'Disaster in the Making': Trump to Open 401(k)s to Crypto, Private Equity Vultures | Common Dreams
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"Stuffing private equity, crypto, and other 'alternative assets' into 401(k)s is about propping up scams and bailing out an industry that's run out of buyers," said one critic.

Editor’s note: He signed it.

U.S. President Donald Trump is expected to sign an executive order on Thursday that would allow private equity and cryptocurrencies into Americans’ 401(k)s, appeasing corporate interests that lobbied for the change and disregarding warnings about the risks it poses to retirement accounts.

Citing an unnamed senior White House official, CNN reported that “the order calls for the Labor Department and Securities and Exchange Commission to issue guidance to employers about providing access to those alternative investments in their retirement accounts.”

  • PodPerson@lemmy.zipEnglish
    2·
    22 days ago

    Not sure if others’ 401ks work differently than mine, but in mine, I can select the investments that I want to have my money in (not unlimited choice on investments, but quite a few). I agree that it’s pretty stupid to add crypto and private equity into that, but if this is becoming/already law, just pick more stable investments that are already likely part of your investment options in your 401k accounts?

      • PodPerson@lemmy.zipEnglish
        2·
        22 days ago

        Example: pick something like an S&P index fund. Far as I know, there are no crypto companies/currencies that would qualify to be in that.

        • pelespirit@sh.itjust.worksOPMEnglish
          1·
          22 days ago

          Again, what happens to the 401k system when someone steals 15 billion from it? I think that would fuck up the system, no?

          • PodPerson@lemmy.zipEnglish
            3·
            22 days ago

            Not a finance expert, but I don’t think there’s any “401k system.” 401k is just a type of account (a bucket you put your money in) that has special rules, such as:

            • you put money into it tax free and are taxed on it when you take it out (opposite of a Roth - you put money that’s already taxed into it and take it out tax free)
            • employers can contribute to it
            • age restrictions on when you can take it out without being penalized
            • special circumstances on when you can borrow from it

            So it’s an account type with some rules. No money there other than what you put in and where you invest it (that’s where you have the choice in where to invest it, and in that case, there’s no way I’d be investing in crypto). No “system” that’s funded or anything like that, other than how each individual investment is put together.

            • pelespirit@sh.itjust.worksOPMEnglish
              1·
              22 days ago

              It looks like what you’re saying is true, but it does seem like the government is saying that you can now invest in gambling as part of your 401k if you so choose. Lol.

              The Department of Labor provides oversight and monitoring of employer-sponsored retirement plans to protect against risky investment strategies. To do this, Labor collects data from fiduciaries, such as employers sponsoring 401(k) plans, that are required to act in the best interest of investors. Fiduciaries must report information about investments annually. But we found that this information doesn’t capture the full picture.

              For example, Labor does not require fiduciaries to provide detailed data on plans with fewer than 100 participants—meaning some investors are left out of the picture. Even plans with more than 100 participants aggregate some of the investment data they provide Labor—obscuring investments in crypto assets. As a result, Labor can’t measure the prevalence of crypto investments in 401(k) plans or identify plans for investigation to protect investors if needed.

              • PodPerson@lemmy.zipEnglish
                4·
                22 days ago

                Yep - exactly right. I didn’t say the new rule wasn’t colossally stupid, but it gives everyone a greater ability to gamble with their retirement. “Luckily” they don’t work like a pension which you have no control over. Example: if your employer decided to invest in Trump coin and then your pension fund tanked. That would be a different level of horrible, but in this case, the rule is giving us all new ways to be stupid with our money (by choice).

                • Transtronaut@lemmy.blahaj.zoneEnglish
                  2·
                  22 days ago

                  Agreed. My concern, beyond the executive overreach that others have mentioned, is that employers could theoretically remove all other options from your available investment vehicles. That would be even more colossally stupid, and I don’t expect it to happen, but that would be the other way this could bite regular people even if they know better. At least they should give you the option to roll your account over into an independently managed IRA before liquidating everything.

                  • PodPerson@lemmy.zipEnglish
                    2·
                    22 days ago

                    Get what you’re saying, but that sounds like a bit of a stretch. If any employer did want to go all in on stupid like that, people would still be able to do the following:

                    • don’t contribute money to it (I certainly wouldn’t - I’d pay out to another account under my control)
                    • roll over / transfer any funds that are already in there into an account of your own control
                    • look for another job (big red flag for an employer, if you ask me)
              • aow@sh.itjust.worksEnglish
                2·
                22 days ago

                You already could. Crypto specifically had some rules put up against it, but all kinds of nutty financial products were in the mix.

                I remember seeing a lot of people using IRAs (different) for options trading as well, which is 1000% “gambling” the way they were doing it.