Adam Bergman

Founder, Tax Lawyer, Author

Target date funds are the most likely way private assets will reach everyday 401(k) savers. Most workers never pick individual investments. They choose the fund with the year closest to their retirement and let it adjust over time. That makes adding alternative assets to target date funds the easiest path for a plan that wants private equity and private credit on the menu, and the largest asset managers are already building products for it.

How a Target Date Fund With Private Assets Is Built

The structure is a familiar glide path with a new slice added. Participants still hold one fund that shifts from growth toward income as the target year approaches. The difference is that a portion sits in private equity, private credit, or other private market holdings instead of only public stocks and bonds.

BlackRock has been the most visible example. It announced a LifePath target date fund with a 5% to 20% allocation to private assets, depending on the investor’s age, and estimated the addition could add about 50 basis points a year to returns (Barchart). BlackRock also built the glide path behind Great Gray Trust Company’s first target date solution, which includes private equity and private credit. On September 16, 2026, BlackRock launched LifePath Solutions, a customizable target date offering that gives plan sponsors the option to use allocations across both private and public markets.

Others are moving too. State Street and Apollo formed a partnership to deliver target date solutions with private asset allocations (PSCA). Vanguard published a research review in early 2026 on how private assets could fit within target date design (Vanguard).

BlackRock’s CFO has said larger plans probably need changes to litigation or advice standards before adding private markets (Crain Currency). The Department of Labor’s proposed safe harbor, which I covered in my post on [what happens when private equity enters 401(k) plans](INSERT LINK), is aimed squarely at that barrier.

What Participants Could Gain

The case for adding private assets rests on two ideas: diversification and return potential. Vanguard’s assessment says private assets can provide both, while noting that how they’re implemented matters a great deal (Vanguard).

Over a full career of contributions, an extra half point a year compounds into a meaningful difference, which is why asset managers are pushing hard on this. That 50 basis points is BlackRock’s own projection, though, and it only holds if the private allocation performs as modeled after fees.

There’s also a practical advantage. A professionally managed fund handles valuation, rebalancing, and liquidity planning inside the portfolio. An individual saver would otherwise have to manage all of that alone.

What Participants Give Up

Putting often illiquid, high-fee private investments inside mainstream retirement funds is a significant departure from how these products have been built. These are the tradeoffs to understand:

• Fees. Private strategies generally cost more than index funds. Compare the total expense ratio against the plain version of the same target date series.
• Liquidity. You can usually move money out of a target date fund any day. The fund has to hold enough liquid assets to honor that, which can limit how much private exposure it carries.
• Valuation. Private assets aren’t priced on an exchange. Their values are estimates between sales, so the fund’s reported price relies on models.
• Less choice. The fund provider and the plan committee set the allocation. You can’t dial the private share up or down inside the fund.
• Complexity. More moving parts make it harder to see what you actually own.

I don’t see any of these as a reason to reject the idea outright. I’ve spent years arguing that everyday savers deserve access to the same alternatives wealthy investors use. These are the questions to ask before you accept a private allocation as your default.

How to Read Your Plan’s Target Date Fund

If your employer’s target date fund adds private assets, the fund fact sheet and plan disclosures are where to look. Check four things:

1. The percentage allocated to private assets at your age and at retirement.
2. The fund’s total fees compared with the version without private assets.
3. How the private holdings are valued, and how often.
4. Any limits on transfers or withdrawals.

Many of these products will be built as collective investment trusts rather than mutual funds, and CITs often have thinner public disclosure. CITs reached 55% of target date assets as of June 30, 2026, according to PSCA, so more savers are likely to run into these structures, and you may have to ask your plan administrator directly for the details.

Where a Self-Directed IRA Fits

A target date fund gives you a fixed, professionally set slice of private markets. A Self-Directed IRA or Solo 401(k) takes the opposite approach. You choose the specific investment, whether that’s private equity, real estate, or a private note, and you decide how much of your savings goes to it. You also take on the due diligence and must stay within the IRS prohibited transaction rules.

Many investors will want both. You can keep your workplace plan in a target date fund and use a Self-Directed account for the alternatives you want to own directly. At IRA Financial, our one-platform model is designed so traditional and alternative assets can sit in the same account.

Final Thoughts

Target date funds are where private markets will reach the most retirement savers, and much of that will happen without workers making any active decision. The managers building these funds believe private assets can improve outcomes, and they may be right. Whether it works for you depends on fees, liquidity terms, and how honestly the holdings are valued. Read your plan’s disclosures when the change comes, and if you’d rather pick your own private investments, a Self-Directed account lets you do that today.

This content is for educational purposes only and does not constitute legal, tax, or investment advice. Consult a qualified professional before making any investment decisions.