​In my previous article, I addressed the three key players who are secretly manipulating your 401(k).

​As an adult, it’s always a little exciting when your job allows you to enroll in a 401(k). You feel like such a grown up, and have hopes that one day, your 401(k) will grow enough so you have a shot at retirement.

However, what exactly happens when we enroll in a 401(k) is usually a mystery. Suddenly, you’re given all of these different retirement plan options. Some of you may have heard of some of these plans like Vanguard, Marcus by Goldman Sachs, Fidelity, Stash, and others. Some of you might be learning about them right now, and are wondering which one is the best?

Unless your teacher in high school taught you about investing and Roth IRA’s, you probably don’t know. The overwhelming part about when an employee is faced with picking a retirement plan, is being expected to choose a plan. When they most likely don’t even know what stocks, bonds, or mutual funds are. Their employer just needs them to pick a plan as soon as possible, so they panic, and just ask for the “safest” plan.

Before they know it, they have been sucked into a retirement savings trap. A trap that is secretly manipulated by three key players. Wall Street, the IRS, and your Employer.

Who really benefits from your 401(k)?

Wall Street is served by your 401(k) because of market manipulation. The top 1% of the wealthiest people in America own the biggest stakes in many different stocks. All they have to do to decrease the value of a stock, is sell their all shares whenever they want to. If an investor wanted to drive the price of a certain company’s stock down, all they have to do is convince that company’s major shareholders to sell their stocks, and invest into a better company.

Thus manipulating the value of your 401(k). Sadly our 401(k)’s are managed by money managers, who are people we have never met. Perfect strangers, who get paid by the hour, to invest our money for us. After a couple of years, we go to check how much our retirement savings has grown, only to ask why our money has only grown marginally. Is the person we are entrusting with our money really doing a good job? Are they actually making the best investment choices for us?

IRS and your 401(k)

The IRS benefits from your 401(k) by tricking you into thinking you get tax breaks, when really you get taxed the same, just later. It’s like you are being charged for saving money, and charged for taking it out. You’d be better off just putting your money into savings, because you’ll likely just break even on any profit you did make, since most if it is going to taxes anyways. You could put your money into a Roth IRA instead of a 401(k), but most people don’t know about Roth IRA tax benefits, because none of this is taught in school.

Your employer secretly benefits from your 401(k), because it’s cheaper for them to give you a 401(k) instead of a pension. A pension is funded by the employer, whereas a 401(k) is funded by the employee. You put in a percentage of your paycheck, and your employer can either match that percentage, or not match it at all.

Either way, it’s cheaper than a pension. Your employer can also hold onto your 401(k), if they ever fired you or laid you off. You lose the right to any unvested money in your 401(k), and your employer can hold your money hostage for up to 60 days, if it’s under $5,000.00. If it’s more, your employer can allow you to roll it over to another 401(k) plan. However, the company your plan rolls over to, will be THEIR choice, not YOUR choice.

401(k) & ​Crypto

Cryptocurrency is considered less of a risk because Wall Street whales (like Warren Buffet, Jeff Bezos, Mark Zuckerberg etc) have less of an opportunity to dominate the crypto market and manipulate it. This is due to process called “halvings”. When a cryptocurrency like Bitcoin, or Ethereum experiences a halving, the little guys have a better shot of getting a slice of the cryptocurrency pie. A halving is when miners slow down how much of the coin is available to buy, so it’s not all bought up at once. If crypto miners said “We mined all the Bitcoins, and they are all available to buy today,” then all the folks with the most money could easily swoop in, and snatch up all of the coins before any of the common folk get a chance to buy some.

So instead, miners have to cut the amount of coins available “in halfs”. This way, it gives the little guy more time to understand, “Hey this is a great investment, I want to buy some Bitcoin, am I too late?” Halvings are an excellent way to better manage market manipulation. Granted, the crypto market still has some manipulation, but it’s just on a lesser scale because it is more balanced between whales, sharks, fish, and minos. This improved balance is all thanks to halving.

Flexibility with crypto

​With cryptocurrency, you are not forced by your employer to choose a retirement plan from a series of options that they pre-selected for you. With crypto, you can create your own retirement plan. You can invest in coins that not only pay you higher interest rates, but can also out grow your 401(k) savings faster. You can earn the same amount in cryptocurrency, in the span of one year, that it took your 401(k) five years to build. I’m not saying go invest in just any crypto coin. You do need to do your research on what coins meet the seven properties of currency (see my article What Every Veteran. Should Know About Money).

Thus, you may conclude cryptocurrency is a more flexible alternative to 401(k) plans. You get to choose what to invest in, how much to invest, when to invest, and how long you want to invest. If you want to enroll yourself in a crypto 401(k), so you don’t touch certain coins for a longer period of time, you can do that! If you decide you also want to invest with different platforms that allow you pull from your savings at any time, you can do that too! It’s YOUR CHOICE.

That dreaded word: taxes

​Now when it comes to the IRS, cryptocurrency used to not be taxed at all. However, because of how fast it’s catching on, the IRS naturally also wants a slice of the pie. So today, if you decide to pull from your crypto portfolio, the IRS will tax you an ugly 40%. Why? This is because the IRS has legally recognized crypto as an asset, and not a currency. Assets are taxed at 40%, where as currency is taxed at 20%. Which one will make the IRS more money? The Asset.

​For serious folks, who are treating their crypto portfolios like a 401(k), all they have to do is wait. We are so early into cryptocurrency game, that major companies are still adding Bitcoin to their balance sheets. We are at the dawn of seeing goods and services being paid for with cryptocurrency. Thus, it’s only a matter of time before the rest of America follows. When this transition from fiat to crypto is complete, crypto will be taxed as a currency, and not as an asset. Wait long enough, and crypto won’t even need to be converted into dollars, because the dollar will have lost all its value. So keep calm, and HODL.

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