In early 2022, Fidelity became the first major financial services firm to offer investors the chance to add crypto assets to their 澳洲幸运5官方开奖结果体彩网:401(k) retirement accounts. The company is a giant in the retirement business, with more than 45 million 澳洲幸运5官方开奖结果体彩网:individ🌌ual retirement account (IRA), 401(k), and 403(b) retirement accounts. The company announced that by late 2022, employees will be able to add Bitcoin to their 401(k) accounts—if their employer allows it.

Though this move was certainly a milestone for crypto, many analysts have been quick to point out that cryptocurrencies may be a poor choice for investors looking to build value over the long term.

Building a 401(k) Account With Crypto

Fidelity is primarily known for its huge portfolio of retirement accounts. The company is the largest 401(k) provider in the U.S. and holds more than one-third of all of the funds invested in 401(k) accounts in the country. These funds are invested in a vast variety of ass♎ets, and now the company wants to add one ꦬmore: Bitcoin.

More specifically, the company announced in April 2022 that they are introducing a digital assets account option alongside its more traditional accounts. This will allow employees with 401(k) accou🐻nts to add Bitcoin to them, for which they will be charged an account fee of between 0.75% and 0.9% of funds invested in the digital asset account. There is also a trading fee.

Employees with a Fidelity 401(k) account may be able to allocate a percentage of their account to Bitcoiꩵn, but only if their employer allows them to make such a designation. Ultimately, it is employers who have the final say in whether their employees will be able🥀 to add Bitcoin to their retirement accounts, and this may impose a significant bar on the widespread adoption of crypto in these accounts.

Even if employers allow employees to add Bitcoin to their Fidelity 401(k) accounts, the level at which they will be able to do so will be limited. Fidelity says that the option to buy Bitcoin will be integrated right into its 401(k) investment menu, so buying crypto will be as easy as buying shares in 澳洲幸运5官方开奖结果体彩网:mutual funds, except that the percentage of a retirement portfolio that is held as crypto will be limited. The employer will determine the ceiling. The platform won’t permit allocations of more than 20%, although that number could change.

Will You Be Able to Add Crypto to Your 401(k)?

Though Fidelity will make it possible to add Bitcoin and ether to 401(k) accounts, this doesn’t mean that every employee whose plan is overseen by the company will be able to do so. 

That’s because 401(k) accounts are ultimately the responsibility of employers, who have a fiduciary responsibility to their employees. Though Bitcoin might be suitable for some employees, it’s u💝nlikely to be a responsible investment for those close to retirement—and because of the way that most employers administer 401(k) plans, the same investment options must be open to all plan participants.

These concerns have been echoed by the 澳洲幸运5官方开奖结果体彩网:Department of Labor. Though the federal agency hasn’t gone as far as banning crypto from retirement plans, it issued a compliance assistance document in March 2022 that reminded plan overseers—that is, employers who must act solely in the best interest of participating workers—that they were responsible for choosing “prudent” options. It is strongly suggested that cryptocurrencies haven’t yet appeared to meet that bar.

The Bottom Line

In April 2022, Fidelity became the first firm to announce that employees could add crypto—in the form of Bitcoin—to their 401(k) accounts. The company will make this emerging 💦asset class investment option available to all of the companies for which it oversees 401(k) plans. 

Ultimately, it will depend on employers as to whether employees can access Bitcoin in their retirement accounts. Employers have a responsibility to offer prudent investment options in their 401(k) accounts, and the Department of Labor has implicitly said that crypto doesn’t meet this test. It remains to be seen how many employers will allow their staff to access Bitcoin in this way and at what volume.