What I Wish I Knew a Year Ago About Crypto IRA: BitcoinIRA .com Review
12 min read.
Cryptocurrency IRAs investments can be a great way to diversify your retirement portfolio, and we often cover alternative assets in our blog articles, but it's important to know what you're getting into.
I wish that a year ago when I first heard about investing in crypto assets through an individual retirement account (IRA), I had done more research so that I could make the best decisions for my financial future.
From understanding the basics of bitcoin IRAs and their regulations to learning about key features of IRA companies, there are many aspects of this process that you need to consider.
In this article, we explain traditional crypto IRA and review BitcoinIRA.com as one provider offering veteran bitcoin investors and rookie retirees alike access to over 60 digital currencies.
The banner ads and some links in this blog post contain affiliate links. If you click on a link and join, I may receive a referral commission at no extra cost to you. All opinions remain my own and each company featured is individually selected.
Can Individual Retirement Accounts have cryptocurrency?
Yes, Individual Retirement Accounts (IRAs) can hold cryptocurrencies, including Bitcoin and other digital assets.
Crypto IRAs can provide an exciting - but volatile - opportunity to diversify your retirement savings with alternative asset classes. Do your due diligence when choosing your Bitcoin IRA company and get familiar with the applicable IRS regulations.
If you are going down the crypto IRA route, our model portfolio suggests allocating 3-5% of your overall investments to cryptocurrencies, and around 5% to alternative investments.
How do crypto IRAs work?
A traditional 401(k) or similar retirement account works by the investor depositing funds into the account, which are then invested in the stock market. As the stock market rises, the retirement fund grows and generates returns.
Investing in cryptocurrencies through a retirement account requires an account that supports holding crypto, such as a crypto IRA. You fund the account and use the funds to invest in cryptocurrencies.
If you're looking to invest in cryptocurrencies for your retirement funds, you can consider Self-Directed IRAs (SDIRA). A self-directed IRA can be either Traditional or Roth IRA, but you will need to choose a custodian to hold the account for you.
Experienced crypto traders and investors have the opportunity to actively manage their investment options and savings through a self-directed retirement account. Most companies that offer cryptocurrency IRAs can provide self-directed IRAS.
A self-directed Bitcoin IRA works in the same way; you add money to the account which you then use to trade crypto. This gives you more control over your investments, but it requires research and knowledge of crypto markets and trends.
How to invest in Bitcoin IRAs?
Opening a Bitcoin IRA account is fairly straightforward. All you need is a reliable crypto IRA custodian and funding accounts. Here are some simple steps to follow:
Research crypto retirement accounts
To get started, research the different types of crypto IRA accounts available, most of which would be self-directed IRAs.
When considering Bitcoin IRAs, make sure to choose a trustworthy company by checking reviews, understanding the platform, and verifying insurance coverage for your digital assets.
Set up an IRA account compatible with cryptocurrency transactions
Once you've compared the various Bitcoin IRA companies and chosen one, you will create an account which should be a quick process.
After validating your IRA account, you can link it to your financial institution.
Fund your crypto IRA
To start using your crypto IRA, you will need to fund it, much like you would with a traditional IRA. Select a company that offers a simple transfer process, allowing you to transfer money directly from your financial institution.
Most Bitcoin IRA companies allow you to link your bank account for hassle-free transfers. Once connected, you can choose the amount you wish to transfer, execute the transfer, and wait for the funds to arrive.
Use the IRA to buy crypto
Once your account is funded, you can make your first crypto transaction. You’ll want a provider with an easy-to-use platform and the latest cryptocurrency prices, such as Ethereum, Bitcoin Cash, or Solana.
Then, you can search cryptos and purchase your desired amount of digital assets, coins, or tokens. You’ll be in complete control of your investment decisions.
Is Bitcoin IRA legitimate?
BitcoinIRA started in 2016 and was the world’s first cryptocurrency IRA account. It now has over 170,000 users.
The security of Bitcoin IRA is unparalleled thanks to its exclusive partnership with BitGo, a leading company in multi-signature encryption and cold-storage wallets. BitGo is widely recognized for its excellence in processing crypto transactions and is considered the gold standard for crypto security worldwide.
