Fidelity, ForUsAll Offer 401(k) Investors Access to Cryptocurrency


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Retirement savers in some 401(k) plans are beginning to gain access to cryptocurrencies like bitcoin.

Fidelity Investments, the largest provider of 401(k) plans by total assets, began offering a Digital Assets Account to clients this fall, a spokesman confirmed.

Employers who sponsor a 401(k) plan through Fidelity can choose to offer the account to workers, allowing them to allocate a portion of their savings to bitcoin.

ForUsAll, a plan administrator aimed at startups and small businesses, in September also rolled out crypto to 401(k) savers, said David Ramirez, the company’s CEO.

Investors can buy into six cryptocurrencies: bitcoin, ethereum, solana, polkadot, cardano and USDC. ForUsAll intends to add five more in the coming weeks, said Ramirez, who declined to say which ones.

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The firms appear to be the first trustees to make crypto available as 401(k) investment options.

The moves come as the US Department of Labor in March urged employers to “exercise extreme caution” before giving workers exposure to cryptocurrency. The regulator cited “significant risks” for investors, such as speculation and volatility.

Meanwhile, investor interest in crypto surged amid record growth in 2021. But prices have since fallen in what some have taken to calling a “crypto winter.”

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Bitcoinfor example, has lost more than 66% of its value from its peak last November. (For comparison S&P 500 index has fallen about 20% in the past year.) Bitcoin’s current price, about $21,000 per coin, has nearly tripled its value since the start of 2020, and the S&P 500 is up about 17% during that time.

Fidelity declined to say how many customers have chosen to offer the bitcoin account to workers.

Fifty ForUsAll clients have made crypto available to employees, and another 100 clients are expected to join soon, Ramirez said. These 150 plans will represent about 27% to 28% of total customers. Ramirez estimates that 70% to 80% of new customers have asked to make crypto available.

“Our core goal has always been to provide equal access to wealth creation,” Ramirez said. “We just didn’t feel it was fair that Americans would be left behind in the 401(k).”

Differentiating approaches to an alternative asset

On a technical level, Fidelity and ForUsAll offer crypto to investors in different ways.

Fidelity’s bitcoin account is an option that sits alongside other 401(k) investments like traditional stock and bond funds. The digital asset account holds bitcoin and short-term, cash-like investments intended to help facilitate day-to-day transactions.

ForUsAll’s is part of a “brokerage window,” essentially a portal through which investors can access dozens of additional investments that aren’t technically part of the core 401(k) options.

ForUsAll intends to make alternative asset classes like private equity, venture capital and real estate available through the window in the future, Ramirez said.

Fidelity and ForUsAll have installed certain guardrails to limit investors’ overall 401(k) allocations to crypto. ForUsAll limits e.g. investor allocations to 5% of their current portfolio balance and sends investor alerts if the share exceeds 5% in the future. Investors, meanwhile, cannot put more than 20% of their balance into Fidelity’s offering, although employers can choose to lower that cap.

But employers may not be as quick to make cryptocurrency or alternative asset classes available to workers because of legal risk, experts said. Workers and other parties have filed numerous lawsuits against companies over the past decade plus allegedly risky and expensive 401(k) funds.

ForUsAll sued the Department of Labor over its cryptocurrency compliance bulletin published in March. That case is still unresolved.


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