Can I Buy Bitcoin with my IRA or 401k Plan?

Can I Buy Bitcoin with my IRA or 401k Plan?

Can I Buy Bitcoin with my IRA or 401k Plan?

Yes, you can buy Bitcoin using an IRA or 401k. All you need to do is open a new Self-Directed Bitcoin IRA, transfer some funds over and begin investing in Bitcoin. It’s a simple process that can be completed in just 24 hours. A custodian company will assist you through each step.

How to Buy Bitcoin with an IRA or 401k Plan

If you hold a traditional IRA or 401k you can use some of those funds, or all if you prefer, to invest in Bitcoin. The process is simple. All you need to do is open a new Self-Directed IRA account that supports Bitcoin investment. This can be done in as little as 24 hours. Once the new IRA is operational, transfer some funds over from your existing retirement account. You can transfer from a Traditional IRA, Roth IRA or 401k plan. You can transfer all of the funds, or just a portion if you prefer. You are entitled to hold a conventional IRA/ 401k and a Bitcoin IRA at the same time if you wish. This way you can split your retirement funds between traditional assets and Bitcoin.

Once the funds have been deposited into your new Bitcoin self-directed IRA you can begin purchasing Bitcoin. Your IRA custodian will make the purchase on your behalf. You will complete a ‘Direction of Investment’ form detailing the cryptocurrency and the quantity you wish to purchase. Your custodian company will then process the transaction on your behalf. The agreed amount of funds will leave your account and Bitcoin will be acquired and stored securely in your name. The best custodians will employ secure offline “cold” storage of all cryptocurrency assets.

Is Bitcoin in an IRA Legitimate?

Bitcoin IRAs are 100% legitimate. Alternative asset classes such as cryptocurrencies and precious metals have been IRA investment options for years.  All IRA accounts, including Bitcoin IRAs, must be managed by a professional custodian company. These companies ensure all legal and taxation responsibilities are taken care of. Bitcoin IRAs are not only legit, they also offer an excellent opportunity for portfolio diversification outside the traditional assets class of stocks, bonds, and mutual funds. Investors have been investing IRAs in Bitcoin for years but given the global events of 2020 alternative assets such as cryptocurrency have never been more appealing. If the global financial system were to stall and the world was to experience another financial crisis the value of traditional paper assets would plummet over-night.

Is Investing in Bitcoin A Good Idea?

As with any investment, the value of a cryptocurrency can increase or decrease over time and there are no guarantees. We recommend you consult with a professional financial advisor before making any significant financial decisions. However, there are two key factors that make Bitcoin such an appealing, stand-out investment option.

  • Asset Diversification: Bitcoin is an alternative asset. It operates outside the traditional global banking system. It is not part of the conventional asset classes of stocks, bonds and mutual funds that traditional IRA and 401k plans are invested in. Therefore it offers an excellent opportunity for portfolio diversification. Anyone concerned about the fragility of the global economy should be seriously considering diversifying their assets.
    Given the pandemic events of 2020 coupled with the early indicators of what was an already creaking financial system, wealth protection should be a priority. Traditional assets could crumble in value overnight and retirement accounts reduced to a pittance. Bitcoin is an alternative asset that could help protect your retirement fund from plummeting in the event of another financial crisis.
  • Growth Potential: Cryptocurrency experts tell us that Bitcoin is still in its infancy and has excellent potential for growth over the coming years. Many believe it will revolutionize how business is done the world over. It facilitates the transfer of money in a way that outpaces and outperforms conventional banking methods. It has a truly global reach, greater security, lower transaction fees and delivers greater user autonomy and privacy compared to traditional online banking. As more users embrace the technology, the digital currency will become more mainstream and could be seen as a viable alternative to the banking system. Its growth potential is enormous.

key advantages of bitcoin - summary

Key Advantages of Bitcoin

  • Global Reach: Bitcoin has a truly global reach. It is not restricted politically or geographically. It can be used to send or receive money anywhere in the world. It requires only an internet connection and an internet-enabled device.
  • Security: Bitcoin transactions are highly secure. It employs a technology called the “blockchain” to process transactions and maintain a record of all transactions processed. The blockchain is a decentralized network of computers that ensures historical data can never be deleted or amended. It creates a permanent record. This protects both the sender and receiver from fraudulent activity.
  • Lower Transaction Fees: Compared to traditional banking methods, Bitcoin transactions involve much lower transaction fees. Financial intermediaries and unnecessary middle-men are removed from the transaction process. Bitcoin is a much cheaper wat of effecting payment.
  • Always Available: The Bitcoin network is available 24 hours per day, 365 days per year. Transactions can be facilitated at any time of day, all year round. Time and day restrictions that are encountered in the banking system do not exist with Bitcoin. The network is always available.
  • Privacy: Bitcoin payments benefit from increased privacy. If a user chooses not to publish their transaction their identity is protected and it can be very difficult to trace the transaction back to the individual.
  • No Upper Limit: There is no upper limit on the amount of Bitcoin that can be processed in any given transaction. It can facilitate the payment of any sum of money, no matter how large.