Digital Trust, LLC is the exclusive self-directed IRA custodian for Bitcoin IRA. Digital Trust is licensed by the State of Nevada Financial Institutions Division. Bitcoin IRA clients direct all investment transactions and choose the assets for their accounts.
Cash is on deposit with their FDIC-insured banking partner. Bitcoin IRA has a variety of insurance coverages, as does Digital Trust under its duties as a licensed financial institution under Nevada Revised Statutes § 669.240.*
Bitcoin IRA offers up to $700M* in total protection for eligible digital assets under custody.
Available for IRA Rollovers, Roth, SEP IRAs, Employer Plan 401(k)s, and new or existing traditional IRAs; buy and sell 60+ cryptocurrencies in your retirement account - available exclusively at Bitcoin IRA. Learn more and get started
What are the digital assets available with Bitcoin IRA?
Bitcoin IRA makes diversifying your retirement funds easy with a variety of cryptocurrencies to make your savings work for you. Let's look at some of the digital assets available:
Created in 2009, Bitcoin is the first cryptocurrency that introduced the idea of using peer-to-peer technologies to buy, sell, and exchange directly, without an intermediary. Bitcoin has a predetermined supply and no central authority.
While there is a certain degree of speculation about when the best time to buy or sell might be, the historical pattern suggests that holding onto it for an extended period is more profitable. People who have held onto Bitcoin for a long time have experienced the biggest returns.
Bitcoin Cash (BCH)
Bitcoin Cash is a peer-to-peer cryptocurrency to ensure worldwide access to sound money. Started in 2017 from a fork of Bitcoin, it allows more transactions into a single block.
The primary distinction between Bitcoin and Bitcoin Cash is their block size limit. Bitcoin Cash has a block size limit of 8MB, which enables roughly two million transactions per day to be handled. Despite having an equivalent hash rate, Bitcoin Cash is capable of processing more transactions per second due to its protocol. This translates to quicker payments and lower costs.
Join America’s #1 Bitcoin IRA and invest in your future with revolutionary digital assets. Open an account and self-trade 24/7
Ethereum is an open-source, decentralized computing platform behind the second-largest cryptocurrency by market cap.
Ethereum is unique because it has a programming ability through smart contracts included in the code from the beginning. This feature allows Ethereum to offer many more uses than other cryptocurrencies.
Cardano is a proof-of-stake blockchain platform that provides security and sustainability to decentralized systems and applications. Cardano's native token ADA is named after 19th-century mathematician Ada Lovelace.
Proof-of-stake is more energy efficient than proof-of-work, the model used by Bitcoin and Ethereum (although Ethereum is changing to proof-of-stake). Cardano's proof-of-stake system uses only a fraction of the energy consumed by Bitcoin and Ethereum.
Learn more with the Bitcoin IRA cryptocurrency guides
Solana is a decentralized computing platform to make blockchain technology more scalable.
Solana is facing tough competition from Ethereum, which is the largest platform for smart contracts and was also the first one. Due to its early start, Ethereum has gained significant popularity as a network for creating decentralized finance protocols (DeFi) and non-fungible tokens (NFTs), which are two areas that Solana is currently competing in.
Funded in 2013 as a fun alternative to Bitcoin and other ''serious'' cryptos, Dogecoin gained popularity through social media, becoming the first meme coin.
Dogecoin is primarily used as a method of payment, serving as a medium of exchange. The currency was originally used for tipping on Reddit among its members, and tipping has remained a significant feature of Dogecoin to this day.
Zcash is an altcoin developed to provide high levels of privacy. Zcash is a hard fork in the Bitcoin protocol and uses innovative modern encryption technology to conceal payments on the blockchain.
Create an account, transfer funds, and start trading 24/7 in real time.
Pax Gold (PAXG)
Pax Gold is an ERC-20 token created by Paxos that gives ownership rights to physical gold from producers on the London Bullion Market Association (LBMA).
Every Pax Gold token is backed by an ounce of allocated gold. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.
Litecoin is a peer-to-peer internet currency with more frequent block generation, which supports more transactions. Litecoin has a finite supply of 847 million Litecoins and no central authority.
People often refer to Litecoin as the "silver" counterpart of Bitcoin's "gold." The purpose of creating Litecoin was to supplement Bitcoin instead of trying to replace it entirely.
