Author: Paul A. Carl, CHSA, CPFA™ Vice President, Retirement Plan Consulting, Registered Representative
The Department of Labor, Employee Benefits Security Administration doesn’t think so EBSA Compliance Assistance Release 2022-01. A U.S. Senator from Alabama disagrees and sent EBSA a letter requesting an explanation of its position.
A major retirement plan recordkeeper may have indirectly hinted that they are in favor of it…for their clients, just not their employees (yet). U.S. Senators from Massachusetts and Minnesota signaled their disagreement with the recordkeeper’s decision.
And a major business news service reported data from a popular on-chain market intelligence firm that 40% of investors in the most popularly known cryptocurrency are ”underwater” in their investment of that specific cryptocurrency CNBC Crypto World: "40% of bitcoin investors are now underwater, new data shows".
Six months ago, my daughter connected me to her 40-year-old friend who was “ready to get serious about saving money and investing.” I was informed that he had nothing saved life-to-date and just wanted to understand how to get started. In my head, I prepared my "family-member speech” (the importance of saving, limiting spending, determining risk tolerance, the cadence of regular investing). The exact conversation involved short, cordial introductions followed by rapid-fire questions on how to get rich investing in cryptocurrency.
If you are a retirement plan fiduciary facing questions from participants about how, when, why or why not cryptocurrency, consider the following based on the facts and circumstances prevailing at that time:
- You have a duty and an obligation to act prudently
- You have a duty and an obligation to act solely in the interest of plan participants and beneficiaries for the purpose of providing benefits
- You are expected to diversify plan investments or offer a menu of investments that allow self-directing plan participants to diversify investments in order to minimize the risk of large losses
- You are expected to follow plan document terms and to avoid conflicts of interest
If you are a retirement plan participant with the opportunity to invest in cryptocurrency, or you have other retirement assets that you are contemplating investing in cryptocurrency, consider the following:
- What is my time horizon?
- What is my risk tolerance?
- How much do I have saved for retirement so far?
- How much do I think I will need in retirement?
- How are my other retirement assets invested?
- Does it fit with my overall objectives?
- Do I fully understand cryptocurrency?
What are your thoughts on investing in cryptocurrency?
HORAN Capital Advisors, LLC is an SEC registered investment advisor. The information herein has been obtained from sources believed to be reliable but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results. Market conditions can vary widely over time and there is always the potential of losing money when investing in securities. HCA and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.