Several US lawmakers have introduced the Retirement Savings Modernization Act to provide 401(k) savers with access to a wide range of investments, including crypto assets. “With inflation at record levels, a slump in the stock market, and a potential recession looming, many Americans are rightly concerned about their financial futures,” said US Senator Pat Toomey.
Introducing the Retirement Savings Modernization Law
The US Senate Committee on Banking, Housing and Urban Affairs announced Thursday that Senators Pat Tommy (R-PA), Tim Scott (R-SC) and Representative Peter Meijer (R-MI) have introduced a bill called the Retirement Savings Modernization Act. .
The law Project The announcement aims to “boost Americans’ retirement savings by allowing workers to diversify assets included in defined contribution plans, such as 401(k) plans.” “This legislation will amend the Employee Retirement Income Security Act of 1974 (ERISA) to make it clear that private sector retirement plan sponsors may offer plans, including annuities and 401(k), that are prudently diversified across a full range of asset classes. “
Senator Tommy said: “With inflation at record levels, the stock market plummeting, and a potential recession looming, many Americans are rightly concerned about their financial futures,” explaining:
By providing 401(k) savers with access to the same asset classes as pension plans, my legislation will open the door to a safer retirement for millions of Americans.
While pension plans and 401(k) plans are covered by the same law, the former have listed asset classes outside the public markets since 1982. Meanwhile, “the latter almost do not include exposure to alternative assets due to the litigation risks expected from the trustees, the announcement explains. It lists Bill “Digital Assets” as a “covered investment”.
Senator Scott described: “Inflation has eroded and devalued the savings many Americans spent their lives accumulating. This bill would modernize retirement plans to ensure they can provide diversified investments with higher returns. American workers and their families deserve to live their lives with peace of mind, Realizing that their hard-earned money will be safe when they choose to retire.”
Until the 1970s, most Americans working in the private sector relied on retirement plans for retirement. Today, the vast majority of private sector workers rely on a 401(k) plan. “However, pension plans have consistently outperformed 401(k) plans because they diversify across a full range of asset classes, and place one in five dollars in alternative asset classes such as private equity,” the lawmakers noted.
Rep. Meijer asserted:
Americans deserve flexibility in their retirement options, especially during times of financial uncertainty.
The US Department of Labor (DOL) issued a Notice In March a warning about crypto investments in 401(k) plans. “The department has serious concerns about the wisdom of the agent’s decision to expose participants in a 401(k) plan to direct investments in cryptocurrency, or other products whose value is linked to cryptocurrency,” the Department of Labor wrote. “These investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss.”
Despite the warning from the Department of Labor, Fidelity, which is the lead planner for the 401(k) plan, announced in April that it would allow bitcoin as an investment option in its new 401(k) products. The financial giant’s decision caused concern from the Department of Labor. Senator Elizabeth Warren (D-MA) is also concerned, and is demanding answers from Fidelity about its decision to allow bitcoin in 401(k) plans.
In May, a US senator introduced a bill that would prevent the Department of Labor from interfering with investments in retirement accounts. In June, US Treasury Secretary Janet Yellen said cryptocurrency was “extremely risky,” asserting that it was not suitable for most retired savers.
Do you think all retired savers should be able to invest in anything including cryptocurrency? Let us know in the comments section below.
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