Numerous U.S. senators called for Fidelity Investments' reconsideration of allowing bitcoin to be included in 401(k), retirement plans. Abigail Johnson, a Fidelity CEO, stated that "the recent implosion FTX, a cryptocurrency trading platform, has made it abundantly obvious the digital asset sector has serious problems."
US Senators Demand Fidelity Stop Offering Bitcoin Retirement Plans
Three U.S. senators wrote Monday to Fidelity Investments CEO Abigail Johnson about the firm's Bitcoin offerings in 401k retirement plans. Senators Elizabeth Warren (D.MA), Richard J. Durbin, and Tina Smith signed the letter.
The lawmakers reiterated their concerns regarding Fidelity's decision to allow bitcoin exposure in retirement plans.
They said: "Since the previous letter, digital asset industry has only become more volatile, turbulent, and chaotic — all characteristics of an asset class, no plan sponsor, or person saving for retirement should wish to go any near."
Recent collapse of FTX, a cryptocurrency trading platform, has highlighted the serious problems in the digital asset sector. There are many charismatic wunderkinds and opportunistic scamsters in the industry. Self-proclaimed investment advisors promote financial products with very little transparency.
On Nov. 11, crypto exchange FTX filed for Chapter 11 bankruptcy. The company is being investigated for allegedly mishandling customer funds.
The lawmakers warned that the "ill-advised and deceptive actions of a few" have an impact on bitcoin and other digital assets' valuations. While the full impact of FTX's damage is still being seen, it is spreading rapidly across the wider digital asset market. Bitcoin is not an exception."
Johnson was also told by the lawmakers that "In light of this risks and constant warning signs, Fidelity Investments is urged to again strongly urge plan sponsors and plan participant to do what is best — seriously reconsider its decision not to allow plan sponsor to offer bitcoin exposure for plan participants."
We are already facing a retirement security crisis by many means. This should not be made worse if retirement savings are exposed to unnecessary risk. Investment strategies that are based on the possibility of catching lightning or driven by fear of missing out are doomed to failure.
The U.S. Department of Labor was disturbed by Fidelity's decision offering bitcoin investments in 401 (k) plans. Ali Khawar, acting assistant Secretary of the Labor Department’s Employee Benefits Security Administration, stated that "We have grave concerns about what Fidelity had done." Janet Yellen, Treasury Secretary, has warned crypto is "very dangerous" and stressed that it is not suitable for most retirement savers.
Johnson received a letter from Senator Warren earlier this year asking for clarifications about the financial company's decision to permit bitcoin exposure in retirement products. A number of U.S. legislators introduced the Retirement Savings Modernization Act in September to allow workers to diversify their assets in 401(k).
What do you think of the U.S. senators asking Fidelity not to allow bitcoin investments in 401 (k) plans. Comment below.
Frequently Asked Questions
How much are gold IRA fees?
A monthly fee of $6 for an Individual Retirement Account is charged. This includes account maintenance and any investment costs.
Diversifying your portfolio may require you to pay additional fees. The type of IRA you choose will determine the fees. Some companies offer free check accounts, but charge monthly fee for IRA accounts.
Many providers also charge annual management fees. These fees range from 0% to 1%. The average rate is.25% each year. These rates are usually waived if you use a broker such as TD Ameritrade.
Is buying gold a good retirement plan?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion bars are the most popular way to invest in gold. But there are many other options for investing in gold. The best thing to do is research all options thoroughly and then make an informed decision based on what you want from your investments.
If you don’t have the funds to invest in safe places, such as a safe deposit box or mining equipment companies, buying shares of these companies might be a better investment. If you require cash flow, gold stocks can work well.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
How to Open a Precious Metal IRA?
It is important to decide if you would like an Individual Retirement Account (IRA). You must complete Form 8606 to open an account. Then you must fill out Form 5204 to determine what type of IRA you are eligible for. You must complete this form within 60 days of opening your account. Once this has been completed, you can begin investing. You may also choose to contribute directly from your paycheck using payroll deduction.
Complete Form 8903 if your Roth IRA option is chosen. Otherwise, the process will look identical to an existing IRA.
You'll need to meet specific requirements to qualify for a precious metals IRA. The IRS says you must be 18 years old and have earned income. Your annual earnings cannot exceed $110,000 ($220,000 if you are married and file jointly) for any tax year. Additionally, you must make regular contributions. These rules will apply regardless of whether your contributions are made through an employer or directly out of your paychecks.
