Fidelity Investments, the largest provider of 401(k) pension plans in the United States, will allow participants to keep money in bitcoin (BTC), but only if their employers allow it.
401(k) plans are employer-sponsored defined-contribution pension accounts, and Fidelity has USD 2.4 trillion in 401(k) accounts, according to 2020 figures compiled by the researcher Cerulli Associates. According to the New York Times, this figure represents more than a third of the domestic market.
Fidelity explained on its website that the Digital Assets Account was a “new proprietary offering” for firms that could “provide your employee’s access to invest in digital assets, specifically bitcoin.” It claimed that the new offering was created “as part of Fidelity’s holistic digital assets services.”
According to the New York Times, account fees will range between 0.75 percent and 0.9 percent of assets, but this will “depend on several factors, including the employer and the amount invested.”
In addition, a “additional trading fee” will be charged. Details are still being worked out, but a company spokesperson has stated that this fee will be “competitively priced.”
Fidelity’s head of workplace retirement offerings and platforms, Dave Gray, was quoted as saying, “We started to hear a growing interest from plan sponsors, organically, as to how could bitcoin or how could digital assets be offered in a retirement plan.”
Wealth Management reported that the offering would be “widely available” to employers by mid-2022.
According to the company’s website, investors will be able to access its Digital Assets Accounts, which “primarily hold bitcoin plus short-term money market investments.”
However, “plan sponsors,” or employers, will have the final say on “electing to offer” accounts and setting contribution and exchange limits.
Employees will also be given educational materials on bitcoin “to help them make informed decisions,” according to the company.
According to the New York Times, regulators “have already said they’re sceptical of the idea,” noting that the Department of Labor, which regulates the space, “said it would cast a critical eye on plans that added digital assets to their investment menus” in March of this year.
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