Just-In: Fidelity Allows Adding Bitcoin In 401(k) Accounts, MicroStrategy Already In

Retirement plans provider Fidelity Investments on Monday reportedly said it will allow 401(k) plan holders to put part of their retirement savings into Bitcoin. The company will introduce a digital assets account facility later in 2022 that will enable investors to hold Bitcoin in their 401(k) account if employers approve it.

Fidelity’s move allows people to directly invest in Bitcoin without opening an account with any crypto exchanges. Thus, it will further push Bitcoin into the mainstream as crypto adoption grows in the U.S.

Several firms, including MicroStrategy, have already opted into the Bitcoin-based 401(k) plans. MicroStrategy, which has the largest Bitcoin treasury among publicly-listed firms, is already offering salaries in Bitcoin. By adding Bitcoin to employees’ retirement saving accounts, the company wants to lead Bitcoin adoption. Also, Fidelity is in discussions with other companies to offer a digital assets account.

Fidelity Allows Adding Bitcoin To 401(k) Retirement Savings

Fidelity Investments will allow customers to diversify investments in their retirement savings accounts by adding up to 20% holding in Bitcoin.

Dave Gray, head of workplace retirement offerings and platforms at Fidelity Investments, asserts increasing demand from clients and plan sponsors to have retirement plans with an option to invest in Bitcoin or other cryptocurrencies.

“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.”

The digital assets account’s fee will be 0.75-0.90% of assets, depending on several aspects, including the employer and the amount invested. Moreover, the company will soon announce a nominal trading fee for the account.

The Labor Department had issued a compliance assistance document last month and plans to keep a close eye on the 401(k) plans with digital assets. Moreover, the Labor Department reminded employers to act solely in the best interest of participating workers.

Bitcoin goes mainstream in the U.S.

Bitcoin adoption is continuously increasing in the U.S. as retail and institutional investors pour money into Bitcoin and other cryptocurrencies. The Bitcoin-based 401(k) and IRA accounts will enable investors to increase their retirement savings as retirement plans also offer tax benefits to account holders. Thus, it allows companies and employees to capitalize on the opportunity of investing in Bitcoin, saving taxes, and diversifying their investments.