How to Roll Over Money from a Regular IRA into a Bitcoin IRA

Last Updated on 2nd June 2022 by Jeffrey Camerda

How to Roll Over from a Regular IRA to a Bitcoin IRA

To rollover from a regular IRA to a Bitcoin IRA, you must first set up a Self-Directed IRA (SDIRA). Once this is done you can roll over your funds from your old IRA into the new Self Directed IRA. This new Self Directed account allows you to invest in cryptocurrencies such as Bitcoin. The easiest way to process the rollover is to engage a custodian who specialises in rollovers and cryptocurrency IRA accounts.

bitcoin ira planRolling Over a Traditional IRA into a Bitcoin IRA is Easy:

Rolling over from a Traditional or Roth IRA into a Cryptocurrency IRA is actually pretty straight forward. It is something you can do yourself if you have a strong understanding of the technicalities of the financial world. But if not the best bet is to engage the service of a good and experienced custodian to act on your behalf. There are a whole host of companies out there that specialise in doing just this. All you need to do is do a little research and select an IRA custodian who specialises in cryptocurrencies. See below for some tips on choosing the right custodian for your account.

The broker will do all the hard work for you and carefully ensure all the steps and details are completed correctly. All you need to do is fill out an application form and address any additional queries your custodian may have along the way. They will create a new self-directed IRA for you and rollover your retirement portfolio from your old IRA into your new one. Once your new IRA is up and running you are ready to invest in bitcoin or any other cryptocurrency that takes your fancy.

investing on smart phoneChoosing the Right Self Directed IRA Custodian:

The Internal Revenue Code (IRC) stipulates that all IRA assets must be held by and managed by a custodian. Generally speaking, there are two different types of IRA custodians out there. There are traditional IRA custodians that specialise in publicly traded securities such as stocks, bonds and mutual funds.

There are custodians that specialise in trading in alternative assets such as cryptocurrencies. These are commonly known as self-directed IRA custodians. This is the type of custodian you are looking for to manage your IRA if you want to invest in bitcoin. It’s important to spend some time assessing the options out there to make sure you choose the right custodian for your Bitcoin IRA.

There are a number of factors to weigh up when considering your options:

Specialisation & Experience: Custodians of traditional IRAs hold a strong knowledge base on how to best manage traditional asset class IRAs. Custodians that specialise in managing self-directed IRAs have a better understanding and knowledge base of the alternative investment options offered by a self-directed IRA. Therefore you should be opting for a custodian with the specific skillset and experience of managing bitcoin IRAs. Some traditional IRA custodians will also offer clients the option of opening a self-directed IRA with them. However, their skill set and experience in managing this investment will not match that of a specialist self-directed IRA custodian. Look for a trusted custodian that specialises in bitcoin IRAs.

Transaction Fluidity: You need to sit down and have a think about how you want your IRA to work in terms of the number of transactions you will be making per week, month or year. Some people want to invest a lump sum in bitcoin and play the long game – just let it sit there untouched and cash in some time in the future. However, others want to be able to move quickly and channel funds into/out of cryptos as they monitor the market and asset performance. If you are in the latter group here, you need a custodian that is willing to process regular transactions on your behalf, and more importantly, process them quickly when you give the go-ahead.

If this is what you are looking for make sure you discuss this with your custodian and agree that you will be able to move funds quickly and as frequently as you see fit as you monitor the cryptocurrency market. Transaction fluidity will play a vital role in allowing you to capitalise on an opportunity when you see one arise.

Transaction Fees/ Asset Based Fees: For SDIRAs custodians generally use one of two models to calculate fees on the account. Either a Transaction Fee or Asset Based Fee model. The best way to assess these options is to discuss them with your potential custodian in terms of how you wish to use the IRA. Depending on how you intend to implement your investment strategy one or the other may be a more favourable option for you. Also, fees may be negotiable for larger accounts.
Other Miscellaneous Fees:

When it comes to alternative assets there can be a substantial number of miscellaneous fees involved relating to the nature of the transactions and the management of the account. It would be a good idea to discuss these with any potential IRA custodian before committing to their services. Miscellaneous fees can include, but are not limited to: account setup fee, statement fees, fund transfer fees, document storage, document processing, fund wire fees and check issuing fees.  For more info, see our guide to the Best Bitcoin Custodian Companies 2020 – read here.

green shoot in a glass of coinsAdvantages of a Self Directed IRA

An SDIRA (Self Directed IRA) offers a number of advantages to the account holder. We’ll take a moment to look at a number of these key advantages.

