Crypto in 401(k)s is upon us, with ForUsAll and Fidelity Investments each confirming today that their new programs allowing participants to invest a small percentage of their 401(k) in cryptocurrency are active.
ForUsAll Inc., revealed in a press release today that 50 of its 550 clients began allowing workers to invest a small percentage of their retirement savings in cryptocurrency via its Alt401(k) platform, about eight weeks ago.
Also today, a Fidelity spokesperson confirmed to 401k Specialist that there are companies that offer Fidelity’s Digital Assets Account as a part of their core 401k lineup. The first plan sponsors went live this fall, as expected, the spokesperson said.
ForUsAll, the San Francisco-based 401(k) provider that caters to small companies and has $1.4 billion in retirement plan assets says its Alt401(k) platform provides employees with the freedom to invest part of their 401k in potentially higher-growth opportunities like bitcoin alongside traditional 401k mutual funds.
Calling itself “the first to deliver crypto in the 401k,” ForUsAll confirmed more than 50 of its clients have enabled access to cryptocurrency investments for their participants, with over 100 more expected to be live in the coming weeks.
Going back eight weeks from today to the approximate time when the Alt401(k) platform went live, bitcoin was trading at $19,236.69 at the beginning of Sept. 7. Since, it peaked at $22,546.03 on Sept. 13, and was trading at $20,254.23 as of 12:22 EDT today. Bitcoin peaked at over $66,000 in November 2021 but since falling precipitously from that time through June 2022, has hovered around $20,000 since August 2022.
Stacks Foundation, Compass Mining, NuHire and BOND are among the companies who have made the Alt 401(k) available to their employees.
“We see first-hand the innovations coming to the financial sector and owe it to our employees to ensure convenient access to the future of finance.”
NuHire’s Ashton Wood
“We believe in providing our employees every available opportunity to save for their financial future, and the Alt401(k) from ForUsAll gives them the tools to do just that,” said Brittany Laughlin, Executive Director at Stacks Foundation. “We believe cryptocurrency and blockchain technology possess great potential for the future.”
“Our team has the privilege of helping grow some of the most cutting-edge blockchain startups in the world,” says Ashton Wood, founding partner of NuHire Group. “We see first-hand the innovations coming to the financial sector and owe it to our employees to ensure convenient access to the future of finance.”
ForUsAll’s Alt401(k) retirement platform provides a simple menu of low-cost mutual funds alongside self-directed windows that allow employees to seek additional growth opportunities in the broader universe of stocks, ETFs, Bonds, and now cryptocurrency.
“Despite the recent downturn, cryptocurrency has been one of the fastest growing asset classes over the last decade because it is the predominant way people invest in blockchain technology,” said David Ramirez, ForUsAll’s CEO and Co-Founder. “95% of the Fortune 500 companies surveyed are exploring blockchain technology, as are nearly 100 central banks—the potential for widespread adoption is significant. Everyday Americans should not be left out.”
ForUsAll provided the following explanation for how the Alt401(k) platform works:
• Self-directed growth windows: Through the Alt401(k), employers can provide employees additional opportunities for diversification and potential growth by adding self-directed windows alongside traditional mutual funds. Participants can choose to invest in the core menu of traditional funds or seek additional potential growth or diversification by investing in individual stocks, bonds, ETFs or cryptocurrency.
• 5% Crypto Cap: Employees can transfer up to 5% of their balances and ongoing contributions into a secure account that includes access to screened cryptocurrencies (e.g. Bitcoin, Ether, Solana, etc.)
• Risk monitoring: ForUsAll closely monitors crypto allocations, alerting employees when their overall cryptocurrency allocation exceeds 5% of their portfolio, making it easy to rebalance.
• Hard-wired investor protections: Risk-focused employee education, robust risk disclosures, and a quiz employees must pass, demonstrating that they understand the risks.
• Employer fiduciary protections: By providing access to additional options via self-directed windows, employers preserve flexibility and employee choice while avoiding fiduciary risk typically associated with adding more sophisticated options to the core 401(k).
Built-in investor protections
As with any volatile asset, ensuring employees have an understanding of the inherent risks is crucial and ForUsAll has hard-wired proactive investor protections and education into the Alt-401(k). Before employees can access the crypto window, they must first acknowledge comprehensive risk disclosures and then pass a quiz.
“We spent considerable time balancing the needs of sophisticated employees that demand the freedom to invest how they see fit with much-needed protections for less-knowledgeable employees,” says Jeff Schulte, Chief Product Officer. “We were concerned some people might not read the risk disclosures, a pop quiz helps ensure that only employees that understand the risks get access.”
Once employees pass the quiz, they are able to transfer up to 5% of the current balance and 5% of ongoing contributions into the crypto window.
“Fidelity, Goldman Sachs, BlackRock, and many more now offer cryptocurrency to their high-net-worth and institutional clients. Everyday Americans simply deserve equal access.”
ForUsAll’s David Ramirez
The crypto window contains a curated list of cryptocurrencies (such as Bitcoin, Etherium, and Solana, etc.) that make it through what ForUsAll says is “a robust and stringent vetting process designed to exclude assets with higher risks of fraud.”
As digital assets continue to gain widespread adoption among wealthy Americans and institutional investors alike, ForUsAll said the company agrees with President Biden’s recent executive order that it is imperative for everyday Americans to also have the opportunity to share in the benefits of this transformative technology. As the executive order stated: “The United States also has an interest in ensuring that the benefits of financial innovation are enjoyed equitably by all Americans and that any disparate impacts of financial innovation are mitigated.”
“Our mission has always been to democratize access to institutional quality investments so that every American has a fair shot at building wealth,” said Ramirez. “Fidelity, Goldman Sachs, BlackRock, and many more now offer cryptocurrency to their high-net-worth and institutional clients. Everyday Americans simply deserve equal access.”
Lawsuit still pending
Back in June, ForUsAll filed a still-pending lawsuit against the Department of Labor, claiming regulators breached their statutory purview by instituting a policy shift without undergoing the required notice-and-comment process when it issued guidance telling retirement plan sponsors they could face an “investigative program” if they allowed digital currencies in their workplace retirement plans.
In mid-September, the DOL asked a federal judge to dismiss the lawsuit challenging its 401(k) cryptocurrency investing guidance, saying the March memo isn’t necessarily final and that ForUsAll lacks standing to sue.
In its June complaint, ForUsAll said it stood to lose up to a third of its potential client base because of the Labor Department guidance.
SEE ALSO:
• Bitwage, ForUsAll Partner on One-Stop-Shop for Crypto 401k and Payroll
• American Interest in Bitcoin Investing Waning: Bankrate
• Fidelity’s ‘Bitcoin-in-401ks’ Plan Moving Forward Despite Questions from Senators