Alternative Investment

Bill seeks fiduciary safeguards for crypto, other alternative assets

While DOL hasn’t said cryptocurrency is inherently imprudent, the agency cautioned 401(k) plan fiduciaries to “exercise extreme care” when considering cryptocurrency as an investment option. In separate guidance, DOL suggested that fiduciaries of “typical” DC plans lack the necessary expertise to evaluate PE investments. Bill supporters say DOL’s stance is at odds with the need to let DC plan participants have access to the “full range” of potentially more lucrative (but riskier) investment strategies used by defined benefit (DB) plan managers.
 

DOL’s guidance prompted some Senate Republicans to introduce another similar bill (S 4147) in May. The Financial Freedom Act would provide that ERISA doesn’t limit DC plan fiduciaries’ ability to select any particular types of investments, as long as participants can choose from broad range of investment options. However, none of the GOP bills to date would require that fiduciaries give plan participants access to specific asset classes or create a safe harbor from ERISA’s fiduciary duties.
 

With Democrats still in control of Congress, the Retirement Savings Modernization Act is unlikely to pass this year. The Senate version is before the Committee on Health, Education, Labor, and Pensions and is sponsored by Sens. Pat Toomey, R-PA, Tim Scott, R-SC, and Cynthia Lummis, R-WY. Rep. Peter Meijer, R-MI, is sponsoring the House counterpart, which is pending with the Education and Labor Committee.
 

Non-Mercer resources

  • S 4973, the Retirement Savings Modernization Act (Congress, Sept. 28, 2022)
  • Press release (Sen. Tim Scott, Sept. 29, 2022)

Mercer Law & Policy resources

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