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Without attempting to elaborate on the already fine points made by many folks already, I'll just say that I like Luke's suggestion: "just add crypto to 408(m)." Problem solved.

Yup, the Senators ask Fidelity to do what public law doesn't do. That recognized, I'm not saying a private business organization's owners shouldn't make their own choices about what goods and services to offer. I've had the privilege of advising businesses, including retirement-services providers, that decided not to offer a lawful service, one that would get profits, because the owners' ethical choice was to refrain from offering a service that could result in harm.

If the leasing company excludes all the owners (who are automatically HCE), then they have a better shot at passing coverage tests. If the inhouse employees are all NHCEs, then you can definitely cover just them and automatically pass. We've done similar things for restaurant chains, etc.

While I am at it, this is an opportunity to reiterate my disapproval of a statute that encourages plans to throw unsophisticated individuals to the wilds of self-directed investment as a refuge from the bogeyman of fiduciary liability.

There are many factors to consider here, and you are not likely to get a simple yes/no answer on this board. If the leasing company were my client, I would advise them to have a lawyer make this determination. If you have access to "Who's the Employer" by S. Derrin Watson, read chapter 4 to get a good understanding of the issues involved and to understand how to go about analyzing the situation. IRC 414(n), Notice 84-11, and Rev Proc 2002-21 are all required reading for this topic.

Peter, I think pretty much everyone who's looked at that has concluded that because Notice 2014-21 says that crypto is "property" and not an actual 'coin," and because it is intangible, it's safe to hold in, e.g., an IRA, without violating 408(m) as currently written. Cold wallet storage raises a custody issue, however, that you have to be careful in handling, e.g. by holding through an exchange rather than directly in your wallet. There is a whole business niche catering to crypto IRAs. I have found that the best place to find info on it is Youtube, but of course it's not all good. Could. They might, but at least until recently there have been some powerful, bipartisan folks in the Senate who are trying to position their various localities as "crypto valley." Crypto has some good lobbyists.

There might be a couple of fixes: return the money, amend to let the few participants in early, etc. All, I think, based on the numbers of people. But, just to snipe a bit, I'm betting the TPA didn't allow ineligible participants to defer, it was the HR/payroll people for the employer.

Peter, I guess my final comment on this will be to take pity on our poor Federal government. (Wow, never thought I'd say that!) People have lost a lot with BTC. Maybe if they hang in, they'll get it back, I guess , agrguably, but in the meantime there are large losses. Sixty-six percent from the peak. For now, price is sticking at about $20k. Folks are already saying about this, "Where was the SEC?" (Of course they should be saying, "Where was the CFTC.") At some point, folks will say, "Where was Congress?" Government being government. I don't think you can blame them on this one.

If an official, and presumably well-crafted and reviewed, letter from the most august legislative body the English-speaking world cannot use “begs the question” properly, we cannot expect them to understand ERISA fiduciary nuances. The misuse of “begs the question” for the purpose of sounding sophisticated, elegant, or erudite simply proves the opposite. And if the government believes that cryptocurrency is inappropriate for retirement savings, it can easily legislate to that end, as it has for other exotic or questionable assets. Oh, wait, I forgot that we do not have an ability to legislate anymore. Cranky

I think the original question is being posed backwards, and the fiduciary relationship is possibly being misunderstood by members of the US Senate. Selection of retirement plan service providers is a fiduciary decision; for selection of an investment provider, the fiduciary needs to consider (among other factors) the investment alternatives offered by the provider. If Fidelity's offering is not prudent, then the fiduciary has a duty to select a different provider. If the fiduciary lacks the experience to determine whether the investment menu is suitable for the plan's participants, then they should retain an investment advisor or other professional who is qualified to help them make that decision.

Filing a 5558 does not create an obligation to file if no Form 5500 is required.

Did you ask for legal fees? If so, the answer might be an award of zero. If not, you/attorney must determine if you have any opportunity for additional claim. Could this mean something simple like, "your lawyer screwed up"?

If you had a lawyer when you won your case, the lawyer should have evaluated whether or not a claim for lawyers fees was viable.