetuates inequality among the vast majority of retirement savers, preventing average Americans from generating higher returns. - Myth of the Tax Subsidy: Cass’s claim that 401(k)s are “quasi-public pensions” that require the government to impose strict limits ignores the fact that the “tax advantages” for such accounts are deferrals, not handouts. Contributions made to 401(k) accounts grow tax-free, but are fully taxed at withdrawal. As Reason [explains](https://reason.com/2012/11/28/how-on-earth-is-a-401k-a-government-subs/), this isn’t a subsidy like forgiven taxes: the revenue simply arrives later, with no permanent loss.  Further, self-directed IRAs (SDIRAs) [allow](https://money.usnews.com/financial-advisors/articles/what-is-self-directed-ira-pros-and-cons) private equity, crypto, and real estate – all tax deferred – and [HSAs permit alternative investment](https://www.fidelity.com/go/hsa/investing-hsa-your-way) options such as real estate, private loans, and precious metals. If these “subsidized” investment vehicles include alternative asset classes without issue, why restrict 401(k)s? - An Issue of Access and Fairness: [Pinpoint’s polling](/news/new-pinpoint-policy-institute-poll-shows-strong-support-for-democratizing-investment-options-in-workers-401k-plans/) over the past two years shows overwhelming support for expanding 401(k) options: 57% favor inclusion of alternative assets (71% among Trump voters) in our January 2025 survey, with a [December 2025](https://www.semafor.com/article/12/09/2025/voters-back-alternative-assets-in-401ks-poll-shows) poll showing support at 65% across all voters. From Pinpoint’s [polling](/__l5e/assets-v1/58190d3b-b9a6-428c-a44f-f053708cea18/National-Investments-Survey-Memo-01-27-25.pdf): Conclusion: President Trump’s Executive Order democratizes wealth-building, leveling the playing field between average retirement savers and the wealthy investors who have long enjoyed access to the higher returns and diversifying benefits of private markets investing. Policymakers should codify President Trump’s EO, not reverse course. That’s exactly what the administration is doing today – as Deputy Secretary of Labor Keith Sonderling [made clear last week](https://d3m889aznlr23d.cloudfront.net/img/events/459275931/assets/6a18902b.sifmaprivatemarketsroundtableseriespart2-transcript.pdf), stating: “our first and foremost priority is ensuring that the President’s executive order on alternative assets occurs, happens and is done in a way that is going to last for a long time.” Watch video of Sonderling’s remarks [here](http://youtube.com/watch?v=mrUm1SYt8lY&feature=youtu.be): [](http://youtube.com/watch?v=mrUm1SYt8lY&feature=youtu.be) [](http://youtube.com/watch?v=mrUm1SYt8lY&feature=youtu.be) More from Pinpoint: - [New Pinpoint Poll: Americans Overwhelmingly Support Expanding Investment Options in 401(k) Plans](/the-point/new-pinpoint-poll-americans-overwhelmingly-support-expanding-investment-options-in-401k-plans/) - [Pinpoint Comments to House Financial Services Committee: Retirement Investment Options – Should 401(k)s and other retirement vehicles have greater access to private markets, and what safeguards would be necessary?](/the-point/retirement-investment-options-should-401ks-and-other-retirement-vehicles-have-greater-access-to-private-markets-and-what-safeguards-would-be-necessary/) - [Broadening Retirement Choice: Why the Time is Right for Private Equity in 401(k)s](/the-point/broadening-retirement-choice-why-the-time-is-right-for-private-equity-in-401ks/) - [New Executive Order: Democratizing Investment Options for Retirement Savers](/the-point/new-executive-order-democratizing-investment-options-for-retirement-savers/) - [Pinpoint Policy Institute Applauds President Trump’s Executive Order Expanding Investment Options for Retirement Savers](/news/pinpoint-policy-institute-applauds-president-trumps-executive-order-expanding-investment-options-for-retirement-savers/) - [Alert: Senators Urge Labor Department to “Expeditiously” Implement New Trump Executive Order Expanding 401(K) Investment Options with Critical Safe Harbor Protections](/news/alert-senators-urge-labor-department-to-expeditiously-implement-new-trump-executive-order-expanding-401k-investment-options-with-critical-safe-harbor-protections/)