Crypto in a 401(k) or IRA: 2025-26 Rule Changes
You can hold bitcoin exposure in an IRA today, most simply through a spot bitcoin ETF in an ordinary brokerage IRA. A 401(k) is different: it can offer crypto only if the employer's plan puts it on the menu or allows a brokerage window. Federal rules no longer discourage that, but as of October 28, 2026 the Labor Department's 2026 proposal on choosing plan investments was still not final.
The rules changed four times in four years, and much of what ranks for "bitcoin 401(k)" is news coverage of one of those changes, written the week it happened. This page puts the whole sequence in one place, from the primary documents, and then separates the three practical routes into a retirement account, because the rules that matter for each are different. It is general information about how the rules work, not advice on whether crypto belongs in anyone's retirement savings.
Three Routes Into a Retirement Account
Questions about "crypto in a 401(k) or IRA" sort into three routes. They differ in who decides, what the account can hold and which rules bite.
| Route | Account | What it holds | Who decides | Rules that matter most |
|---|---|---|---|---|
| 1. Spot bitcoin ETF bought in an IRA | Traditional or Roth IRA at a brokerage | Shares of an exchange-traded fund that holds bitcoin | You | IRA contribution limits; the fund's fees; nothing crypto-specific in IRA law |
| 2. Coins held in a self-directed IRA | IRA at a custodian that accepts digital assets | Bitcoin itself, held by or for the custodian | You, within the custodian's offering | Prohibited-transaction rules; custody arrangements; the custodian's fees |
| 3. A crypto option on a 401(k) menu or through a brokerage window | Employer plan covered by ERISA | Whatever the plan offers: a fund with crypto exposure, or ETFs through a window | The plan fiduciary, usually the employer or a committee | ERISA's duty of prudence; the Labor Department guidance in the timeline below |
Route 1 is the simplest of the three, and it has been available since the SEC approved spot bitcoin ETFs on January 10, 2024. Route 2 predates ETFs and trades simplicity for holding the asset itself. Route 3 is the one the executive order and the 2026 proposal are about, and it depends entirely on your employer.
What Changed for 401(k) Plans, 2022 to 2026
Show the dated events
| Date | Event | Document |
|---|---|---|
| 2022-03-10 | DOL tells 401(k) fiduciaries to use "extreme care" before adding a crypto option | Compliance Assistance Release 2022-01 |
| 2024-01-10 | SEC approves listing of spot bitcoin exchange-traded products | SEC chair statement |
| 2025-05-28 | DOL rescinds the 2022 release and returns to a neutral position | Compliance Assistance Release 2025-01 |
| 2025-08-07 | Executive order lists vehicles investing in digital assets among alternative assets; orders DOL review within 180 days | Executive Order 14330 |
| 2026-03-31 | Proposed safe harbor for selecting plan investments: performance, fees, liquidity, valuation, benchmarking, complexity | 91 FR 16088 (2026-06178) |
| 2026-06-01 | Public comment period closes | 91 FR 16088 |
| 2026-10-28 | No final rule published (date of this check) | Federal Register EBSA listing |
March 10, 2022: the "extreme care" release. The Labor Department's Employee Benefits Security Administration issued Compliance Assistance Release 2022-01, which told plan fiduciaries to exercise "extreme care before they consider adding a cryptocurrency option to a 401(k) plan's investment menu for plan participants." The phrase mattered because ERISA fiduciaries can be personally liable for imprudent choices, and a regulator singling out one asset class gave employers a clear reason to stay away.
January 10, 2024: spot ETFs approved. The SEC approved the listing of spot bitcoin exchange-traded products. That did not change any retirement rule, but it gave IRAs and 401(k) brokerage windows a product they could hold through ordinary brokerage channels: a listed security with a ticker, daily pricing and a regulated custodian.
May 28, 2025: the 2022 release rescinded. Compliance Assistance Release 2025-01 withdrew the 2022 guidance in full. The new release says the "extreme care" standard "is not found in" ERISA and "differs from ordinary fiduciary principles", and it restores what it calls the Department's historical approach, "neither endorsing, nor disapproving of" fiduciaries who decide to include cryptocurrency in a plan's menu. Note what this did and did not do. It removed a warning; it did not create permission, because no permission was ever required. A fiduciary choosing crypto still carries the same duty of prudence as for any other option.
August 7, 2025: Executive Order 14330. "Democratizing Access to Alternative Assets for 401(k) Investors" listed six kinds of alternative assets, one of which is "holdings in actively managed investment vehicles that are investing in digital assets." It directed the Secretary of Labor, within 180 days, to reexamine the Department's guidance on alternative assets in participant-directed plans and to clarify the appropriate fiduciary process. Read the wording closely: the order speaks of actively managed vehicles investing in digital assets, which is a description of a fund, not of coins held directly in a participant's account.
