NewsIRAs and Bitcoin – 101

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Have you ever considered storing cryptocurrency contributions for retirement? Well, Bitcoin is now also making moves into the individual retirement space.

Setting yourself up for retirement is important. An IRA is an account that an individual can use to save up money for their retirement. It can be opened at several financial institutions and has many advantages. There are also many different types of IRAs, including traditional IRA, Roth IRA, and rollover IRA, and each one has its pros and cons.

Traditional IRAs are simple accounts that anyone can open and accumulate funds in. Rollover IRAs are accounts filled with contributions that rollover from a qualified retirement plan and Roth IRAs are tax-free accounts in which users deposit post-tax money.

All IRAs have different issues that cryptocurrencies are seeking to address. Below is a summary of how Bitcoin can contribute to IRAs and what’s available in the market.

WHAT IS A BITCOIN IRA?

A Bitcoin IRA is an account set up to store cryptocurrency contributions for retirement. Most IRAs are not set up to accept cryptocurrencies, so one of the easiest ways to set up a Bitcoin IRA would be by setting up a self-directed one. This is an account that offers unconventional investment options such as real estateart, precious metals, and more recently, cryptocurrency. Individuals could hold separate accounts with other investments while holding a self-directed account with cryptocurrencies.

WHAT ARE THE ADVANTAGES OF A BITCOIN IRA?

  • Self-directed IRAs have high potential tax savings with a capital gains tax range of 15-20% which also applies to cryptocurrencies, since the IRS treats them like other assets for tax purposes.
  • As it has shown in the past, Bitcoin has the potential for large gains — which can greatly improve an individual’s quality of life during retirement.

WHAT ARE THE DISADVANTAGES OF A BITCOIN IRA?

  • Cryptocurrency is currently way too volatile for a retirement plan. Such accounts require a certain level of stability to serve their intended purpose.
  • Unlike stocks, most cryptocurrencies do not generate any earnings or dividends for their holders and are solely based on their fluctuating prices.
  • Self-directed IRAs are more expensive than their traditional counterparts, especially in the case of bitcoin which costs a lot to set up and store due to its security needs.
  • It is a risky way to invest and there is a possibility of loss.

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CHOOSING A BITCOIN IRA

Although self-directed Bitcoin IRAs are a common way to invest in digital currencies for retirement, some specialized Bitcoin IRAs are emerging. When choosing which one to use, it’s important to consider the costs, tax options and security associated with it. Some of the most popular Bitcoin IRAs in 2019 are:

BITCOINIRA

This is an IRA company that allows people to save their retirement funds in the form of Bitcoin, EthereumRipple, Litecoin, Bitcoin Cash, Ethereum Classic, Stellar Lumens, and Zcash. It provides traditional, Roth and rollover models, and allows users to trade their digital currencies while they are in the IRA.

BitcoinIRA uses multi-signature encryption, as well as voice identification to secure user accounts and avoid breaches. It also offers consultation and trading services, price charts, and free ebooks. For users who want a simple IRA that allows them to save different digital currencies at the same time, this can be a good choice.

BROAD FINANCIAL

This company offers self-directed IRAs, and solo 401(k) including the option of investing in Bitcoin. It requires a payment of  $1,395 (or a different amount, depending on the state), after which users can keep investing. Like BitcoinIRA, Broad Financial gives investors the option of speaking to a specialist about investment assistance.

REGAL ASSETS

Regal Assets support IRA investments in Bitcoin, Ethereum, Ripple, Litecoin, and Monero. It is credited as the first firm to receive a trade license for cryptocurrency commodities and the first to establish a bitcoin IRAs for BTC.

FIRST DIGITAL IRA

First Digital IRA offers its users several investment options such as stocks, bonds, mutual funds, real estate, and cryptocurrency. With this IRA, users are able to invest their retirement funds in Bitcoin, Ripple, and Ethereum. They offer all three types of IRAs and the option of handling all trade and investment services for the user. This is a good option for people who need investment guidance and assistance, especially with the complexity of cryptocurrency.

DIVERSIFYING IRA

IRAs are a necessity for anyone who hopes to retire without financial problems.

Naturally, people search for the best way to increase the amount of money they save. As a result, there is a growing opportunity for IRA providers to diversify into the realm of cryptocurrency due to its growing use and demand.

However, there are still volatility issues to be considered. Always do your research before investing in crypto.

 

Thanks MinDice for sharing How to Choose a Bitcoin IRA.

Aisha Hillary-Morgan

Aisha Hillary-Morgan

3 comments

  • Adam P

    May 9, 2019 at 9:19 am

    Hi Aisha, it’s great to see attention on different options to add Bitcoin and other digital assets to IRAs and 401k. I wanted to bring your attention to my firm, Digital Asset Investment Management(DAiM), based in Newport Beach, CA. We were first fully licensed Registered Investment Advisor for digital assets in the U.S and began operating in May 2018.

    We differ from the other options mentioned in your article in that we provide licensed and compliant advisory services for our customers without the hidden or punitive fees to start up an account or trade. Our goal is to be a co-pilot with our clients as the purchase digital assets, speak to them on a regular basis to meet their needs and empower them through education to be self-sovereign and in control.

    We would be thrilled and appreciative to be included in your article as an option for investors and would be happy to provide more specific details about our firm and services.

    Great work and look forward to speaking with you!

    Reply

  • Taylor Bishop

    May 15, 2019 at 2:52 am

    I wanted to thank you for helping me learn more about bitcoin IRA. It’s interesting to learn that this could improve someone’s quality of life because Bitcoin has the potential for large gains. That said, it sounds important to really be on top of Bitcoin so that you can get these gains.

    Reply

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