United States-based asset manager Digital Asset Investment Management (DAiM) has launched bitcoin retirement plans.
It is the first employer-sponsored retirement plans that support investments in Bitcoin in the U.S
The company in an announcement on Thursday, November 19, 2020, hinted that DAiM will serve as the advisor and fiduciary in helping companies “create a 401(k) plan that offers several recommended model portfolios of varying risk to traditional assets and allocation of up to 10% to Bitcoin.”
How it works
The firm explained that the BTC will be held in cold storage by Gemini Trust, allowing DAiM to transfer Bitcoin to former employees who have left participating companies.
The crypto-friendly plans are compliant with the Employee Retirement Income Security Act of 1974, says DAiM.
A statement by the company said the bitcoin retirement plan will be available for employers effective 2021.
The announcement came at a time, several tech giants in the U.S are embracing cryptocurrency, PayPal is one of them.
Since the Internal Revenue Service began taxing Bitcoin in 2018, U.S. citizens have been able to include crypto assets in their individual retirement accounts, 401K rollovers, and brokerage accounts.
DAiM chief operating officer Adam Pokornicky was quoted by Cointelegraph as saying, “It’s been impossible to offer Bitcoin inside actually company-based plans until now.”
Pokornicky said the difference is, users can take an old 401K plan and convert it to an IRA when an employee leaves a job or employer to invest in Bitcoin, “but it’s never been possible to invest in Bitcoin while working at a company without taking a penalty or quitting your job until now.“
He pointed out that no investment advisors are willing to offer licensed and regulated access to Bitcoin directly in brokerage and retirement accounts prompted the company to take the lead.
“There’s an enormous amount of work and compliance that needs to be done to develop operational frameworks, infrastructure, and strategic partnerships that need to be married together to be compliant in every state you operate,” Pokornicky said.