If you’d invested $1,000 in Bitcoin (CRYPTO: BTC) in 2010, you’d probably already be retired — and living a pretty extravagant lifestyle at that. And with some crypto-bulls asserting that the original cryptocurrency’s price could one day exceed $100,000 per token, it’s understandable that many people might be wondering if Bitcoin could help fund their retirements too.
Anything’s possible, but if you’re hoping to use your 401(k) funds to invest in Bitcoin, you could run into a surprising problem.
Why it pays for your employer to be conservative with 401(k) options
In a typical 401(k), the company offers its employees a limited menu of choices in which they can invest, generally mutual funds and ETFs. Some may allow them to invest in company stock as well. But few businesses enable their employees to invest in anything they want. You can thank the Employee Retirement Income Security Act of 1974 (ERISA) for that.
This law does some great things to protect the rank-and-file worker’s retirement savings, including requiring plan trustees (i.e., the employers) to act as fiduciaries. This means they have a legal obligation to take prudent care of their employees’ money. If they don’t do this, they could be held liable for the losses their employees incur.