Would you be happy if cryptocurrency became an investment option in your company's 401(k) plan?

One possible roadblock to keep the 401(k) option from becoming reality was removed after the Department of Labor's Employee Benefits Security Administration (EBSA) issued Compliance Assistance Release No. 2025-01 in late May (tinyurl.com/3wh7zarx).

The new release rescinded a 2022 communication (Compliance Assistance Release No. 2022-01) that cautioned retirement plan fiduciaries "to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan's investment menu for plan participants" (tinyurl.com/3atpk3jc).

The 2025 release states that the standard of "extreme care" is "not found in the Employee Retirement Income Security Act (ERISA) and differs from ordinary fiduciary principles thereunder."

What is the ERISA standard? As noted in a footnote in the 2025 release, the requirement is that "a fiduciary curate a plan's investment menu 'with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims' for the 'exclusive purpose' of maximizing risk-adjusted financial returns to the plan's participants and beneficiaries."

By rescinding the 2022 guidance, the Labor Department "reaffirms its neutral stance, neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan's investment menu is appropriate" (tinyurl.com/edwvc5f7). U.S. Secretary of Labor Lori Chavez-DeRemer added in the press release that the department was "making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats."

This shift comes at a time when prices of cryptocurrencies have climbed. As an example, on June 3, 2023, bitcoin closed at $27,075.13. Two years later to the day, bitcoin closed at $105,432.47 (tinyurl.com/3w5j6rpv) -- an increase of 289%.

Notwithstanding, should cryptocurrency be viewed the same as an S&P 500 Index fund? The answer is a firm "no."

Why? "Crypto assets have experienced higher levels of volatility relative to more traditional investment assets, meaning that price swings -- and any investment value -- may go up and down dramatically and unpredictably, and the risk of losing all of your investment is significant," says FINRA's "Crypto Assets." Read FINRA's articles "Bitcoin Basics" (tinyurl.com/4ydfc4pp) and "Crypto Assets" (tinyurl.com/rd2jn67k). FINRA (the Financial Industry Regulation Authority) regulates member brokerage firms doing business in the U.S.

A U.S. Government Accountability Office report released to the public in December of 2024 found that available industry data and stakeholder interviews suggested that "crypto assets are a small part of the 401(k) market." It also cautioned that "GAO's analysis of investment returns indicates crypto assets have uniquely high volatility -- a measure of their riskiness to participants -- and their returns can come with considerable risks" (tinyurl.com/5n9yd7nw).

The 2022 EBSA guidance on cryptocurrency said that "[c]ryptocurrencies are often promoted as innovative investments that offer investors unique potential for outsized profits. These investments can all too easily attract investments from inexpert plan participants with great expectations of high returns and little appreciation of the risks the investments pose to their retirement investments."

When I wrote about digital currencies possibly being part of 401(k) accounts in August 2021, I recommended thinking about priorities:

"Priority No. 1: Save for your retirement.

"Priority No. 2: Invest for growth over the long term.

"... Priority No. 100: Speculate only after meeting priorities 1-99. Bitcoin falls into the speculation category, as do other cryptocurrencies."

Has that view changed? Before guessing my answer, imagine someone putting 100% of his 401(k) into bitcoin.

Speaking of 401(k)s, National 401(k) Champion Day launches for the first time on June 15 (tinyurl.com/58e78zjy). It celebrates the award I founded and sponsor in my pro bono role as an advocate of financial literacy education.

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If you don't participate in a 401(k) plan at work because one isn't offered, why should you read this column? I'll admit I have a prejudiced view. I believe you can help others in your circle of friends and family who may not realize why they should participate.

Let's go through a few basic points together.

For some motivation, consider this: 401(k)s help create millionaires.

Fidelity Investments reported 537,000 401(k) participants with more than $1 million 401(k) accounts at the end of 2024 (Fidelity's 2024 fourth-quarter retirement analysis -- tinyurl.com/mcdfx33k). Overall, there were 24.5 million 401(k) participants in the study.

More motivation: Not saving enough is a common concern.

A 2024 Global Retirement Survey of 724 retirement plan participants by MFS Investment Management, a U.S.-based global investment manager, found that 59% were very or extremely concerned about saving enough money for retirement (tinyurl.com/yc4jb8x6).

And the challenges are real. When asked what, if any, competing financial priorities prevent them from adequately saving for retirement, 31% of the respondents said saving for an emergency, 28% indicated they live paycheck to paycheck and cannot save for retirement, and 19% said they are setting money aside for child education.

401(k)s offer the answer.

There is no better way to save for retirement, especially if the plan offers an employer match. A match compresses the time it takes to double an investment. If it takes roughly 10 years to double an investment with an annual return of 7.2% (rule of 72), what if you could double your investment overnight? Wouldn't that appeal to you?

That's what a 401(k) with a dollar-for-dollar match gives you -- double your investment without the need to wait 10 years. Most 401(k)s do have matches. The dollar amount varies.

Good enough. But what if someone "can't afford" to participate?

Even though a payroll contribution is usually necessary to participate in a 401(k), that does not mean that the dollar amount of your paycheck will necessarily drop.