What Other Cryptocurrencies Can I Buy with my IRA?

There are many cryptocurrencies to choose from for IRA investment. One custodian alone, Regal Assets, supports 35 cryptocurrencies with more available on demand. Below is a list of the most popular cryptos on the market today:

  • Bitcoin is the world’s leading and best-known cryptocurrency. It employs a technology called the blockchain to process and store a record of digital transactions. It is a completely decentralized digital currency. It is not controlled by a central bank or any other financial authority. It is used to transfer payments directly from one user to another using a peer-to-peer network without any intermediaries.
  • Ethereum is another of the leading cryptocurrency technologies. It is both a cryptocurrency and an open-source, decentralized computing platform. It is used to build decentralized applications and distribute new crypto assets called Ethereum tokens. It runs on a distributed operating system that employs smart contract functionality.
  • Ripple XRP is a crypto that is aimed at businesses. It is a real-time, cost-efficient, gross settlement cryptocurrency. Ripple is the name of the payment network and XRP is the cryptocurrency that is used on it. It was developed by a company called Ripple Labs in San Francisco.
    Bitcoin Cash is a cryptocurrency that emerged as a fork in the Bitcoin project. Its goal is to deliver better transaction fluidity for everyday customer transactions. It was created in 2017. And in 2018 it was to fork again into two new separate projects; Bitcoin Cash and Bitcoin SV.
  • Litecoin was developed as a cryptocurrency that delivers a faster payment confirmation schedule than Bitcoin. It also uses a different cryptographic algorithm. It was created way back in 2011 and is one of the earlier Bitcoin spin-off projects. Like Bitcoin, it employs an open-source cryptographic protocol and is not controlled by a central authority.
  • Tether is a new type of cryptocurrency. It is called a ‘stablecoin’. Unlike other cryptos, it aims to keep its valuation stable and avoid dramatic changes in value. Its coins are backed by an equivalent amount of fiat currency. Like Bitcoin, it runs on the blockchain technology.
  • EOS was created to support large-scale applications. It does not charge fees to send or receive payment. It substitutes fees for inflation. Periodically, the protocol rewards entities that run the EOS network with new EOS coins, hence the occurrence of inflation.
  • Binance Coin is a new cryptocurrency that is run on the Ethereum platform. It uses a finite number of Binance coins, the figure has been set to 200 million. It is envisaged that Binance will be used to pay for trading fees, listing fees, and exchange fees.
  • Bitcoin SV as mentioned above, the Bitcoin SV crypto was created when a fork emerged in the Bitcoin Cash project in 2018. It was created to restore some of the original Bitcoin protocol to create what developers’ believed was a more stable network that was better suited for scaling.
  • Stellar Lumens is a cryptocurrency used to facilitate digital currency to fiat currency transfers and payments. It uses a decentralized and open-source protocol. It can connect banks, payment systems and individuals around the world and allow transfer from one fiat currency to another.

What Companies Manage Bitcoin IRA Accounts?

There are several Bitcoin IRA custodian companies on the market. Below are four of the main contenders and a summary of the key points for each.

Regal Assets

Regal Assets offer cryptocurrency and precious metal investments to their IRA customers. They were the first company to be awarded a global cryptocurrency commodity trading license. The support investment in over 35 cryptocurrencies and also offer the option of precious metal investments in gold, silver, platinum, and palladium. Their online customer account management tool, the ‘Regal Wallet’, has received positive reviews from customers.

  • Cryptocurrency Specialists: Regal is a cryptocurrency specialist and has been managing Bitcoin IRAs for years. They assist customers through all the steps in getting an account set up, purchasing Bitcoin and ongoing management of the account.
  • Precious Metal Options: Regal also support precious metal investments in gold, platinum, silver, and palladium. This provides another avenue of alternative investment for diversification of assets.
  • Security: the online Regal Wallet tool used to manage customer accounts boasts strong security features to protect assets. All cryptocurrency investments securely stored offline in cold storage. This means they are out of reach of hackers.
  • 35 Crypto Options: they support investment in thirty-five cryptocurrencies and more are available on request. They are the market leader in the number of cryptocurrencies supported.
  • Excellent Ratings & Reviews: Regal have excellent feedback from their own customers and industry rating agencies. They have a Triple AAA Business Consumer Alliance, A+ Better Business Bureau, and a five-star TrustLink rating based on over one thousand reviews.
  • Insurance Cover: insurance is available on all investments to their full market value.
  • Account Set-Up Assistance: assistance is provided at all steps in the process, including account creation, rollover of funds, purchase of Bitcoin, asset storage and ongoing account management.

