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Fidelity, the nation’s largest provider of 401(k) retirement plans, has opened the door for a future of crypto nest eggs: the company announced it would soon allow a portion of participants’ contributions to be held in Bitcoin.
Employees who work for one of the 23,000 companies that use Fidelity’s 401(k) services will be allowed to allocate up to 20% of their portfolio to the world’s largest cryptocurrency, the company announced last week. But that’s only if their employer lets them. And given widespread pushback against the plan, including from the U.S. Department of Labor, it seems unlikely that many employers will jump at the opportunity for now.
“From what I’m hearing, most employers are on a wait-and-see basis,” says David John, a senior policy advisor at the AARP Public Policy Institute.
A recent poll by the Plan Sponsor Council of America found only 2% of the 63 employers surveyed would consider making cryptocurrency available in their plans. John says that based on his recent conversations and research, the Labor Department’s disapproval has had a huge impact in dissuading employers from taking on the risk.
Moreover, employers have a legal fiduciary duty to offer prudent investments to retirees, based on the Employee Retirement Income Security Act of 1974, which leads to more cautious decision-making. “You’ve seen a wide number of lawsuits against employers, charging that their investment mix is wrong, or that the fees are too high,” John says. “So I’ve heard employers saying, ‘Maybe we’re going to wait and see how this all plays out.’”
Fidelity’s announcement came the month after the …read more
Source:: Time – Technology