Labor Dept. Rescinds Ban On Crypto Investments In 401(k) Plans

HomeNews* The U.S. Department of Labor has withdrawn its 2022 guidelines discouraging cryptocurrency options in 401(k) plans.

• The previous guidance asked fiduciaries to use “extreme care” with crypto in retirement investment menus.
• Withdrawal of the rule returns the Department to a neutral position on cryptocurrency in retirement plans.
• U.S. Secretary of Labor Lori Chavez-DeRemer stated this move lets fiduciaries decide investment options, not government officials.
• The Department’s decision clarifies that it neither supports nor opposes including cryptocurrency in 401(k) plans. The U.S. Department of Labor has rescinded a 2022 compliance release that had warned fiduciaries against adding cryptocurrency investment options to 401(k) retirement plans. The decision was announced in Washington and signals a change in the Department’s approach to how retirement plan investment choices are regulated.

• Advertisement - The original 2022 guidance asked plan fiduciaries—people who manage retirement plans for others—to exercise “extreme care” before offering cryptocurrency choices. According to current statements, this language was stricter than the general requirements of the Employee Retirement Income Security Act (ERISA), which sets federal standards for retirement and health benefit plans in private industry.

“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.” The Department now states it is taking a neutral position—meaning it does not encourage or discourage the inclusion of cryptocurrency in 401(k) plans.

Fiduciaries are required to act in the best interest of retirement plan participants under ERISA. The previous guidance marked a departure from the Department’s neutral, principles-based approach and was viewed by some as discouraging the use of cryptocurrency in retirement investments.

By rescinding the 2022 policy, the Department reaffirms that fiduciaries can decide whether cryptocurrency fits the needs of a retirement plan’s investment options, as long as they comply with established legal and ethical standards. For more details, the official compliance assistance update can be found on the Department of Labor’s website.

This move does not serve as an endorsement or a rejection of cryptocurrency in retirement investment menus, restoring the Department’s earlier neutral stance. No further action items for plan sponsors or participants were specified in the new release.

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