New Labor Department Rule Shields 401(k) Managers From Crypto Losses

Retirees now face a higher legal threshold to hold employer-sponsored retirement plan managers accountable for losses incurred from volatile assets. The Department of Labor has proposed a rule that provides a safe harbor from litigation for 401(k) agents and managers who follow a specific 164-page guide to vetting assets. Under the rule, if a fiduciary follows the described process, their judgment is presumed reasonable and entitled to significant deference. This process applies to a non-exhaustive list of investments including cryptocurrency, private credit, and real estate. By reducing the threat of litigation, the rule removes the incentive for fiduciaries to avoid investments that may not be in the employee's best interest. Retirement savings are now more exposed to volatile assets including private credit and cryptocurrency.