Your 401(k) funds may one day contain private equity.

At least one private equity firm is already marketing the asset class to the designers of target date funds.

Given that these kinds of funds commonly populate 401(k) offerings, CNBC asked Alice Handy, CEO of Investure, one of the country's top institutional money managers, how investors might handle private equity in their 401(k) accounts.

Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!

"I understand why the industry would want to be in 401(k)s. It's sort of crazy for the average investors," she said.

"The first thing is that it is a very illiquid investment, so it has to be an investor with a long time frame. The only retirement participants that really could put them in 401(k) accounts are young people."

Institutional investors expect a higher return as compensation for the illiquidity, and individual investors should demand the same, Handy noted.

At a minimum she looks for returns 400 basis points higher than what publicly-traded stocks can provide annually.

"You also need to know which funds you're getting," she said. "There's a huge difference between the top quartile and bottom quartile funds.

"It's not a panacea. You don't automatically get great returns."

Meanwhile, when it comes to the 230 multi-millionaire members of investment network Tiger 21, 21 percent of their money was in private-equity investments as of Dec. 31, according to The Wall Street Journal. That almost matches the 22 percent record high registered in Tiger’s first-quarter survey last year.

The commitment "reflects members' desire to roll up their shirtsleeves" and construct a new business, Tiger 21 Chairman Michael Sonnenfeldt told The Journal.

Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!

Related Stories:

• Private Equity Fundraising Soars to 5-Year High
• Blackstone's James Says Private Equity Good Times Just Starting