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Should You Invest In Crypto In Your 401k?

By Miranda MarquitPublished Jun 6, 2022 · Updated Nov 2, 2026 · 7 min read
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You can hold crypto in a 401(k) only if your employer's plan offers it, through a crypto fund on the plan's menu, a bitcoin option like the one Fidelity announced in 2022, or a self-directed brokerage window that allows crypto ETFs. Whether it fits depends on your plan's choices and fees, how much volatility you can take in retirement savings, and whether you'd rather hold crypto in an IRA or a taxable account.

Quick Take

  • The Labor Department withdrew its 2022 warning against crypto in 401(k)s in May 2025, and it proposed a rule in March 2026 to make it easier for employers to add alternative investments.
  • Most 401(k) plans still don't offer crypto directly. A brokerage window holding a spot bitcoin or ether ETF is the most common route.
  • Crypto in a traditional 401(k) loses the long-term capital gains rate, because withdrawals are taxed as ordinary income. A Roth 401(k) avoids that.

Where The Rules Stand

Date What Happened
March 2022 The Labor Department told employers to "exercise extreme care" before offering crypto in 401(k)s
April 2022 Fidelity announced a Digital Assets Account that lets workplace plans offer bitcoin
January 2024 The SEC approved spot bitcoin ETFs, which brokerage windows can hold
July 2024 Spot ether ETFs began trading
May 28, 2025 The Labor Department rescinded its 2022 warning, returning to a neutral stance
Aug. 7, 2025 A presidential executive order directed the Labor Department to revisit guidance on alternative assets, including crypto, in 401(k)s
March 31, 2026 The Labor Department proposed a safe harbor rule for how plan fiduciaries pick investments, including alternatives

The March 2026 proposal doesn't require any plan to offer crypto. It sets out a process, weighing factors such as performance, fees, liquidity, valuation, benchmarks and complexity, that would give employers a presumption that their investment choices were prudent. Comments closed June 1, 2026, and the Labor Department hadn't published a final rule as of Nov. 2, 2026, according to the Federal Register.

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How You Can Hold Crypto In A 401(k)

Route What You Own Who Offers It Trade-Off
Crypto Fund On The Plan Menu An account or fund holding bitcoin, like the Digital Assets Account Fidelity announced in 2022 Only plans whose employer adds it Your plan may limit how much you put in
Self-Directed Brokerage Window Spot bitcoin or ether ETFs, plus crypto company stocks Plans with a brokerage window, if crypto ETFs are allowed Extra window fees, and you pick and monitor the funds
Target-Date Or Multi-Asset Fund With Crypto A small crypto slice inside a broader fund Few, if any, as of Nov. 1, 2026 You don't control the amount
Solo 401(k) For The Self-Employed Whatever your provider allows, sometimes coins directly Providers such as My Solo 401k (its plans can hold crypto at an eligible outside custodian, with extra setup) and Rocket Dollar Only for business owners with no full-time employees

Fidelity announced its Digital Assets Account in April 2022 so employers could add a bitcoin option to their plans. Whether your plan offers it, and any limit on how much you can put in, is up to your employer. The largest spot bitcoin ETFs charge about 0.15% to 0.25% a year. Ask your plan administrator or check your plan's investment menu to see which routes yours allows.

Why Some Investors Want Crypto In A 401(k)

  • Tax deferral: gains inside a 401(k) aren't taxed each year. You can rebalance between crypto and other funds without creating a taxable sale.
  • Paycheck investing: contributions come out of each paycheck automatically, which spreads purchases over time.
  • Contribution room: for 2026, you can defer up to $24,500, plus $8,000 if you're 50 or older, or $11,250 if you're 60 to 63, according to the IRS.
  • Roth option: in a Roth 401(k), qualified withdrawals are tax-free, so any crypto growth is never taxed.

The Trade-Offs Of Crypto In A 401(k)

Volatility In Money Meant For Retirement

Bitcoin fell about 77% from its November 2021 high to its November 2022 low. A drop like that close to retirement, when you have little time to recover, is harder to absorb than the same drop at 30. Check live prices on our Bitcoin price page, and note that crypto isn't backed by cash flows the way stocks and bonds are.

