US Lawmakers Draft Bill To Allow Bitcoin & Crypto In 401(k) Plans• October 1, 2022 3:14 pm • Comments
Multiple Republican members of Congress have revealed that they have drafted a new bill called the Retirement Savings Modernization Act which would essentially allow for Bitcoin and other crypto currencies to be included in 401(k) plans.
This would greatly extend the investment flexibility of 401(k) plans as crypto has been accused by many regulators as being too volatile and risky to be included in retirement plans.
This new bill would make amends to an existing act called the Employee Retirement Income Security Act of 1974 which states the types of assets that are permitted to be offered.
So far, many are in support of the new bill, but there is also major opposition to it by many members of Congress so it is unclear on how likely that this new bill will actually pass.
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“A fiduciary shall not be liable for a breach of fiduciary duties under this section solely for — recommending, selecting, or monitoring any covered investment as an investment option for a plan,” reads the bill.
The document continues to define a “covered investment” and lists “digital assets” along with the other standard assets which can be managed within a standard 401(k) savings plan.
Congressional sponsors of the bill include: Senator Pat Toomey (R-Pa.) of the Senate Banking Committee, senator Tim Scott (R-S.C.) and House of Representatives member Peter Meijer (R-Mich.)
“Our legislation will provide the millions of American savers invested in defined contribution plans with the option to enhance their retirement savings through access to the same wide range of alternative assets currently available to savers with defined benefit pension plans,” said Toomey, per a report.
According to some reports, there are plans to introduce this bill as part of an end of year tax package deal.
The appeal of this is so that it can be shown as a way to boost overall retirement savings since the bill includes details that extends to assets beyond just crypto.
Earlier in the year, Fidelity Investments had launched their first Bitcoin 401(k) plan which gathered a lot of interest from the overall industry.
Although it faced much criticism from the likes of Senator Warren, it seems that providing account holders the freedom to invest in what they want is crucial for investment freedom.
With a large firm like Fidelity making such a move, it could be seen as the start of a new trend where all other plan providers start doing the same eventually and perhaps with more options than just Bitcoin.
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Senator Scott described: “Inflation has eroded and devalued the savings many Americans spent their lives accumulating. This bill would modernize retirement plans to ensure they can provide diverse investments with higher returns.
American workers and their families deserve to go about their lives with peace of mind, knowing their hard-earned money will be secure when they choose to retire.”
Until the 1970s, most Americans working in the private sector relied on pension plans for retirement. Today, the vast majority of private sector workers rely on 401(k) plans.
“However, pension plans have consistently outperformed 401(k) plans because they diversify across the full range of asset classes, putting one of every five dollars in alternative asset classes like private equity,” the lawmakers noted.
Representative Meijer stressed:
Americans deserve flexibility with their retirement options, especially in times of fiscal uncertainty.
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