March 31, 2026: the proposed rule. The Department published "Fiduciary Duties in Selecting Designated Investment Alternatives" in the Federal Register (91 FR 16088, document 2026-06178), with comments due by June 1, 2026. Its abstract says it implements section 3(c) of the executive order.
October 28, 2026: still a proposal. The Federal Register's list of documents from the Employee Benefits Security Administration, checked on that date, showed no final rule under that title. A proposed rule is not law. Until a final rule is published and takes effect, plan fiduciaries are working under ERISA itself, the 2025 release and existing case law.
What the March 2026 Proposal Actually Says
Much of the coverage summarised the proposal as "the government opens 401(k)s to bitcoin." The text is narrower and, for anyone trying to understand what an employer might do, more useful than the headline.
It is a process safe harbor, not a list of approved assets. The proposal identifies six factors a fiduciary should "objectively, thoroughly, and analytically" consider when picking a designated investment alternative: performance, fees, liquidity, valuation, benchmarking, and the complexity of the option. A fiduciary that follows that process gets a presumption that its judgment was reasonable and is "entitled to significant deference." The Department describes the list of factors as non-exhaustive.
It says there is no per se rule against digital-asset vehicles. In a footnote, the proposal states that paragraph (c) "makes clear, for example, that there is no per se rule respecting the inclusion of actively managed investment vehicles that are investing in digital assets," and it cites the 2025 rescission. That is the sentence the headlines were about. It removes an automatic objection. It does not say crypto is suitable, and it does not lower the six-factor bar.
It is about the menu, not your personal account. The rule governs how a fiduciary selects "designated investment alternatives" for a participant-directed individual account plan. If your plan adds a fund with crypto exposure, this is the process it would have to document. If it does not, the proposal gives you no way to add one yourself.
The six factors are where crypto options will be tested. Each one maps to a concrete question an investment committee would ask about a crypto fund:
| Factor in the proposal | What a committee would examine for a crypto option |
|---|---|
| Performance | Return history net of fees over a meaningful period, and how it compares with the risk taken |
| Fees | Total cost, including fund expense ratio, trading costs and any wrapper fees |
| Liquidity | Whether participants can move in and out daily at a fair price |
| Valuation | How the fund prices its holdings each day, and against which reference rate |
| Benchmarking | What the option should be measured against, and whether that benchmark is published |
| Complexity | Whether participants can understand what they are buying, and what disclosures would be needed |
Factors from the proposed rule, 91 FR 16088, March 31, 2026. The right-hand column is our reading of how each applies, not text from the rule.
A spot ETF scores very differently on these factors from an actively managed fund holding a basket of tokens. That gap, not the headline, is likely to decide which options appear on menus, if any do.
One Real Fund Measured Against the Six Factors
To see how the six factors work on an actual product, here is the largest spot bitcoin ETF, the iShares Bitcoin Trust (IBIT), read against each factor using the figures BlackRock publishes on the fund's own page. This is an illustration of the process the proposal describes, not a recommendation of the fund or a statement that any plan should offer it.
| Factor | What the fund's page shows (checked October 28, 2026) | What a committee would still have to decide |
|---|---|---|
| Performance | NAV total return of -8.69% for 2026 to October 26; NAV range of $33.19 to $65.27 over 52 weeks | Whether a history that starts in January 2024 is long enough to judge, and how to weigh a 52-week low that sat 49% below the 52-week high |
| Fees | Sponsor fee of 0.25% | How that compares with other menu options and with the plan's own administration costs |
| Liquidity | 30-day median bid/ask spread of 0.02%; 30-day average volume of about 35.9 million shares | Whether daily liquidity holds in a stressed market, which is when participants are most likely to sell |
| Valuation | Benchmark: CME CF Bitcoin Reference Rate, New York Variant; the page also publishes a daily premium or discount of the market price to NAV | Whether the benchmark and the 4 p.m. pricing are adequate for a daily-valued plan |
| Benchmarking | The fund tracks the price of bitcoin through that reference rate | What the option is benchmarked against in the plan's investment policy, which has no standard answer for crypto |
| Complexity | One holding: bitcoin, held by a custodian | Whether participants understand that they own fund shares, not coins, and that the price can fall by more than half |
Source for the middle column: iShares Bitcoin Trust ETF product page, figures as of October 26 and 27, 2026, as shown on the page when captured on October 28, 2026.