In your circle of friends, do you know anyone who receives tax refunds? If they don't participate in the 401(k) because they "can't afford to," tell them get some advice on tax management. IRS Form W-4 is the key.

If someone is getting a refund, they are lending money to the federal government. Why do that if you can use that money to pay for your 401(k) contribution? (If you would like more information on how to do that, I'll send you some columns I've written on the subject. Write to readers@juliejason.com.)

Another motivating factor: People need a vehicle to create retirement security for themselves.

When asked in the MFS survey, 48% somewhat or strongly agreed that they could financially support themselves during a 30-year retirement. Also surveyed by MFS were 310 retirees, most of whom (76%) said they somewhat or strongly agreed they could financially support themselves over a 30-year retirement period.

To use a 401(k) effectively, you will want to do some homework to make sure your financial decisions are sound. While 42% in the survey cited a financial adviser or planner as a resource, 39% indicated they used a plan provider, and 35% cited their employer.

Interestingly, 30% indicated a family member as a resource, and 18% named a friend, peer or co-worker. The latter group provides the basis for the 401(k) Champion Award, which honors those who not only use their 401(k)s wisely to save for retirement but also encourage those around them to do the same. Full disclosure: In my role as an advocate of financial literacy education, I founded and sponsor the award (401kchampion.com), as well as National 401(k) Champion Day, which will be celebrated for the first time on June 15 (tinyurl.com/58e78zjy).

Company retirement plans such as 401(k)s need your attention, even if you aren't working for a company that offers them. Why? It's simple. People you know, your circle of friends and family, are likely participants or eligible to be participants. And you want them to participate -- for their own financial futures.

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Do you have a favorite cause or a favorite charity you support, either through volunteering or donating funds? Or, perhaps you have a vision for more than you see being done, a vision for more than the work that you see charities taking on?

My personal cause is financial literacy education, which I support through donations to educational institutions and through my writing and lecturing. But, because of my business running an investment counsel practice for high-net-worth clients, I notice a gap that I don't see being addressed, and I'm itching to solve that problem.

My vision is to transform 401(k) education for those who believe they cannot afford to contribute. I want to see everyone, no matter their financial circumstances, retire securely. And, I'm exploring the idea of setting up a nonprofit to do just that.

I'm guessing that a few of you may have the same urge to fill a perceived gap in your own way. And if that's you, I know there are hundreds of thousands more of you. According to the National Center for Charitable Statistics (NCCS), there are more than 1.85 million nonprofits, based on 2024 data (tinyurl.com/4mwu83yz).

However, anyone who is considering setting up a nonprofit has to be ready to approach the exercise as if he were setting up a business, with a well-thought-out "business plan," starting with a clear mission and an answer to the "why" questions. Why do we need a new nonprofit? Why is the mission desirable? Why will the vision encourage people to join the effort? Why should this cause succeed? Why do other nonprofits with similar missions fail?

Add to that list questions suggested by Greg McRay, founder and CEO of The Foundation Group: "Who is the target or beneficiary group that my organization will impact?" and "How will I accomplish my mission?" The Foundation Group provides startup, compliance and consulting services to nonprofit 501(c)(3) organizations. "Why?" is not enough. In "11 Must-Dos for Starting a Nonprofit" (tinyurl.com/yc4b8mad), McRay writes that you also need to address who, what, where, when and how.

Once you've identified the mission, the work begins. Among the 12 steps Sharon Cody, JD, lists in the Kindful article "How to Start a Nonprofit: Complete 12-Step Guide for Success" (tinyurl.com/5xc73ssn) are:

-- Research federal and state legal requirements for nonprofit registration

-- Incorporate your nonprofit

-- Create your bylaws (a necessary step for a 501(c)(3) application to the IRS)

-- Develop a conflict-of-interest policy

-- Apply for federal tax-exempt status and state tax exemptions

Cody adds that you will want to seek out local expertise (an attorney, accountant or someone else familiar with how charitable organizations work) to make sure you comply with all the laws related to a nonprofit organization.

One resource provided by the National Council of Nonprofits is a list of state nonprofit associations (tinyurl.com/yc4rywdw). For example, in my home state of Connecticut, there is the CT Community Nonprofit Alliance (tinyurl.com/yru6nx2s). Another resource is Legal Zoom's "How to Start a Nonprofit" (tinyurl.com/32t5d3zf).

Once you decide to go ahead, be aware that it will take some time before you are recognized as a nonprofit. The IRS provides details on getting federal tax-exempt status, including processing times for the various forms of nonprofits, on its website (tinyurl.com/bevwyfpu).

Beyond the tax-exempt approval, there are other issues, as highlighted by the National Council of Nonprofits article "How to Start a Nonprofit" (tinyurl.com/y8yena7m): "Will you need office space or a facility? What will the program costs be, including labor (which may include payroll taxes and benefits)? In some cases, special licenses, permits, or certifications will be necessary to provide certain services."

It's obvious that creating a nonprofit is a big decision, not to be thought of lightly. There are other avenues to pursuing your vision. For one, as suggested by the National Council of Nonprofits: "If there is an organization in your community that you admire, consider approaching that organization to explore establishing a new or expanded program to reach the people you are hoping to serve."

In the end, what's important is delivering on the promised eleemosynary outcome that drives your vision.

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