Crypto in 401(k) Plans: What the DOL Proposal Means for Your Crypto Tax

A proposed rule that would open 401(k) retirement plans to alternative assets, including crypto, has reached the White House for review. It isn't law yet, and it doesn't change how crypto is taxed in the US today. But it does raise a question every saver should start thinking about: if crypto ends up inside a retirement account, how does that sit next to the crypto you already hold and report on your tax return?

This piece covers what the Department of Labor (DOL) actually filed, what we don't know yet, and how a possible 401(k) crypto option would connect to the way crypto tax works for individual filers. We keep to what has been reported and flag clearly where the details are still missing.

What the DOL Sent to the White House

On Thursday, the Department of Labor filed a proposal with the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget. OIRA reviews federal regulations before they are published. The filing is meant to carry out an executive order from President Trump directing the DOL to pave the way for alternative assets in 401(k) plans.

That's a procedural milestone, not a finish line. A rule under review can still be changed, delayed, or reworked before it appears for public comment or takes effect. Nothing in the reported filing tells savers that their plan will offer crypto on any given date.

The fiduciary question at the centre of it

The DOL's filing says the clarification must aim to identify the criteria fiduciaries should use to prudently balance potentially higher expenses against the goal of seeking greater long-term net returns and broader diversification. In plain terms, the people who run a 401(k) plan have a legal duty to act prudently for participants. The proposal is about giving them a framework for deciding whether assets like digital assets or private equity can be added without breaching that duty.

This is the key point for ordinary savers. The rule, as described, doesn't tell anyone to buy crypto. It sets out how plan managers should think about whether to offer it. Whether your employer's plan ever adds a crypto option remains their decision.

What's still unknown

The DOL said in its filing that it was still considering the costs. That means the cost and benefit analysis isn't finished. The reported material doesn't specify which digital assets could qualify, what share of a portfolio could be allocated to them, or how plans would handle custody and valuation. Anything beyond the filing itself would be speculation, so treat early commentary on those points with caution.

Where This Fits in the Bigger Picture

The filing comes months after the DOL unveiled an initial rule outlining the steps 401(k) plan managers should take when considering alternative assets such as digital assets and private equity. So this is a second stage in a longer process rather than a sudden change.

The background matters too. Trump's executive order directed the DOL to act after the department, under the previous administration, had raised concerns about crypto in retirement plans and steered plan managers away from considering it. The new direction reverses that posture.

Political pushback

The proposal has drawn scrutiny on Capitol Hill. Earlier this year, Senators Bernie Sanders and Elizabeth Warren pushed the DOL to scrap the rule, arguing it would expose investors to volatile assets, crypto included. That tension is worth watching: a rule can clear White House review and still face political and legal friction. If you're following this for planning purposes, expect the timeline to move in fits and starts. For more on how agency action is shaping US crypto rules while Congress is slow, see our look at how agencies are driving US crypto rules.

How Is Crypto Taxed in the US Today?

This is the part that doesn't change because of the DOL filing. Under current US practice, the IRS treats crypto as property for tax purposes. That framing drives most of what individual filers deal with, and it applies to crypto you hold outside a retirement plan. We cover the baseline in more depth in our explainer on how crypto is taxed in the US today.

Crypto you hold in a regular account

If you buy, sell, swap, or spend crypto from an exchange or wallet outside a retirement plan, those disposals can create capital gains or losses that belong on your return. You need a record of what you paid, when you acquired it, what you received, and when you disposed of it. This is where a crypto tax calculator earns its keep: it matches your acquisitions and disposals across wallets and exchanges and produces a crypto tax report you can use to file. If you're trying to calculate crypto taxes for the first time, the quality of your transaction history decides how painful the exercise is.

Crypto that might sit inside a 401(k)

A 401(k) is a tax-advantaged account, and it follows different rules from a taxable brokerage or exchange account. The general feature of these plans is that trading inside the account is not reported the same way as trading in a taxable account, with tax usually arising later when money comes out, depending on the plan type. The DOL filing as reported doesn't address tax treatment at all, since it's a labour and fiduciary rule, not a tax one. So if a plan adds crypto, you should expect your existing tax rules for 401(k) contributions and withdrawals to apply, and confirm the details with your plan administrator and a tax professional rather than assume.

