Private-equity funds returned an average of 14 percent from 2002 through 2012, according to Seattle-based researcher PitchBook Data Inc. U.S. stock funds gained an annualized 8.4 percent and bond funds rose 5 percent a year, according to Morningstar.

The likely entry point for private-equity firms seeking access to 401(k)s are target-date funds, the most common default option for employees joining the plans, said Callan’s Lucas. The funds usually are structured as mutual funds and hold a mix of assets that becomes more conservative as employees near retirement age.

Entry Point

The funds could add an alternative product -- such as a private-equity, real estate or hedge fund -- as part of the asset allocation with other sources of liquidity, Lucas said. Large employers increasingly are using formats such as collective trusts or creating customized versions, which are regulated differently from mutual funds and may allow for more illiquid investments such as private equity or real estate, she said.

Assets in target-date funds will more than double to $1.1 trillion by 2017, according to Cerulli.

“As that custom target-date world continues to develop, consultants are going to want to bring more sophisticated investments to their clients,” said KKR’s Gaviser. “They’re trying to find greater returns, but they can’t access the same investments that defined-benefit plans can yet.”

U.S. Senator Tom Harkin, an Iowa Democrat and chairman of the Senate Health, Education, Labor and Pensions Committee, is pursuing changes to 401(k) plans. Harkin has said he will introduce legislation this year that would create so-called USA Retirement Funds blending features of pensions and 401(k)s to improve worker outcomes.

Slow Spread

“Because of the frequency of withdrawals, it’s much harder for 401(k)s to take advantage of the types of investments that pension plans, with their long time horizons, use to diversify their holdings,” Harkin said in an e-mail, citing asset classes such as real estate and private equity.

Employers can take years deciding on 401(k) investment choices because they’re liable under Department of Labor regulations as fiduciaries of such plans, which means they must act in the best interest of their workers and select suitable funds with reasonable fees.