US Lawmakers Introduce Bill Allowing Crypto Investments in 401(k) Pension Plans – Regulation Bitcoin News


Several US lawmakers have introduced the Retirement Savings Modernization Act to provide 401(k) retirement savers with access to a wide range of investments, including crypto assets. “With inflation at record highs, a slowing stock market and a potential recession on the horizon, many Americans are understandably concerned about their financial future,” said US Senator Pat Toomey.

Introduction to the Retirement Savings Modernization Act

The U.S. Senate Committee on Banking, Housing, and Urban Affairs announced Thursday that Senators Pat Toomey (R-PA) and Tim Scott (R-SC) and Rep. Peter Meijer (R-MI) have introduced a bill titled Retirement Savings Modernization Act. .

The bill aims “to strengthen Americans’ retirement savings by allowing workers to diversify the assets included in defined contribution plans, such as 401(k) plans,” the announcement details. “This legislation will amend the Employees Retirement Income Security Act of 1974 (ERISA) to clarify that private sector pension plan sponsors may offer plans, including both pensions and 401(k), which are cautiously diversified across the full range of asset classes. ”

Senator Toomey said, “With inflation at record highs, a slowing stock market and a potential recession on the horizon, many Americans are rightly concerned about their financial future,” adding:

By giving 401(k) savers access to the same asset classes as pension plans, my legislation will open the door to a more secure retirement for millions of Americans.

While pension plans and 401(k) plans are covered by the same law, the former have been integrating asset classes outside of the public markets since 1982. Meanwhile, the latter “almost never integrate the “exposure to alternative assets due to the risk of anticipated litigation from trustees,” the announcement explains. The bill lists “digital assets” as a “covered investment.”

Senator Scott described, “Inflation has eroded and devalued the savings that many Americans have accumulated throughout their lives. This bill would modernize pension plans to ensure they can offer diversified investments with higher returns. Working Americans and their families deserve to live their lives with peace of mind, knowing that their hard-earned money will be safe when they choose to retire.

Until the 1970s, most Americans working in the private sector relied on pension plans for their retirement. Today, the vast majority of workers in the private sector rely on 401(k) plans. “However, pension plans have consistently outperformed 401(k) plans as they diversify across the spectrum of asset classes, placing one in five dollars in alternative asset classes like private equity,” they said. noted lawmakers.

Representative Meijer pointed out:

Americans deserve flexibility in their retirement options, especially in times of fiscal uncertainty.

The US Department of Labor (DOL) issued an advisory in March warning against crypto investments in 401(k) plans. “The department has serious concerns about the prudence of a fiduciary’s decision to expose participants in a 401(k) plan to direct investments in cryptocurrencies or other products whose value is tied to cryptocurrencies,” DOL wrote. “These investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss.”

Despite the Labor Department’s warning, Fidelity, a major administrator of 401(k) plans, announced in April that it would allow bitcoin as an investment option in its new 401(k) products. The decision of the financial giant raised concerns at the Ministry of Labor. Senator Elizabeth Warren (D-MA) is also concerned, demanding answers from Fidelity regarding its decision to allow bitcoin in 401(k) plans.

In May, a US senator introduced a bill prohibiting the Department of Labor from interfering with investments in retirement accounts. In June, US Treasury Secretary Janet Yellen said crypto is “very risky,” noting that it is not suitable for most retirement savers.

Do you think all retirement savers should be able to invest in anything, including cryptocurrencies? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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