Is a Cryptocurrency / Bitcoin IRA Legit?
Last Updated on 2nd June 2022 by Jeffrey Camerda
Can I Use My Current IRA to Invest?
A Bitcoin IRA is 100% legal and legitimate. A Bitcoin IRA offers an excellent opportunity to diversify your retirement portfolio outside of the traditional paper asset classes into an assets that is less correlated to stocks and bonds. To invest in Bitcoin you need to have a ‘Self-Directed’ IRA account. However, if you currently hold a traditional IRA account it is very easy to open a Self Directed IRA, transfer your funds over and begin investing in Bitcoin or any Cryptocurrency you like.
Is A Bitcoin IRA Legit?
A bitcoin IRA is 100% legit. Not only is a bitcoin IRA legit, but it also offers an excellent opportunity to diversify your retirement portfolio and invest in asset classes outside of the traditional stocks, bonds and mutual funds. Given the uncertain economic times, we live in today cryptocurrency is becoming a very popular investment choice. Investors see it as a way to protect their funds and move them outside of the conventional global banking system. Financial analysts are warning of another imminent financial crash – so alternative assets like cryptocurrency can be a very wise move in current times.
Can I Invest in Bitcoin with my IRA?
You can absolutely invest in bitcoin using an IRA. Investors have been doing this for years. However, depending on the type of IRA you currently hold and who your account custodian is they may or may not allow you to invest in cryptocurrency. To check, just pick up the phone and contact your account custodian to see if they offer bitcoin or other cryptocurrency investment opportunities. If not, don’t worry, it is super easy to open a bitcoin IRA and transfer your funds over.
The best and easiest way to do this is to make contact with an IRA custodian that specialises in managing bitcoin IRAs. They will take you through the process of opening up a bitcoin “Self Directed IRA” and transferring your funds over from your old IRA or 401k account. You’ll be up and running in no time and be able to invest in the crypto market as you wish – not just bitcoin but also Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin and many more. Read our guide to the best cryptocurrency IRA companies – here.
Bitcoin IRA and Tax Implications
Using an IRA or a solo 401k to buy bitcoin is becoming increasingly popular as people gain a better understanding of the cryptocurrency markets. As discussed above one of the key advantages of investing in bitcoin is that it is an alternative asset in a new market, separate from all the traditional asset classes. However, another point worth bearing in mind is that when you use your IRA or solo 401k to invest in crypto you will be benefiting from significant tax breaks. If you are using a pre-tax IRA to invest, the tax is deferred. For a Roth IRA or a 401k, there is no tax at all once the conditions on the account are met. It’s worth noting that the IRS has classed cryptocurrency as a capital asset and not a currency.
Is Bitcoin Investing a Good Idea?
Bitcoin is emerging from its 18-month bear market and things are looking really good. From a low of $3,000 back on January 19 it rose again to peak at $9,000. At the time of writing, it is trading at over $8,000 per coin showing the resilience and the value of the blockchain technology underpinning the currency. Bitcoin is still in its infancy. It is still a very small market in its very early days, making it an excellent time for investors to get on board. Cryptocurrency investment experts believe it will grow to become a multi-trillion dollar market over the next number of years. The true value of bitcoin lies in very solid foundations – the ‘blockchain’.
Bitcoin is the most secure digital network in the world. There is no other network in existence that is more secure than bitcoin. This security is delivered by a technology called ‘blockchain’. Blockchain is the incorruptible backbone of bitcoin. Built on the pillars of decentralization, transparency and immutability it is this technology that delivers its value. In simple terms, the bitcoin blockchain is a secure record-keeping technology.
Many believe that it will revolutionise the way we do business and the way the global financial system will operate in the future. Teeka Tiwari, a cryptocurrency and investment expert, has stated that bitcoin is currently wildly undervalued and that in our lifetime we will see its value rise to $250,000 per coin. He likens bitcoin to modern-day digital gold. It can be used to store wealth, is of fixed supply and is incredibly secure.
How to Open a Bitcoin IRA?
