Today, the Department of Labor’s Employee Benefits Security Administration issued Compliance Assistance Release No. 2025-01, effectively rescinding Compliance Assistance Release No. 2022-01 (the “2022 Release”), issued under the Biden Administration, concerning 401(k) plan investments in cryptocurrencies. The 2022 Release cautioned plan sponsors against offering cryptocurrencies as an investment option to 401(k) plan participants.
Specifically, the 2022 Release advised plan sponsors to use “extreme care” before offering cryptocurrencies as part of a 401(k) plan’s investment options. Today’s Release notes that, while the fiduciary duty established under the Employee Retirement Income Security Act of 1974 (ERISA) requires that plan fiduciaries act solely in the interest of plan participants, “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,” it does not impose the standard of “extreme care” that the 2022 Release sought to impose. Today’s Release further states that the recission of the 2022 release should be taken as an indication that the DOL is taking a neutral approach (similar to that historically taken by the DOL) to particular investment types and strategies that might be utilized by plan sponsors, and that it does not endorse or oppose the decision of any plan sponsor choosing to offer cryptocurrencies as an investment option in its 401(k) plan.
While the 2022 Release did not have the force of law, it clearly had a chilling effect on the addition of cryptocurrencies and other digital assets to a 401(k) plan’s investment platform or availability under a brokerage window. Plan fiduciaries who had been reluctant to consider adding cryptocurrency as an investment option in light of the DOL’s 2022 guidance may now wish to consider whether the addition of a cryptocurrency investment option in some form would be consistent with their fiduciary obligations under the plan. As always, we advise plan sponsors to carefully weigh the risks and benefits of any investment option offered to plan participants.
Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.
Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.