Tax advantages of a crypto IRA
Bitcoin IRAs may provide tax benefits. When you pay taxes on profits from retirement accounts assets depends on whether you choose a Roth IRA or Traditional IRA.
Contributions to traditional IRAs are tax-deductible, but withdrawals in retirement are taxable (known as tax-deferred). In comparison, contributions to Roth IRAs are not tax-deductible, but the withdrawals in retirement are tax-free.
Crypto IRAs have the same tax benefits as traditional IRAs or Roth IRAs. This means that capital gains tax isn't levied as long as the money stays in the account. This is better than holding cryptocurrency in a taxable wallet and getting taxed when you sell an asset for a profit.
Another benefit of Crypto is that, unlike most other assets, you’re able to “stake” it to earn interest and other rewards.
If you want to invest in cryptocurrency and avoid high capital gains taxes, you can use a tax strategy that involves adding digital assets to your retirement accounts. A good option is to put your cryptocurrency in a Roth IRA, which allows you to avoid taxes on any capital gains because you have already paid taxes on your cash contribution.
Putting your cryptocurrency in a traditional IRA means you will have to pay income taxes when you withdraw from it. However, it could be advantageous for you from a tax perspective if your income (and therefore your income tax bracket) decreases after you start making withdrawals from your IRA.
I recommend discussing your specific circumstances, IRS regulations, tax savings, and overall retirement plan with a tax professional or CPA.
How should I choose a crypto IRA company?
When looking for crypto IRAs providers, consider first whether you are comfortable with crypto currencies' volatility, which you would experience to a lesser degree with conventional IRAs.
Opinions vary concerning digital assets, but I believe cryptos have their place in a long-term, diversified portfolio, alongside traditional assets and precious metals. Depending on your risk tolerance, allocating up to 10% in crypto and alternative investments is reasonable. More guidance in this model portfolio.
Recent scandals have, understandably, turned some people away from cryptocurrencies. Even if you can handle the high degree of risk, nobody wants the content of their crypto wallet to disappear overnight.
Bitcoin IRA has an exclusive relationship with BitGo, the leader in multi-signature encryption technology and cold-storage wallets. BitGo is one of the world’s largest processors of Bitcoin transactions and is the industry standard for crypto security globally. Simply put, no other crypto IRA can match this level of security. Check their credentials
As with any investment company, the transaction fees and other charges can seriously impact your overall returns.
Bitcoin IRA charges a custodian fee, a security fee, and a one-time service fee.
Other providers may charge monthly maintenance fees or storage fees, making it harder to compare. With most crypto IRAs options, watch out for:
Annual administration fees
Account setup fee
BitcoinIRA was selected as the Best Overall Bitcoin IRA Company by Investopedia.
Strong customer service is critical. Bitcoin IRA provides live customer support, training tools, and on-demand crypto and retirement planning resources.
With thousands of 5-star reviews, and many honors and awards (EY Entrepreneur of the Year Award, Globee Best in Business, and Best New Mobile App), Bitcoin IRA is a strong contender for your cryptocurrency IRA.
What are the fees for Bitcoin IRA.com?
Bitcoin IRA is a full-service provider offering 24/7 trading, but it does come with higher setup and maintenance fees than other competitors such as Equity Trust Company. However, their level of security is second to none.
The exact fee amounts are not provided on the website and potential investors need to contact customer service for this information.
What is the minimum investment for Bitcoin IRA?
You can open a retirement account with a minimum investment of $3,000, or a $100 monthly contribution for a Saver IRA.
Retirement accounts that hold Bitcoin require significantly more steps and procedures than cash purchases.
Bitcoin IRA provides a full-service solution that facilitates the process for account setup, rollover of funds from an existing IRA custodian, access to a self-trading platform, and moving funds to a secure digital wallet for all retirement account types.
Can you buy crypto in a Roth IRA?
You can hold cryptocurrency in your Roth IRA, but you must open an account with a specialized platform that provides this option.
With over 60+ Cryptocurrencies, Bitcoin IRA is the industry-leading crypto IRA platform
Should you place your retirement savings with a crypto IRA provider?
