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The Newest Nontraditional Asset Option for 401(k)s: Bitcoin

November 06, 2020

Don’t limit your current retirement plan investment options! Instead, consider investing retirement monies into other potential growth or diversification strategies that go beyond the traditional sense of investing (e.g. mutual funds, ETFs, etc.).

Digital Assets such as Bitcoin and other cryptocurrencies are becoming a major element in the financial service industry. For those who are unfamiliar with the concept, cryptocurrencies allow individuals to purchase goods and services, or trade them for profit. However, “unlike other currencies, cryptocurrencies are digital and use cryptography to provide secure online transactions.” Over the years, cryptocurrencies have captured the eyes of the public, growing in both popularity and demand. For instance, since the first cryptocurrency – Bitcoin – was developed in 2009, the price has surged from less than a dollar to over $15000 (as of this writing).

“Wealth managers who didn't buy bitcoin for their clients will be like those wealth managers who never bought Amazon: out of business.” -Andy Edstrom, CFA/CFP at WESCAP Group

There is no denying that the world is becoming increasingly more digitalized overtime. That said, business owners should seriously consider implementing nontraditional investments such as Bitcoin into their employee benefits options. Earlier this year, the “world’s first Bitcoin 401(k) plan” was introduced through a four-way strategic collaboration between Bitwage, Leading Retirement  Solutions, Kingdom Trust, and Gemini. This cutting edge retirement plan solution means companies can now legally offer employees the ability to invest traditional/pre-tax and roth/post-tax 401k dollars into Bitcoin. As we continue to navigate through the digital era, more people are realizing the value of bitcoin as a long-term investment. In a recent article published by Plansponsor.com, Ryan Radloff, CEO of Kingdom Trust stated that “people interacting with bitcoin in retirement accounts are expressing the view that, just like Apple and Tesla stock, Bitcoin will be more valuable in 10 years.”

Start innovating ahead of the curve by implementing alternative investment strategies such as private stock, qualified employer securities, joint ventures, real estate, hard money lending, agriculture/maritime rights, bitcoin, and other types of loans and liens. When planning for a successful retirement, it’s important to keep an open mind and understand that certain nontraditional options may be the missing puzzle piece that allows you to reach your goals. There’s no denying that for most individuals, many of these nontraditional strategies can feel complex and difficult to understand. Considering the significance and risk involved in retirement planning, don’t rush into things! When it comes to nontraditional investments consult with a Third-Party Administrator, like LRS for expert insights and advice from specialists directly involved in alternative investments within the retirement plan space (e.g. 401(k), 403(b), Defined Benefit, ROBS, ESOPS, etc.).

If you’re a business owner or entrepreneur operating in an industry that has traditionally been underserved by large financial institutions, now’s the time for you to consider nontraditional investment strategies that allow you to grow your company without having to acquire standard bank loans. The Rollover as Business Startups (ROBS) transaction (also known as the Qualified Employee Securities) is designed to allow business owners and entrepreneurs to use pre-tax retirement assets to fund a new or existing business without paying taxes on the retirement assets, normally assessed under IRC § 72(t).

You can learn more on how the ROBS strategy can benefit your business ventures in these blog articles.

To learn more on how you can start implementing nontraditional investment strategies into your retirement plan, check out the Nontraditional Plans under the Solutions tab on the LRS website. You can also connect with one of our retirement industry experts by visiting our contact page!

For more tips and information regarding retirement plans, contact us.

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About The Author

Keyvan Khaki is a student at the University of Washington School of Business. He is a Brand Content and Marketing Intern at Leading Retirement Solutions. For more information on Keyvan and the work he is pursuing, be sure to check out his LinkedIn.

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