401(k) Crypto Rule Nears Final Step: White House Review Underway

On Thursday, the Labor Department's final regulation designed to shield employers that add private equity, real estate and digital assets to 401(k) plans was sent to the White House. This review represents the last hurdle before the rule becomes official.

Employer-sponsored retirement accounts such as 401(k)s held $15 trillion as of late June, according to Investment Company Institute data. Asset management firms are eager to access those funds. In June, three Democratic lawmakers urged the regulation to be rescinded.

The Legal Protection Structure for Crypto 401(k) Plans

The rule arrived at the Office of Information and Regulatory Affairs (OIRA), which screens major regulations, as reported by Bloomberg Law. It implements an executive order issued by Trump.

No retirement plan is required to offer the new asset classes. Instead, employers that evaluate six criteria receive a legal safe harbor. Those criteria are: performance, fees, liquidity, valuation, benchmarks and complexity.

Under that arrangement, courts would presume the employers acted prudently. The proposal states that the threat of lawsuits has narrowed the range of options employers provide.

Timeline for Private Assets to Reach 401(k) Participants

OIRA has up to 90 days to finish its review, according to BeInCrypto's guide to crypto 401(k)s. The draft moved faster: OIRA received it on January 13 and cleared it by March 24, per federal records.

The Labor Department proposed the rule a week later. After publication, each employer retains the ability to choose its own investment menu.

ICI, which supports the regulation, sees target-date funds — which shift a saver's assets based on age — as the primary route. Under ICI's modeling, a 20% private allocation boosted the median account balance by 12% after 40 years.

Why Critics Want the Rule Rescinded

A standard S&P 500 index fund inside a 401(k) charges between 0.03% and 0.10% each year. One cryptocurrency option cited in BeInCrypto's guide costs roughly 1%.

Senators Edward Markey and Elizabeth Warren, together with Representative Stephen Lynch, said private equity has trailed stock indexes while carrying higher fees.

“DOL should not use Americans’ retirement security to prop up an industry searching for its next cash infusion,” an excerpt from the letter noted.

Retirement savers are also cautious. A survey by the National Institute on Retirement Security found that 77% of Americans consider crypto in retirement accounts to be risky.

The final published text will show whether the six-factor test withstood tens of thousands of public comments. Ultimately, employers — not Washington — will decide if cryptocurrency reaches workers' accounts.