Opening a bitcoin IRA is easy. All you need to do is engage the services of what is known as a bitcoin IRA custodian. This company will take you through the steps of opening up your new “Bitcoin Self-Directed IRA”. This new retirement account will allow you to invest in bitcoin and other cryptocurrencies as you see fit. A Bitcoin IRA custodian makes bitcoin investing very easy for people who have never invested in cryptocurrency before or who have little knowledge of the market. In addition to this, it is a legal requirement to employ a custodian to manage your account for you.
There are a number of financial and legal obligations that need to be properly taken care of in relation to the running of an IRA.
A lot of people out there aren’t even aware that bitcoin is an investment option for your IRA retirement account. Bitcoin offers an alternative option to the traditional assets such as stock, bonds and mutual funds – which are highly vulnerable to any economic shock or global crisis. Cryptocurrencies have been providing some incredible returns and it is still only early days in the market. A good bitcoin IRA custodian will not only open and manage your account for you but they should also provide you with a wealth of information and knowledge on how to best invest in the crypto market. For more info see – How to Roll Over from a Traditional IRA to a Bitcoin IRA.
How to Rollover from Traditional IRA to Bitcoin IRA
When it comes to transferring the funds over, your custodian will take care of all the work for you. You can use the funds in your old IRA or 401k and transfer them over to your new Bitcoin IRA. Your custodian will take you through all the steps, paperwork and legalities when it comes to rolling over your funds. The whole thing is a very straight forward process once you have a good and reputable IRA custodian on board – so when it comes to choosing your custodian, choose wisely.
You want to look for a company that specialises in cryptocurrency. That way you will be working with a group of professionals that understand the market and have a depth of knowledge in making bitcoin investments. Also, do some background research to ensure the company is legit and has a good reputation in the wider community. Choosing wisely now will pay dividends down the line. You want to work with the best.
How To Buy Bitcoin with Self-Directed IRA
The best way to buy bitcoin using a self-directed IRA is to engage the services of your account custodian. If you have taken the time to choose a good bitcoin IRA custodian then you will have chosen a company that has an in-depth knowledge of how the crypto market works. All you need to do is instruct them of exactly what you want to do and then leave it in their capable hands. These people do this day-in-day-out for a living, so let them steer the ship on this one.
However, there are some people out there who want to have more control over the transactions on their account. Some IRA investors have a lot of experience in the crypto markets and want to be able to channel funds into or out of a cryptocurrency rapidly without the delay of having to go through the services of another person. If this is something that specifically appeals to you, you can consider going down the road of opening what is called an IRA/LLC. This is basically a set up that gives complete checking control to the account holder. As the account holder, you will receive limited liability protection similar to that of a corporation and you will have full control over your own investment strategy.
Fidelity & E*Trade Enter Bitcoin Market
Fidelity Investments and E*Trade have recently unveiled plans to enter the cryptocurrency market. This will have an incredible impact in allowing much larger numbers of investors access to bitcoin. In October 2019 major player Fidelity Investments announced that they will be introducing bitcoin investment products to all qualified investors. Meanwhile, online stock broker E*Trade are planning to introduce trading support for both bitcoin and ether, with other cryptocurrencies to follow.
This news is a game-changer in the crypto world. The mainstream financial companies are jumping aboard. They want in on the action. When something goes from hard-to-buy to easy-to-buy you can be sure that its value is going to be on the rise. The average person will now be able to log into their Fidelity account, click a few buttons and buy some bitcoin. The movements of these two big mainstream investment and stockbrokers signal a change of direction from the mainstream. It shows that they believe its time to get investing in cryptocurrency. For further reading, see our homepage at thewealthbuilder.club.
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Dr. Jeffery Camerda, PhD, is a financial planner who specializes in wealth management and retirement planning.
With a PhD in Economics and Financial Planning, Jeffery represents the highest level of financial planning expertise and achievement in the USA
In addition to preparing you for a career in financial planning, a PhD in economics and finance also prepares you for academic pursuits, such as becoming a university professor in teaching or doing research.
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Jeffrey Camarda, PhD, CFA, EA is also the founder of the Family Wealth Education Institute, is a member of the Financial Planning Association and serves as the Chairman of Camarda Wealth Advisory Group