Legislation aimed at expanding the kind of investments that administrators of 401(k)s and other defined contribution plans may make, including investments in digital assets, has been proposed by three congressional Republicans.
The Retirement Savings Modernization Act would also release fiduciaries from any legal obligations when recommending investments in cryptocurrencies or other conventional financial instruments like hedge funds or private equity.
Three Republicans have backed the bill: Sen. Tim Scott (R-S.C.), the departing chairman of the Senate Banking Committee, Rep. Peter Meijer (R-Mich.), and Sen. Pat Toomey (R-Pa.).
401(k)s are used by considerably more Americans for retirement than traditional pensions
The three congressman cited inflation and “fiscal uncertainty” as reasons for broadening retirement investing alternatives in statements made after the bill was introduced. They also point out that 401(k)s are used by considerably more Americans for retirement than traditional pensions, but they criticize investment cap restrictions on 401(k)s as lowering overall returns in comparison to traditional pensions.
“Our legislation will provide the millions of American savers invested in defined contribution plans with the option to enhance their retirement savings through access to the same wide range of alternative assets currently available to savers with defined benefit pension plans,” said Toomey in a release touting the bill.
Although the law covers more than just digital assets, Toomey in particular has developed a reputation as a strong proponent of cryptocurrencies on Capitol Hill. However, a lot of people in the government, particularly the Department of Labor, which oversees retirement programs, are dubious about the inclusion of cryptocurrency in retirement plans.
Legislative progress has virtually halted since the start of November, when midterm elections will be held. Meijer won’t be participating in the upcoming legislative session because Toomey is not seeking reelection and he lost his primary contest to Republican rival John Gibbs. However, the sponsors of the plan might try to include it in a larger end-of-year tax bill.
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