Even though cryptocurrency continues to capture headlines and attract interest from institutions and private investors, the vast majority of Americans simply aren’t taking advantage of it. Primarily because investing in cryptocurrency simply isn’t offered by most employers’ 401(k) plans.
Recently, the Government Accounting Office (GAO) took a look at retirement savings accounts across America. Here’s what they found…
Employers prevent savers from diversifying with cryptocurrency
Since 2022, some retirement plans have offered cryptocurrency alongside traditional assets, simply as standard 401(k) options. Most just don’t.
Why not? It’s pretty a straight-forward question of regulatory uncertainty…
See, the Employee Retirement Income Security Act (ERISA) imposes fiduciary requirements on those who offer 401(k) plans to their employees. And fiduciaries are “required to act in investors’ best interest by considering the risk of loss versus the potential gains of investment strategies.”
In other words, the folks who put together the list of “standard 401(k) options” that employees can access have decided crypto is too risky. Not for themselves, mind you – but for you.
See, if they simply offer the same tired list of traditional asset classes that everyone else does, they won’t get in trouble. If, on the other hand, they decide to be innovative and offer investors a new asset (especially a volatile new asset), they might get in trouble. Right? We’ve all heard stories of everyday folks who sank every penny into Alex Mashinsky’s “crypto bank” Celsius, which blew up in 2022 and took $4.7 billion in customers’ savings with it.
We’ve all read up on Sam Bankman-Fried’s accidental misfiling of $8 billion in customer funds.
Both Mashinsky and Bankman-Fried have been sentenced to federal time for fraud.
With those examples to look at, the failure of 401(k) plan managers to offer crypto sort of makes sense, doesn’t it?
Most of us are stuck with our employers. That means, if we want to save pre-tax dollars for retirement, we’re stuck with whatever 401(k) choices we’ve been handed.
Sure, offering bitcoin and ether and other wildly popular, rapidly-growing cryptocurrencies to 401(k) investors would delight them! On the other hand, not offering those same investments means the plan manager can’t lose. Can’t be sued for violating fiduciary standards. It doesn’t matter that every type of financial asset fluctuates in price over time! Crypto is too new, too misunderstood and (they might argue) fluctuates in price “too much” to make a “good” investment option for you.
That’s why nearly every working American is prevented from diversifying their 401(k) savings with crypto. The GAO tells us 1% of 401(k) savings go into crypto. Even though 15% of Americans say they’re likely to buy crypto – and 40% of Americans own crypto already!
That math simply doesn’t make sense, does it? If nearly HALF of all Americans own crypto, and another 15% want to, then why are just 1% of 401(k) savings going into crypto?
Breaking out of 401(k) jail
As the old saying goes, If you want something done, you’ve gotta do it yourself.
First, you can lobby your employer for a better 401(k) plan.That can take months, even years, to come to fruition – if it does at all. As we’ve seen, those 401(k) administrators are simply not interested in offering crypto as an investment option.
Second, you can open a Digital IRA right now. It takes about 10 minutes start to finish (seriously). Since it’s not a 401(k), you can’t fund it with pre-tax dollars. Though it DOES give you the option to diversify your retirement savings with cryptocurrencies as you see fit.
If your 401(k) is a jail, and you want to break out? You can. Right now. You can start your Digital IRA with BitIRA any time, day or night. You can start investing in the future of money.
And if you want to learn more, if you’d prefer a guided tour of the benefits of diversifying with cryptocurrency, BitIRA can help there, too. Just call (800) 299-1567 to speak to a Digital Currency Specialist.
