Bitcoin: Is it worth to add crypto to you 401(k) retirement plan? | Marca

Today cryptocurrencies continue to gain ground in the financial and investment market, with some experts even openly recommending betting on adding these digital tokens to your 401(k) retirement plan, although others question this decision.

This disjunction becomes relevant after the nation’s largest 401(k) plan provider, Fidelity Investments, which manages more than $2.7 trillion in 401(k) plan assets, has made it known that it will allow its clients to put a portion of their retirement savings in Bitcoins, provided their employers approve.

Beyond some people questioning the idea that Bitcoin is the ideal cryptocurrency to start investing in this way in plans like 401(k)s, others are simply wondering if it’s a good idea to take a chance on digital tokens when it comes to a retirement plan.

“As an advisor to 401(k) plans, I would be very hesitant to recommend bitcoin in a 401(k) and subject the trustees to that liability,” Ronald Rogé, a certified financial planner and chairman an CEO at R.W. Rogé & Co. in Naples, Fla., told Yahoo Money.

Criticism of lack of cryptocurrency diversification

As mentioned earlier, choosing only Bitcoin as the cryptocurrency for 401(k) retirement accounts to diversify into raises many questions about portfolio balance, as it is not the ideal scenario for dealing with a potential downturn in the markets.

Potential fraud and theft

This risk is not only mentioned by financial and investment experts, but also by the Department of Labor, which oversees workplace retirement plans and has expressed concern about 401(k) plan investments with bitcoins.

“The Department cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants… these investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft, and loss,” according to the DOL guidance.

The volatility of cryptocurrencies

It is known to many that the value of cryptocurrencies fluctuates greatly, which is a huge risk for any retirement plan.

“It can be very hard for ordinary investors to separate fact from hype. When fiduciaries include a cryptocurrency option on a 401(k) plan menu, it signals to participants that knowledgeable investment experts have approved it as a prudent option. This can mislead participants about the risks and cause big losses,” Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration, wrote in a blog post.

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