20% of crypto in a 401(k)? DOL will likely ‘pressure’ Fidelity to lower that limit, analyst says
The Department of Labor, which oversees employer-sponsored retirement plans, took issue with Fidelity Investment’s decision to allow a maximum of 20% of 401 accounts to be invested in bitcoin, according to a recent report.
The department has “grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told the Wall Street Journal. Fidelity announced on Tuesday it would allow up to 20% of assets in 401s to be invested in bitcoin, though the 23,000 companies whose employees save for retirement in Fidelity accounts would have the final say on the permissible percentage. Employers are held to a fiduciary standard when offering retirement accounts and are responsible for evaluating plans for any risky investments or high fees.
The Labor Department had issued a warning in March to employers about allowing cryptocurrency investment via retirement accounts. As a result, the department will likely accept some amount of bitcoin in a 401 plan but will apply “pressure for that number to be below 5%,” according to Jaret Seiberg of Cowen Washington Research Group. “If it wanted the exposure to be zero, we believe the agency would have gone further than just speaking to a newspaper.
Though the investing world is still watching how cryptocurrencies will fit into employer-sponsored retirement plans, investors can include bitcoin and other digital assets in IRAs already.
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