The table shows why the type of product matters so much more than the headline. A single-asset spot ETF publishes a daily price, a tight spread and a named benchmark, so four of the six factors have documented answers before a committee starts. An actively managed vehicle holding several tokens, the category the executive order actually names, would have to answer the same questions with a manager's valuation policy, a custom benchmark and a fee structure that is usually higher. Whatever a final rule says, those are the documents a fiduciary would need to file away before adding either kind of fund. Our page on why crypto prices differ across exchanges explains the reference-rate and pricing questions in more depth.
IRAs: Spot ETF Versus Coins in a Self-Directed IRA
IRAs are not governed by ERISA's menu rules, so the question there is not whether crypto is allowed but which tax rules apply to what the account holds.
Bitcoin is property, not a collectible. IRS Notice 2014-21 says virtual currency "is treated as property" for federal tax purposes. IRS Publication 590-A lists what counts as a collectible in an IRA: artworks, rugs, antiques, metals, gems, stamps, coins, alcoholic beverages and certain other tangible personal property. An IRA that invests in a collectible is treated as having distributed the amount invested, which can trigger tax and the 10% early-distribution tax. Bitcoin is not on that list and is not tangible, which is why custodians offer it in IRAs. Publication 590-A's own discussion of IRA investments does not mention digital assets (its only use of the term, checked October 28, 2026, is a note that tax payments cannot be made in them), so the conclusion rests on the general rules rather than a ruling that names bitcoin.
Prohibited transactions are the real trap in a self-directed IRA. Publication 590-A gives examples: borrowing money from the IRA, selling property to it, using it as security for a loan, and buying property for personal use with IRA funds. It also warns that the risk of a prohibited transaction is higher when an IRA is invested in assets "that you directly control." The consequence is severe: if you engage in one, the account stops being an IRA and "is treated as distributing all its assets to you at their fair market values on the first day of the year." For coins in a self-directed IRA, the practical rules follow from that: the IRA's coins stay with the IRA's custodian, you do not move them to your own wallet, and you do not transfer coins you already own into the IRA, because contributions to an IRA are made in cash.
What an ETF in an IRA avoids. A spot ETF share is an ordinary listed security, so it sits in any brokerage IRA with no special custodian, no wallet and no extra prohibited-transaction exposure beyond what any stock carries. The cost is the fund's sponsor fee. The iShares Bitcoin Trust, for example, lists a 0.25% sponsor fee on its product page, which on a $7,500 position is $18.75 a year. In exchange you own fund shares, not coins: you cannot withdraw bitcoin from the fund, and the fund's custodian, not you, holds the keys. Our comparison of the US spot bitcoin ETFs sets out the fees, custodians and sponsors side by side, and how spot bitcoin ETFs work explains the creation and redemption mechanism behind the share price.
2026 Limits and the Tax Arithmetic
Retirement accounts change the tax on bitcoin, not the price risk. The 2026 contribution limits, announced by the IRS in news release IR-2025-111 on November 13, 2025, set how much can go in each year:
| 2026 limit | Amount |
|---|---|
| 401(k), 403(b), governmental 457 and Thrift Savings Plan employee contributions | $24,500 |
| Catch-up for participants 50 and over in those plans | $8,000 (so $32,500 in total) |
| IRA contributions | $7,500 |
| IRA catch-up for age 50 and over | $1,100 |
Source: IRS, IR-2025-111, checked October 28, 2026. A higher catch-up limit applies at ages 60 to 63 under SECURE 2.0; the release gives the details.
A worked illustration. The inputs below are stated assumptions to show the mechanics, not a forecast. Take a single filer who puts $7,500 into a spot bitcoin ETF in 2026 and sells it more than a year later for $15,000, a $7,500 gain. Assume the filer's taxable income in the year of sale, including the gain, is $80,000.
The comparison shows the trade-off clearly. The retirement wrapper removes the tax on gains, and in exchange it locks the money behind withdrawal rules: early distributions before age 59½ generally face a 10% additional tax, as Publication 590-B explains, and a traditional IRA's deduction is recovered by taxing withdrawals as ordinary income. A loss inside an IRA also cannot be deducted, which matters more for an asset whose daily close has fallen more than 50% from a peak six times since 2013, counting the decline still open in October 2026, as our bear market history table records. For crypto held outside retirement accounts, our US crypto tax guide covers holding periods, basis and the forms in full.
What to Ask a Plan or IRA Provider
If you are weighing route 2 or route 3, these questions get to the facts that matter, in the order a provider is likely to be able to answer them:
The answers set out the practical differences between the routes. None of them answers whether an allocation is right for you, which depends on your timeline, other savings and how much of a large drawdown you could hold through. A fee-only adviser or the plan's own resources are the place for that conversation. For the price history behind the drawdown point, see bitcoin's price history by year, and the ETFs and institutional products hub collects the related guides.
