A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.
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Several US lawmakers have introduced the Retirement Savings Modernization Act to give 401(k) retirement savers access to a wide range of investments, including crypto assets. “With inflation at record highs, a slump in the stock market and a potential recession on the horizon, many Americans are rightly concerned about their financial future,” said US Senator Pat Toomey.
The US Senate Committee on Banking, Housing and Urban Affairs announced Thursday that Senators Pat Toomey (R-PA) and Tim Scott (R-SC) and Representative Peter Meijer (R-MI) have introduced a bill called the Retirement Savings Modernization Act.
The bill aims to “strengthen Americans’ retirement savings by allowing workers to diversify assets included in defined contribution plans, such as 401(k) plans,” the announcement details. “This legislation would amend the Employee Retirement Income Security Act of 1974 (ERISA) to clarify that sponsors of private sector retirement plans may offer plans, including both pensions and 401(k)s, that are prudently diversified across the full range of asset classes.”
Senator Toomey opined, “With inflation at record highs, a slump in the stock market and a potential recession on the horizon, many Americans are rightly concerned about their financial future,” elaborating:
By giving 401(k) savers access to the same asset classes as retirement 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 has incorporated asset classes outside the public markets since 1982. Meanwhile, the latter “almost never incorporate exposure to alternative assets because of managers’ expected litigation risk,” the announcement explains. The bill lists “digital assets” as a “covered investment”.
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 live life 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. 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 spectrum of asset classes, putting one in five dollars into alternative asset classes such as private equity,” the lawmakers noted.
Representative Meijer emphasized:
Americans deserve flexibility with their retirement options, especially in times of fiscal uncertainty.
The US Department of Labor (DOL) issued a notice in March warning about 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 linked to cryptocurrencies,” the DOL wrote. “These investments pose significant risks and challenges to participants’ retirement accounts, including significant risk of fraud, theft and loss.”
Despite the Labor Department warning, Fidelity, a major 401(k) plan administrator, announced in April that it will allow bitcoin as an investment option in its new 401(k) products. The financial giant’s decision caused concern for the Ministry of Labour. 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 that would prohibit the Department of Labor from interfering with investments in retirement accounts. In June, US Treasury Secretary Janet Yellen said that crypto is “very risky”, stressing that it is unsuitable for most retirement savers.
Do you think all retirement savers should be able to invest in everything including cryptocurrencies? Let us know in the comments section below.
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