Deciding whether to place your retirement funds with Bitcoin IRA companies is a significant financial decision that requires careful consideration. While cryptocurrency investments have the potential for high returns, they also come with substantial risks. Consider these factors before making a decision:
Risk tolerance: Cryptocurrencies are known for their volatility and can experience significant price fluctuations. If you have a low-risk tolerance or prefer more stable and predictable investments, a crypto IRA may not be suitable for you; look at mutual funds or ETFs instead.
Knowledge and understanding: Cryptocurrencies operate in a complex and rapidly evolving market. Have a solid understanding of blockchain technology, cryptocurrency fundamentals, and market dynamics.
Diversification: Diversification is a fundamental principle of investing. Placing your entire savings in a crypto IRA would mean concentrating your investments in a single asset class, which amplifies the risk. It's generally advisable to diversify across different asset classes, including stocks, bonds, and traditional investments, to mitigate risk.
Regulatory and custodial considerations: Cryptocurrency regulations vary by jurisdiction, and the regulatory landscape can change rapidly. Choose a reputable and regulated crypto IRA provider that adheres to compliance standards and offers secure custodial services to protect your money.
Long-term perspective: Retirement savings are typically intended for long-term financial security. While cryptocurrencies have shown potential, their long-term viability and stability are still uncertain. Approach crypto investments with a long-term perspective and don't rely solely on short-term market trends.
How to set up a crypto IRA
Like opening any brokerage account, you’ll need to have your full legal name, address, Social Security number, and banking information available.
Choose a custodian
To invest in Crypto IRAs, you need to select a custodian that permits cryptocurrency investment. Make sure to choose a custodian that provides Bitcoin investment options since not all IRA custodians offer them. Bitcoin IRA, Alto IRA, Equity Trust Company, and BitIRA are some well-known custodians that allow Bitcoin investment.
Open a self-directed IRA
After selecting a custodian, you should proceed with opening a self-directed account to invest in assets that aren't limited to traditional options such as mutual fund, shares, and bonds.
Add your IRA funds
To fund your account, you have a few options: you can transfer funds from existing retirement accounts such as IRA or 401(k), make a contribution, or roll over your 401(k) into an IRA after opening the account.
Buy digital assets
You can buy Bitcoin and other cryptos through the platform provided by your IRA custodian. The purchasing process is like buying it on a cryptocurrency exchange, but the transaction is conducted through the IRA custodian’s platform.
Store your crypto
It is vital to securely store your Bitcoin investment held within your IRA. Check with your custodian to see if they offer secure storage options like cold storage or a multi-signature wallet.
Is Bitcoin IRA for you?
Deciding whether a Bitcoin IRA is suitable for you requires careful consideration of several factors. It's important to acknowledge the high risks associated with cryptocurrency investments.
The crypto market is known for its volatility, price fluctuations, and regulatory uncertainties, which can result in substantial financial losses.
However, when approached with caution and as part of a well-diversified investment portfolio, a Bitcoin IRA can offer potential benefits and tax breaks.
Bitcoin and other cryptocurrencies have shown remarkable growth over the years, and some investors believe in their long-term potential.
Including a small portion of your retirement savings in a Bitcoin IRA may provide exposure to this ''emerging'' asset class. However, it's crucial to balance this potential upside with prudent risk management and diversification across different asset classes to mitigate cryptocurrencies' inherent volatility and uncertainties.
As always, it's advisable to consult with a financial advisor who can assess your specific circumstances and help determine if a Bitcoin IRA aligns with your investment goals and risk tolerance.
Where do you stand with crypto investments? Anything you wish you knew before investing? We'd love to know in the comments below!
*Security, storage, wallet providers, and insurance may vary based on the asset chosen and the custody solution available.
No Investment Advice. This article does not provide financial advice and has been prepared without taking into account any person’s investment objectives, financial situation, or particular needs.
Alternative IRA Services (“AIS”) dba BitcoinIRA.com is a platform that connects consumers to qualified custodians, digital wallets, and cryptocurrency exchanges. The company is not a custodian, is not a digital wallet, and is not an exchange. Self-directed financial opportunities processed through AIS have not been endorsed by the IRS or any government or regulatory agency. The IRS does not review, approve, or endorse any investments, including Bitcoins or precious metals in an IRA. AIS offers a $1 Million Consumer Protection insurance policy that covers consumers on the transactional side from any internal cases of fraud or theft. AIS is not FDIC-insured and is not a bank.