Fidelity Investments announced on Tuesday that it will offer Bitcoin as an investment option. this is The 401 (k) is planned by the middle of this year.
This is a big move given that Fidelity is the largest 401 (k) plan provider in the United States and is acting as a custodian for 23,000 plans with 20.4 million participants. These plans total $ 2.7 trillion in assets under management.
However, the Bitcoin option is only available to participants whose employer chooses to include Bitcoin in their plans.
Fidelity did not specify the number of employers You are already signed on. Dave Gray, Head of Fidelity’s Workplace Platform and Products, said: He expects more clients to contact him now that Fidelity has publicly announced the news.
Gray also said that both devoted and interested clients vary in size and industry.
Like any investment 401 (k) In the plan, participants can choose to divert some of their regular savings contributions to what is called a Digital Asset Account (DAA) where Bitcoin is held. You can also transfer money to DAA from another investment in your plan. And they can receive distributions from that account.
However, there is a limit on how much you can contribute. Due to fidelity, the employer cannot set the limit higher than 20%. Gray Said. However, employers may set the limit much lower (for example, 5%). The limit also applies to the amount that can be remitted to the DAA as a percentage of total assets in the 401 (k).
There are also restrictions on the frequency of “round-trip transactions” to your account. “We designed this from the perspective of investors who see Bitcoin as an opportunity for long-term retirement savings, not for those who are trying to trade in day trading or market volatility,” Gray said. increase.
There will be transaction fees that have not yet been announced. Also, the annual fee for management is 75-90 basis points for your account’s assets. That’s $ 75- $ 90 for every $ 10,000. It’s for DAA management, accounting, and management, Gray said.
Fidelity also provides plan sponsors with materials and tools to educate participants on the risks and volatility inherent in investing in Bitcoin.
The Ministry of Labor ensures that an employer’s retirement plan meets the minimum standards for participant protection set by the Employee Retirement Income Security Act. Very worried 401 (k) Participants may be exposed to the extreme volatility of crypto trading.
He said he would pay particular attention to plans to offer cryptocurrencies as an investment option.
Fidelity argues that DOL has gone beyond this by suggesting that it is ill-advised, rather than picking out the type of investment and leaving its valuation to the fiduciary duty employer. “Decision of caution [in investment options] I belong to the fiduciary security of the plan sponsor, “says Gray.
In any case, investing in Bitcoin has been and will continue to be a fuss. And those who save for retirement should not bet excessively financial security on the crypto asset class.
Bitcoin, which is currently trading at just under $ 40,000, has fallen by nearly 27% in the last 12 months and has fallen by about 15% this year alone.