The Bitwage salary service and the Gemini cryptocurrency exchange have opened the possibility of generating pension savings under the 401 (k) model with a certain share in bitcoin as reported on the Bitwage blog.
The launch of the solution was preceded by 10-month testing of the mechanism with the participation of employees of the company itself.
Bitwage says it has become a pioneer in providing the most popular 401 (k) plans in the US pension system with the option of investing in bitcoin. Before, the similar offers were based on the less popular IRA plan, which implies that the future pensioner is independently involved in the issue of pension contributions.
According to the United States Tax Code, the 401 (k) plan enables company employees to transfer part of their salary to their personal funded pension accounts before taxes. The number of contributions may be increased at the expense of the employer. Typically, such plans form a basket of assets consisting of stocks and bonds.
The offer purports that at the first stage, Bitwage creates a 401 (k) plan for the company with the participation of the administrator of Leading Retirement Solutions and the regulated custodian of the Kingdom Trust, partners of the Bitcoin payroll service. In the future, financing of transfers, including from those plans that were created before, falls on the shoulders of the Gemini exchange. Its function is to automatically convert fiat to cryptocurrency in accordance with the payment period.
Program participants are not limited only to bitcoin and can diversify funds between more than 20 thousand different assets, including real estate and direct investments, to which Leading Retirement Solutions has access.
Bitwage expects its offer to help companies get the most out of the US Paycheck Protection Program (PPP), which provides loans to companies in the wake of the COVID-19 pandemic. The program assumes that the US authorities will free companies from the need to repay the loan if they direct at least 75% of the funds received to pay salaries, including pension contributions.
“We are working with clients who want to use PPP proceeds to make contributions to a 401(k) Plan. It turns out that retirement benefits are included in the expenses that can be counted towards the 75% payroll expenses and they are not included in the $100,000 yearly salary cap per employee. This gives companies an opportunity to provide matching or profit sharing contributions to employee 401k accounts in order to help close the gap to receive full loan forgiveness. Together with the PPP program, the Bitwage Bitcoin 401(k) Plan allows employers to get more out of their PPP loans, while providing their employees new and innovative investment options,” according to Bitwage.
Earlier, the US Treasury approved the Bitcoin-friendly payment company Square as a member of PPP, in which it will provide financial support to small businesses