[1] Unlock Alternative Investment Opportunities

One of the main advantages of an SDIRA is that it allows the account holder to invest their portfolio in alternative investment options that are unavailable with a traditional IRA. Traditional accounts limit your investments to just the conventional stocks, bonds, mutual funds and treasuries options. An SDIRA unlocks a much wider range of asset classes. Among the additional investments are cryptocurrency, gold, silver, other precious metals, real estate, undeveloped land, water rights, mineral rights, livestock, promissory notes and tax lien certificates.

[2] Control Over Investments

You have complete control over how your funds are used across the range of investment options. You decide how much capital to invest and you decide which asset classes you want your funds invested into. This is another key advantage of the self-directed IRA.

[3] Potential for Greater Growth

The key point here is potential. There is no sure-fire way of guaranteeing increased growth on any fund. But some of the asset classes that the SDIRA allows you to invest in have shown great potential for greater growth compared to the traditional asset classes that the Roth IRA is locked down to. For example – real estate and cryptocurrency investments have shown that the can return rapid returns on investment.

[4] Liquidity Control

If you open an LLC checking account with your SDIRA as discussed above you hold a lot of control over your account in terms of liquidity. This set up will free up your ability to move funds in or out of the SDIRA quickly with reduced admin red tape. If you need to get access to your funds quickly an LLC bank account can facilitate this and you won’t have to go through middlemen to gain access to your funds.

mobile phone on a deskCan I Do the Bitcoin Roll Over Myself?

The short answer to this is – Yes. Yes, you can – but it can be a difficult and trying exercise. You can go through this process yourself but bear in mind that there are quite a few technical steps along the way. It is not necessarily a good idea to set out on this road alone unless you have a good understanding of how the industry works or you have worked in this area previously. The sensible advice here would be to take some time to choose a trustworthy custodian to this work for you and make sure all the details are properly taken care of along the way.

Among the steps involved in rolling over to a bitcoin IRA are:
[1] Set up a new SDIRA (Self Directed Individual Retirement Account)
[2] Set up an IRA/LLC (Self Directed Individual Retirement Arrangement for a Limited Liability Company)
[3] Create an LLC Business Checking Account
[4] Link your Checking Account to Coinbase

What is an IRA/LLC?

An IRA/LLC is just a self-directed IRA arrangement for a limited liability company. It functions in a similar way to a traditional IRA. It allows you to set up and direct your own investment strategy giving you control over your investment options. An LLC account holder receives limited liability protection similar to that of a corporation. The IRA/LLC set-up also gives the account holder ‘chequebook control’ over their account. This means they hold complete signing authority over their account portfolio funds. A key advantage of this set-up is that the account holder has the ability to react quickly and channel funds rapidly as they identify good investment opportunities in the market.

is investing in bitcoin a good idea in 2021Why Link My Account to Coinbase?

Coinbase is a secure platform that facilitates the easy buying, selling and storage of cryptocurrencies such as bitcoin and ethereum. It is a trusted digital currency exchange that brokers the exchange and storage of cryptocurrency across the world. Its goal is to create an open financial system for the world and allow users to digital currency into and out of local fiat currency.

You need to get your LLC bank account linked to coinbase so that you can move funds back and forth from real dollars to virtual assets such as bitcoin. Your LLC bank account will be linked to a coinbase wallet. This will allow you to exchange actual dollars in your LLC account for bitcoin or other cryptocurrencies in the virtual crypto world. It will also enable you to sell bitcoin in your coinbase wallet for dollars that will be deposited back into your bank account. It is this link that allows you to move assets back and forth as you wish.  For further reading, visit our homepage by clicking here.

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Certified Financial Planner at Camarda Wealth Advisory Group | 800-262-1083 | Website

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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In order to provide the finest advice and services, we pay close attention to the specific financial circumstances and requirements of each client.

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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



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