US Department of Labor cautions 401(k) plan fiduciaries to exercise extreme care as they consider cryptocurrencies

WASHINGTON – The U.S. Department of Labor today published compliance assistance for 401(k) plan fiduciaries considering plan investments in cryptocurrencies, in an effort aimed at protecting the retirement savings of U.S. workers.

Published by the department’s Employee Benefits Security Administration, Compliance Assistance Release No. 2022-01 cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants. As of 2019, private pension plans held an estimated $6.2 trillion on behalf of about 91 million defined contribution 401(k) plan participants.

The Employee Retirement Income Security Act of 1974 requires plan fiduciaries to act solely in the financial interests of plan participants and adhere to the standards of professional care in considering investment options for participants in 401(k) plans.

“Today’s announcement reminds plan fiduciaries of their important role in selecting investment options for 401(k) plan menus,” said Employee Benefits Security Administration Acting Assistant Secretary Ali Khawar. “At this stage of cryptocurrency’s development, fiduciaries must exercise extreme care before including direct investment options in cryptocurrency.”

Read Compliance Assistance Release 2022-01.

Learn more in Acting Assistant Secretary Khawar’s blog post on the new compliance assistance.

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