OPINION: “Our retirement system is wobbly enough; let’s not turn 401(k) plans into casinos,” columnist Alicia H. Munnell writes.
In late April, Fidelity, the nation’s largest provider of 401 plans, said that it would make it possible for participants to invest a portion of their 401 account balances in bitcoin. The digital assets account would become widely available by midyear and could be integrated into the 401 investment menu, just like traditional mutual funds.
Whether or not a particular asset class is appropriate for 401 plans involves a fact-driven inquiry that involves applying ERISA’s fiduciary standards of prudence, diversification, and loyalty. That is, is the asset class generally acceptable? Are the trustees behaving solely in the interest of participants? How could the asset class improve diversification?
The threshold consideration is the general acceptability of the asset class to a broad group of investors, and, the author argues, particularly to the trustees of defined-benefit plans. Defined-benefit plans and 401s are “like” “enterprises” in that they both accumulate retirement resources for distribution to participants, and therefore one might think they would be open to similar asset classes.
Bitcoin fails this threshold test of acceptability; it has not been embraced by defined benefit trustees. That is not surprising given that bitcoin is new ; the volume of bitcoin investments is relatively small; and bitcoin prices are volatile, trading in thin markets. As Figure 1 shows, bitcoin has lost half its value since January.
In short, adding bitcoin to the menu of 401 investments is not prudent. Fidelity should not be opening the door to this type of activity. Our retirement system is wobbly enough; let’s not turn 401 plans into casinos.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
‘American Gigolo’ Director Paul Schrader Calls Showtime’s TV Adaptation “A Terrible Idea”No stranger to hot takes, Paul Schrader has a new target in his sight: his own movie. To be more exact, an upcoming television adaptation for his 1980 movie. Showtime released a trailer earlier thi…
Read more »
Tempo Move review: a great idea with terrible connectivityIt hits almost all the right notes, but its one flaw is a stinker.
Read more »
Paul Schrader Won’t Watch Showtime’s ‘American Gigolo,’ Says Adapting His Film Is “Terrible Idea”Jon Bernthal and Gretchen Mol star in the TV remake of the 1980 film that featured Richard Gere and Lauren Hutton.
Read more »
Binance Concludes 3 Promos: Bitcoin Button Game, Bitcoin Button Reshare Promotion, and Bitcoin Button Milestone Giveaway | Binance SupportFellow Binancians, The following promotions have now concluded: Bitcoin Button Game Bitcoin Button Reshare Promotion Bitcoin Button Milestone Giveaway Reward Distribution: Steps to follow depending...
Read more »
New York Senate passes Bitcoin mining ban bill over environmental concernsA bill that targets proof-of-work mining (PoW) was approved by the New York State Senate on Friday, June 3 in... Continue reading
Read more »
Kenya's Largest Power Provider Plans to Deliver Access to Geothermal Power to Bitcoin MinersBitcoin miners may establish an energy park at the company's new industrial site in the Olkaria power station.
Read more »