A coalition of 24 states, including Michigan, has officially opposed a new Trump administration proposal that could shift billions of dollars in American retirement savings into high-risk investments like cryptocurrency and private credit. In a comment letter submitted to the U.S. Department of Labor, the coalition argued the rule change removes crucial protections for workers and leaves retirees vulnerable to severe financial losses.
According to Department of Labor estimates, the rule change would redirect roughly $178 billion annually into higher-risk funds, affecting about 4.5 million workers and retirees. The proposed rule would alter how investment managers, known as fiduciaries, are held accountable under the Employee Retirement Income Security Act of 1974.
Currently, these managers are legally required to select and monitor 401(k) options with skill. If they fail, they face government enforcement or lawsuits from workers who have lost money.
Cryptocurrency (File)
The coalition states that the new rule creates a loophole that shields multi-trillion-dollar investment firms from these lawsuits, effectively shifting financial risk from institutions to individual workers. The Department of Labor itself acknowledged that the rule would likely prompt managers to shift savings from traditional stocks and bonds to more volatile alternative assets.
Michigan Attorney General Dana Nessel criticized the administration’s priorities regarding the policy shift.
“This proposed rule is a veiled attempt to allow investment firms to gamble with workers’ retirement savings,” Nessel said. “Instead of protecting the retirees they are supposed to serve, the Trump administration is trying to unlawfully insulate multi-trillion-dollar fiduciaries from accountability. These corporations must be held to the highest standard, and the federal government should prioritize the best interests of hard-working Americans who have spent decades building their life savings. Instead, this administration has consistently shown it prefers protecting wealthy donors over workers. My office remains committed to opposing this rule and fighting for the financial security of Michiganders.”
State officials warned that the fallout from lost retirement savings would extend beyond individual households. The coalition’s letter noted that major financial losses could force seniors to work well past retirement age, creating health and safety risks, while forcing others to rely heavily on state and federal public assistance programs.
Michigan joined the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai’i, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Wisconsin, alongside the Pennsylvania Department of Labor and Industry, in signing the opposition letter.
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Michigan Joins 23-State Coalition Fighting Trump Admin’s Plan To Put Crypto In 401(k) Plans
