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Fidelity will give employers the option of adding bitcoin to the options in the 401(k) plans they offer

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A bitcoin logo is seen during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 8, 2022 in Miami, Florida.

While a 401(k) that includes cryptocurrency may pique the interest of younger investors, the volatility of bitcoin worries some financial advisors. Marco Bello/Getty Images

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Fidelity, the biggest retirement plan provider out there (and a Marketplace underwriter) is launching a new bitcoin option in 401(k)s. At companies that opt in, employees will be able to put up to 20% of their nest egg into the cryptocurrency, if they think that’s a good idea.

Fidelity says plenty of people are already pouring tons of money into crypto outside of their 401(k)s.

“We have certainly seen the mainstreaming of digital assets and bitcoin,” said Dave Gray, who heads workforce retirement platforms for Fidelity Investments.

Obviously companies in the crypto business might be interested in this type of thing, but Gray said he’s already getting inquiries from outside cryptoland.

“We think that this solution certainly can be attractive to younger employees,” he said. “Younger investors increasingly are comfortable with and immersed in the digital assets, or just the digital economy.”

But it won’t be up to employees of any age — it’ll be up to the companies. There are good reasons they may decide not to offer the bitcoin option, said Katie Hockenmaier at Mercer, where she advises companies on 401(k) plans.

“We don’t think necessarily that super high-volatility investments that many people don’t necessarily have an extremely strong grasp on make a lot of sense,” she said.

HR departments aren’t just scared a 64-year-old employee might have to postpone their office retirement party because bitcoin dips, Hockenmaier added. They’re scared that a 64-year-old might sue them. Which is why the Fidelity announcement was kind of a shock.

“There have been a lot of questions from employers about why are they doing this? What is happening? I thought the Department of Labor said we really shouldn’t be doing this?” Hockenmaier said.

The Department of Labor issued guidance last month telling companies they should exercise “extreme care” before adopting a retirement plan with crypto. Federal law holds companies liable for irresponsible retirement plans.

And while HR departments might get emails from crypto enthusiasts asking where their 401(k) bitcoin is, the cryptocurrency’s carbon footprint could invite pushback from other employees.

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