The practical takeaway is that you'd have two buckets: crypto inside a plan, governed by retirement account rules, and crypto outside it, governed by property and capital gains rules. Mixing them up is the risk.

What This Means for Individual Filers

Most people reading this will ask the same thing: do I need to do anything now? For the most part, no. But a few habits make sense whatever happens to the rule.

Keep your taxable crypto records clean

The proposal doesn't reduce your obligations on the crypto you already own. If you've been trading, swapping, or earning crypto outside a retirement plan, the reporting duty is unchanged. Gather your exchange histories and wallet addresses, and reconcile them. If you've missed something in past years, our piece on fixing past crypto tax mistakes explains the direction of a proposed disclosure route.

Don't move money on a headline

A rule at OIRA is not an available product. Your plan may not offer crypto for a long time, or at all. Rolling or reallocating retirement money in anticipation of a rule that hasn't been finalised, and whose cost analysis the DOL itself says is incomplete, would be getting ahead of the facts.

Ask your plan administrator

If you're curious, the most useful step is a simple question to your employer's plan administrator: is the plan considering alternative assets, and what would the fees and limits look like? The DOL framing explicitly puts higher expenses on the table, so fees are the right thing to ask about.

What Accountants and Advisers Will Watch

For professionals who help clients with filings, the filing raises practical questions even before a rule is final. Client questions will come in early, and the honest answer is that the rule is unfinished.

Scope questions to track

Watch for how the final text defines the assets in scope, what the fiduciary criteria look like in practice, and whether the DOL's cost analysis changes the shape of the proposal once completed. Each of these affects how a plan could responsibly offer crypto and how advisers should frame it to clients.

Why record separation matters

If clients hold crypto both inside and outside employer plans, advisers will need to keep the taxable activity cleanly separate from the retirement-plan holdings. Your crypto tax software should be fed only the taxable accounts. Retirement-plan positions follow a different reporting path, so blending them into a crypto tax report would create confusion rather than accuracy.

The DeFi side of the market is a reminder that product innovation tends to outrun tax guidance. Our breakdown of how each DeFi building block affects your return shows how much tracking depends on knowing exactly which account an asset sits in.

What to Do Now

Here is a short, realistic list based only on what we know today.

A simple checklist

• Don't change retirement allocations because of this filing alone. It's a proposal under review, not a final rule.
• Keep complete records of your taxable crypto activity, since your reporting duty on that is unchanged.
• Know how to file crypto taxes for the accounts that are taxable now: collect exchange histories, reconcile wallets, and generate a report.
• Ask your plan administrator whether crypto is under consideration and how fees would work.
• Watch for the published proposal and its cost analysis, because the DOL has said it is still weighing the costs.

The direction of travel is clear enough: the executive branch wants alternative assets, including crypto, to be a prudent option for 401(k) fiduciaries, while some lawmakers are pushing back hard. The tax rules for the crypto you hold today haven't moved. Treat this as something to follow, not something to act on yet.

FAQ

Can I buy crypto in my 401(k) right now because of this proposal?

No. The proposal has only reached White House review. It's not a final rule, and even if it becomes one, your employer's plan decides whether to offer any crypto option.

Does the DOL proposal change how crypto is taxed in the US?

Nothing in the reported filing changes tax treatment. It's a Labor Department proposal about how plan fiduciaries evaluate alternative assets. Crypto you hold outside a retirement plan is still treated as property for tax purposes.

Do I still need a crypto tax calculator if crypto comes to 401(k)s?

Yes, if you hold crypto in taxable accounts. A crypto tax calculator helps you calculate crypto taxes on trades, swaps, and spending outside retirement plans. Retirement-plan holdings follow separate account rules.

Why did the DOL say it was still considering costs?

In the filing, the DOL said it was still weighing the costs when describing costs and benefits. That suggests the analysis isn't complete, so the details of the proposal could still change.

Who opposes the proposal?

Senators Bernie Sanders and Elizabeth Warren pushed the DOL earlier this year to scrap the rule, saying it would expose investors to volatile assets, including crypto.

Bottom Line

The filing is a real step toward crypto in 401(k)s, but only a step. Keep your taxable crypto records in order, stay sceptical of any claim that a crypto option is available today, and check back when the proposal is published with its cost analysis.

Source: The Block