DOL Moves to Dismiss Suit Challenging its 401(k) Cryptocurrency Investment Guidance

December 22, 2022
Hall Benefits Law, LLC

The U.S. Department of Labor (DOL) recently asked a District of Columbia federal court judge to dismiss a lawsuit challenging its 401(k) cryptocurrency investment guidance. ForUsAll, a San Francisco-based 401(k) recordkeeping firm, sued the DOL in June 2022, claiming that the agency had changed policy in violation of the Administrative Procedure Act (APA), which requires a public notice and comment period. In response, the DOL argues that its regulatory guidance does not have the force of law.

The case is ForUsAll Inc. v. U.S. Department of Labor et al., case number 1:22-cv-01551, U.S. District Court for the District of Columbia.

On March 10, 2022, the Employee Benefits Security Administration of the DOL issued Compliance Assistance Release No. 2022-01, which related to 401(k) plan investments in cryptocurrencies. In this guidance, the DOL stated that retirement plan sponsors could face investigative programs if they included digital currencies as investment options in their employer-sponsored benefit plans. As a result, plan fiduciaries should use “extreme care” in adding digital options to their plan’s investment menus for participants.

In its lawsuit, ForUsAll alleges that the DOL deliberately circumvented the APA in rushing out the guidance to counter commercial broadcasts during the Super Bowl urging individuals to invest their retirement savings in cryptocurrencies. The company also claims that the DOL’s guidance contradicts President Biden’s Executive Order dated March 9, 2022, which directed federal agencies to evaluate how to move crypto forward through the appropriate regulatory process. Finally, the company argues release of the DOL’s guidance has resulted in a massive drop in the demand to add cryptocurrency to retirement plan offerings through company programs.

In summary, ForUsAll is requesting that the court vacate the DOL’s guidance on cryptocurrency in 401(k) investments, prevent the DOL from implementing the guidance, and prohibit the DOL from investigating companies in any manner other than ERISA authorizes. From the perspective of the DOL, its guidance merely reiterates the duties of plan fiduciaries under ERISA and the agency’s power to investigate and pursue enforcement actions against fiduciaries if necessary to correct misconduct.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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