Where the Simple Answer Breaks
"My 401(k) can't hold crypto" is not always true. Some plans include a self-directed brokerage window, which lets participants buy securities outside the core menu. Whether that window permits spot bitcoin ETFs depends on the plan's terms and the window provider, not on federal law. Check the plan documents before assuming either way.
"The executive order lets me put bitcoin in my 401(k)" is not true. The order directs a federal agency to review guidance. It does not give participants any right to choose investments their plan does not offer, and nothing in the order or the proposal requires an employer to add a crypto option.
A crypto option on a menu is not necessarily bitcoin. The order's category is "actively managed investment vehicles that are investing in digital assets." A fund in that category could hold several tokens, could use derivatives, and could charge far more than a spot ETF. The six factors are where those differences would be weighed.
Moving coins you already own into an IRA is not a contribution. Publication 590-A says contributions "must be in the form of money" and that property cannot be contributed, so coins held outside an IRA cannot simply be deposited. Selling them to fund a contribution is a taxable sale in a regular account.
Using IRA coins personally ends the IRA. Lending them, pledging them as collateral or moving them to a wallet you control are the kinds of transactions Publication 590-A describes as prohibited, and the consequence is a deemed distribution of the whole account on January 1 of that year.
Rollovers are about the account, not the asset. Rolling a 401(k) into an IRA is a standard transaction, and the IRA can then buy a spot ETF. The rollover rules, including the 60-day limit on indirect rollovers, are in Publication 590-A and apply whatever the IRA later buys. If you are moving an old 401(k) into an IRA to hold a spot ETF, the comparison of US spot bitcoin ETFs sets out each fund's fee, custodian and sponsor so the choice inside the new IRA rests on documents rather than ticker familiarity.
Frequently Asked Questions
Can I buy bitcoin in my 401(k)?
Only if your plan offers it. A 401(k) participant chooses from the investments the plan fiduciary puts on the menu, plus anything a brokerage window allows if the plan has one. Federal guidance stopped discouraging crypto options in May 2025, but no rule requires an employer to offer them.
Did the August 2025 executive order put bitcoin in 401(k)s?
No. Executive Order 14330 directed the Labor Department to review its guidance on alternative assets, including actively managed vehicles investing in digital assets. The resulting proposed rule, published March 31, 2026, sets out a six-factor process for choosing plan investments and was still a proposal on October 28, 2026.
Can I hold a spot bitcoin ETF in a Roth IRA?
Yes, at a brokerage whose IRA platform offers the ETF, because the ETF is an ordinary listed security. Gains inside the Roth are not taxed, and qualified withdrawals are tax-free. Contribution limits for 2026 are $7,500, plus $1,100 for those 50 and over.
Is bitcoin a collectible in an IRA?
It is not on the collectibles list in IRS Publication 590-A, which covers items such as artworks, gems, metals and coins (the physical kind). The IRS treats virtual currency as property under Notice 2014-21. Publication 590-A does not discuss digital assets as IRA investments, so this rests on the general rules.
What happens if I move bitcoin out of my self-directed IRA into my own wallet?
Taking IRA assets for personal use is the kind of prohibited transaction Publication 590-A describes. If an IRA owner engages in one, the account stops being an IRA and is treated as distributing all its assets at fair market value on the first day of that year, which can create a large tax bill.
Are crypto losses in an IRA deductible?
No. Gains and losses inside an IRA are not reported year by year, so a fall in value inside the account cannot offset gains elsewhere. Losses can be harvested only in a taxable account, under the rules our tax guides describe.
CryptosEyes publishes general educational research. This page is not tax, legal or investment advice and does not recommend any investment or account. Contribution limits and tax thresholds are for 2026 as published by the IRS; check current figures and your own plan documents before acting.
Source & Review Basis
This article is reviewed against the source types below. Source links are provided to help readers verify primary documents, market context, and methodology independently.
May 28, 2025 rescission of Compliance Assistance Release 2022-01 (March 10, 2022) and its "extreme care" standard. Checked October 28, 2026.
August 7, 2025. Lists actively managed investment vehicles investing in digital assets among alternative assets; 180-day review. Checked October 28, 2026.
91 FR 16088, March 31, 2026; comments closed June 1, 2026; six factors and no per se rule on digital-asset vehicles. No final rule in the EBSA document list as of October 28, 2026.
January 10, 2024 approval. Checked October 28, 2026.
Collectibles list, prohibited transactions and their consequence. Checked October 28, 2026.
Virtual currency is treated as property for federal tax purposes. Checked October 28, 2026.