WASHINGTON, Aug 7 (Reuters) - U.S. President Donald Trump signed an executive order on Thursday that aimed to allow more private equity, real estate, cryptocurrency, and other alternative assets in 401(k) retirement accounts – opening the way for alternative asset managers to tap a greater share of trillions of dollars in Americans' retirement savings.

The White House said regulatory overreach and litigation risks have prevented retirees from benefiting from potentially higher returns, while critics warned the investments were inherently riskier, lacked the same disclosures and carried higher fees than traditional retirement investments.

"My Administration will relieve the regulatory burdens and litigation risk that impede American workers’ retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement," the order said.

It directed the Labor Secretary and Securities and Exchange Commission to make it easier for investors to access alternative assets in their defined contribution retirement plans. It did not expressly ask the agencies to add more legal protections for investments, but directed them to clarify or potentially revise rules that could help shield the industry from litigation risk.

Asset managers welcomed the news, saying it was a major step toward modernizing retirement savings."Expanding access to investments long out of reach will help ensure millions of Americans build stronger, more diversified portfolios designed to increase savings and address the practical considerations of DC plan fiduciaries," Jaime Magyera, head of retirement for leading asset manager BlackRock (BK.N), opens new tabsaid in a statement, referring to defined-contribution plans like 401(k)s.

The move could be a boon for big alternative asset managers such as Blackstone (BX.N), opens new tab, KKR (KKR.N), opens new tab, and Apollo Global Management (APO.N), opens new tab by opening the $12-trillion market for all defined-contribution plans, of which 401(k)s are the most popular, to their investments.

Some of those firms have already struck partnerships with asset managers who run those plans. A Blackstone spokesman said the firm welcomed the decision.  

BlackRock, which lobbied the Trump administration to expand asset options, plans to launch its own retirement fundthat includes private equity and private credit assets next year.

Proponents have argued that younger savers can benefit from potentially higher returns on riskier investments in funds that get more conservative as they approach retirement."