Bitcoin Goes To Retirement Plan, Department of Labor is Alarmed

Fidelity is planning to offer 401(k) savers an option to invest in bitcoin later this year. Democrats are trying to prevent it.

Have you ever considered acquiring cryptocurrency as a part of your retirement plan? Some investors already wonder if cryptocurrencies have a place in their pension savings. Many financial advisors say it can be part of a well-balanced investment portfolio. In fact, some clients have already been adding it to their investments outside of employer-sponsored retirement plans. But there has been a significant shift lately.

Fidelity Investments, the U.S. largest retirement-plan provider, announced they would offer investors the option to put Bitcoin in their 401(k)s by the middle of this year (401(k) is one of the most popular personal pension plans in the U.S.). It will make the company the first provider to offer crypto for retirement savings. The option will be available for 23,000 employers that use Fidelity to administer their retirement accounts.

Fidelity Investments put some guardrails in place to keep investors from moving all of their retirement assets to cryptocurrencies. The plans will let account holders invest up to 20% of their savings in bitcoin, an amount that can be reduced but not exceeded.

There is a guidance by the Department of Labor for types of investments allowed for pension and cryptocurrencies were explicitly warned in the official release in March. Looks like Fidelity is testing the laws here. Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, has expressed serious doubts about Fidelity’s offering, he also told the WSJ that the guidance could be rescinded or amended if the market develops.

Elizabeth Warren, the U.S. Senator, also expressed concern that the company may be exposing clients to a “risky and speculative gamble.” She wrote a letter to the company’s chief executive, arguing that crypto might be too dangerous an investment for retirement savers.

Anyway, financial advisors cautiously recommend investing in crypto for the amount of money that one is ready and willing to lose (not very optimistic).

Would you diversify your retirement savings with crypto? And what share of the pension plan are you ready to shift to crypto?