You Lose The Long-Term Capital Gains Rate In A Traditional 401(k)

Withdrawals from a traditional 401(k) are taxed as ordinary income, no matter how long you held the crypto. In a taxable account, crypto held more than a year is taxed at 0%, 15% or 20%.

Scenario Taxable Account Traditional 401(k) Roth 401(k)
$10,000 Grows To $40,000 $30,000 long-term gain $40,000 withdrawn as income $40,000 withdrawn tax-free
Federal Tax In The 22% Bracket $4,500 at 15% $8,800 at 22% $0 if qualified
Up-Front Tax Break None $10,000 deducted when you contributed None

The traditional 401(k) gave you a $10,000 deduction up front, worth $2,200 in the 22% bracket, but the crypto gain was taxed at a higher rate on the way out. Rates follow our crypto tax rates article.

Losses Can't Be Deducted

A crypto loss inside a 401(k) can't offset gains or reduce your taxes. In a taxable account, you could use it to offset gains and up to $3,000 of income.

Fees And Limited Choices

Brokerage windows often carry an annual fee, and plan crypto funds may cost more than a low-cost index fund. Most plans offer at most bitcoin and ether exposure, not other coins.

How To Decide Whether Crypto Belongs In Your 401(k)

Questions to answer before you add crypto to your retirement plan:

  • Does your plan offer it, and at what cost? Check the fund's expense ratio and any brokerage window fee.
  • What's your time horizon? Ten years from retirement is different from 35.
  • What if it went to zero? Could your retirement plan survive the loss, financially and emotionally?
  • Is a 401(k) the best place for it? An IRA, a Roth account or a taxable account may give you more choice or better tax treatment.
  • How much of your total portfolio would it be? In October 2025, Morgan Stanley's Global Investment Committee suggested 0% to 4% depending on the portfolio's goal. Our article on crypto portfolio allocation covers how investors size positions.

Other Tax-Advantaged Ways To Hold Crypto

Crypto In Retirement Accounts Outside The US

  • United Kingdom: the FCA allowed retail investors to buy crypto exchange-traded notes (cETNs) from Oct. 8, 2025, and they can be held in registered pension schemes such as SIPPs. Since April 6, 2026, new cETN purchases go in an Innovative Finance ISA, not a stocks and shares ISA, according to HMRC.
  • Canada: crypto ETFs listed in Canada can be held in an RRSP or TFSA.
  • Australia: self-managed super funds can hold crypto directly if the fund's investment strategy allows it, and crypto ETFs trade on Australian exchanges.

What To Watch Out For

  • Pending rules: the Labor Department's safe harbor rule is a proposal. Plans may wait for the final rule before adding crypto.
  • Concentration: a plan's limit on a single volatile asset is a ceiling, not a target.
  • Fees: compare a plan's crypto option with a spot ETF in an IRA.
  • Early withdrawals: taking money out before 59½ generally adds a 10% penalty on top of income tax.
  • Fund structure: an ETF or fund tracks crypto prices but doesn't give you coins you can move to a wallet.

FAQ

Can I Buy Bitcoin In My 401(k)?

Only if your plan offers it. Some plans offer a bitcoin fund on the menu, and plans with a self-directed brokerage window may allow spot bitcoin ETFs. Ask your plan administrator.

Yes. Federal law has never banned it. The Labor Department's 2022 warning discouraged it, but that guidance was rescinded in May 2025, and a March 2026 proposal aims to make employers more comfortable adding alternative investments.

How Much Of My 401(k) Can Go Into Crypto?

That's set by your plan, which can limit how much goes into a crypto option. Institutional guides suggest small amounts, such as Morgan Stanley's 0% to 4% range.

Is It Better To Hold Crypto In A 401(k) Or An IRA?

An IRA usually gives you more choice, including direct coin ownership at a crypto IRA provider. A 401(k) may offer an employer match and higher contribution limits. You can use both and hold crypto in whichever account offers it at the lowest cost.

Are Crypto Gains In A 401(k) Taxed?

Not while they stay in the account. Traditional 401(k) withdrawals are taxed as ordinary income, and qualified Roth 401(k) withdrawals are tax-free.

About the author

Miranda Marquit, Contributor

Miranda Marquit has covered cryptocurrency for more than 10 years and personal finance and investing for 15. She holds a B.S. in communications, an M.A. in journalism and an M.B.A.

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