BitIRA

BitIRA was a crypto asset company established by precious metal dealer the Birch Gold Company in 2017. They have received positive feedback from the Better Business Bureau and the Business Consumer Alliance. All cryptocurrency bought through a BitIRA managed account is stored offline in secure, guarded vaults. A point worth noting about BitIRA is that they do not charge selling fees customers decide to cash in on their investment and sell their Bitcoin.

  • Secure Storage: all Bitcoin investments are stored securely, offline in a guarded vault.
    No Fees on Selling: BitIRA does not charge any fees when a customer decides to cash in and sell their Bitcoin.
  • Eight Cryptocurrencies Supported: they support investment in eight cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Ripple, Stellar Lumens, and Zcash.
  • Insurance: insurance cover is available for all investments.
  • Good Customer Reporting Tool: the online reporting tool provided for all customers has received positive feedback.
  • $20,000 Minimum Investment: it has been reported online that the minimum investment required to open an account is $20,000.

Noble Bitcoin

Noble Bitcoin is a part of the well known and well respected Noble Gold Investment company. As the name suggests, Noble Gold is a precious metal investment specialist. They launched Noble Bitcoin in 2016 to cater for cryptocurrency investments. They support investments in four cryptos, not just Bitcoin.

  • Strong IRA Experience: Noble Gold, the parent company, has over 25 years of experience managing retirement investment plans. They are well-respected and trusted across the US.
  • Four Cryptocurrencies: Bitcoin, Ethereum, Ripple, and Litecoin.
  • Secure Storage: secure storage is provided for all investments to prevent theft or online hacking.
  • Set-Up Assistance: the company can have an account set up in as little as five minutes once all the necessary documentation has been completed and approved.
  • $20,000 Minimum Investment: it has been reported online that a minimum investment of $20,000 is required to set up a new account.

BitcoinIRA

BitcoinIRA was one of the first companies established to facilitate Bitcoin as an investment option for IRAs. The company was formed in 2016. They are a Bitcoin and cryptocurrency specialist company. They offer options in six of the leading cryptocurrencies. They have received good customer feedback and positive online reviews.

  • Cryptocurrency Expertise: BitcoinIRA is a cryptocurrency specialist company with plenty of experience.
  • Six Cryptocurrencies: they facilitate investments in six of the leading cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Ripple, and Litecoin.
  • Secure Storage: all investments are stored securely in offline cold storage and employ multi-signature digital wallets for account access.
  • Positive Ratings & Customer Reviews: Online feedback is positive in terms of ratings and reviews.

For more information on Bitcoin IRA custodian companies, see our guide: Best Cryptocurrency IRA Companies 2020

What is Bitcoin? How Does It Work?

Bitcoin is a virtual currency that can be used to buy and sell products and services around the world. It is the first decentralized digital currency, meaning it is not tied to any government or central authority such as a bank. Traditional fiat currencies, like the US dollar, are centralized and controlled by governments. New money can be printed and issued whenever the government deems it to be economically favorable. The number of Bitcoin on the market has been fixed and once this number is reached, no more will be issued.

Bitcoin is a cryptocurrency, which means it has been encrypted in code to prevent it from being copied. As it is not controlled by any government it cannot be subject to their influence or failings, and it cannot be devalued by an authority. Every transaction that takes place in Bitcoin is recorded in an open ledger called the blockchain. The ledger and all transactions on it are open and completely transparent. Users can see how much money is being exchanged in every transaction. Although all transactions can be openly viewed the identities of the individuals sending and receiving Bitcoin are protected.

Bitcoin facilitates the transfer of a payment directly from one individual to another without the need for an intermediary or clearinghouse. This facilitates rapid transactions, lower fees, and user anonymity. The network is facilitated by computers called ‘miners’. The miners are rewarded for their services with newly generated Bitcoin. The total number of Bitcoin that will be issued is fixed and new coins are slowly released over time to these miners. It is believed the mining process and issuance of new coins will continue for over one hundred years.

For more information on Bitcoin and cryptocurrency IRA options visit our homepage, here.

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