From midway of 2022, Fidelity investments is allowing investors to put bitcoin in their 401(k)s. Here’s all you need to know about how this works.
Fidelity will allow you to add bitcoin to your 401(k)
On Tuesday, Fidelity Investments announced that it will be offering investors an option of putting bitcoin to their 401(k)s. The retirement plan provider is the first to offer crypto additions. The offer is available for 23,000 employers using Fidelity for administering retirement accounts. The firm with $11.3 trillion in assets, is the largest in the realm and this move will help in making cryptocurrency more popular and mainstream. According to the Wall Street Journal, Microstrategy, a cloud and intelligence firm is going to be the first to offer bitcoin in their retirement plan.
“There is also a growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies,” stated Dave Gray. Gray is the head of Fidelity’s workplace retirement offerings and platforms.
Integrations of crypto and traditional plans
Currently, regulators are urging caution on involving cryptocurrencies in one’s 401(k). The Department of Labor asked firms to “exercise extreme care” before considering adding crypto as an option. The department also cited concerns about volatility and speculation in addition to high valuation. Additionally, it warned about record-keeping and major custodial issues as losing or forgetting passwords can result in losing the asset.
Fidelity stated that the digital assets account is a custom plan account that holds bitcoin and short-term money market investments to provide the liquidity needed for the account to facilitate daily transactions. The organization added that Bitcoin in the DAA will be held on the Fidelity digital assets custody platform. Hence, this way, the organization will be ensuring institutional-grade security.