You can invest in precious metals IRAs to buy gold, palladium and platinum. However, you won't be able purchase physical bullion. You won't have the ability to trade stocks or bonds.
Your precious metals IRA can be used to directly invest in precious metals-related companies. This option can be provided by some IRA companies.
An IRA is a great way to invest in precious metals. However, there are two important drawbacks. First, they don't have the same liquidity as stocks or bonds. This makes them harder to sell when needed. They don't yield dividends like bonds and stocks. So, you'll lose money over time rather than gain it.
What precious metal should I invest in?
This question is dependent on the amount of risk you are willing and able to accept as well as the type of return you desire. Although gold has been considered a safe investment, it is not always the most lucrative. You might not want to invest in gold if you're looking for quick returns. Silver is a better investment if you have patience and the time to do it.
If you don’t want to be rich fast, gold might be the right choice. If you are looking for a long-term investment that will provide steady returns, silver may be a better choice.
How is gold taxed within a Roth IRA
A tax assessment for an investment account will be based on the current market value, and not what you paid initially. So if you invest $1,000 in a mutual fund or stock and then sell it later, any gains are subject to taxes.
But if you put the money into a traditional IRA or 401(k), there's no tax when you withdraw the money. You pay taxes only on earnings from dividends and capital gains — which apply only to investments held longer than one year.
These rules vary from one state to another. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. Massachusetts allows you to delay withdrawals until April 1. New York has a maximum age limit of 70 1/2. To avoid penalties, you should plan ahead and take distributions as soon as possible.
Can I hold a gold ETF in a Roth IRA?
Although a 401k plan might not provide this option, you should still consider other options like an Individual Retirement Account (IRA).
A traditional IRA allows for contributions from both employer and employee. A Employee Stock Ownership Plan, or ESOP, is another way to invest publicly traded companies.
An ESOP can provide tax advantages, as employees are allowed to share in company stock and the profits generated by the business. The tax rate on money that is invested in an ESOP is lower than if it was held in the employees' hands.
Also available is an Individual Retirement Annuity. You can make regular payments to your IRA throughout your life, and you will also receive income when you retire. Contributions made to IRAs are not taxable.
What precious metals do you have that you can invest in for your retirement?
Silver and gold are two of the most valuable precious metals. Both are easy to sell and can be bought easily. Consider adding them to the list if you're looking to diversify and expand your portfolio.
Gold: Gold is one of man's oldest forms of currency. It's also very safe and stable. It's a great way to protect wealth in times of uncertainty.
Silver: Silver is a popular investment choice. It's an ideal choice for those who prefer to avoid volatility. Unlike gold, silver tends to go up instead of down.
Platinum: This precious metal is also becoming more popular. It's like silver or gold in that it is durable and resistant to corrosion. It is however more expensive than its counterparts.
Rhodium: Rhodium can be used in catalytic convertors. It is also used as a jewelry material. And, it's relatively cheap compared to other types of precious metals.
Palladium: Palladium is similar to platinum, but it's less rare. It's also much more affordable. It is a preferred choice among investors who are looking to add precious materials to their portfolios.
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement funds
- Gold IRA, Add Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How to Keep Physical Gold in an IRA
The most obvious way to invest in gold is by buying shares from companies producing gold. But, this approach comes with risks. These companies may not survive the next few years. Even if they survive, there's always the risk that they will lose money due fluctuations in gold prices.
Alternative options include buying physical gold. You'll need to open a bank account, buy gold online from a trusted seller, or open an online bullion trading account. The advantages of this option include the ease of access (you don't need to deal with stock exchanges) and the ability to make purchases when prices are low. It is also easier to check how much gold you have stored. The receipt will show exactly what you paid. You'll also know if taxes were not paid. You have less risk of theft when investing in stocks.
However, there are disadvantages. There are some disadvantages, such as the inability to take advantage of investment funds and interest rates from banks. Also, you won't be able to diversify your holdings – you're stuck with whatever you bought. Finally, tax man may want to ask where you put your gold.
BullionVault.com is the best website to learn about gold purchases in an IRA.
By: Kevin Helms
Title: US Senators Urge Fidelity to Stop Offering Bitcoin in 401(k) Plans Citing FTX Collapse, ‘Serious Problems’ in Crypto Industry
Sourced From: news.bitcoin.com/us-senators-urge-fidelity-to-stop-offering-bitcoin-in-401k-plans-citing-ftx-collapse-serious-problems-in-crypto-industry/
Published Date: Wed, 23 Nov 2022 00:30:51 +0000
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