With cryptocurrencies gaining in popularity — especially Bitcoin — you could be wondering if there’s a way to use them in your long-term retirement planning.
The answer is: yes. It’s now possible to invest in crypto for retirement, as long as you have a custodian that will help you with a self-directed IRA. One company that could help connect you to custodial and digital wallet services is Bitcoin IRA. They may also be of additional interest to you if you’re also considering investing in precious metals as part of your diversification.
Here’s what you need to know about Bitcoin IRA and how it works if you’re interested in potentially adding cryptocurrency to your retirement portfolio.
Bitcoin IRA customers have traded over $500 in investments.
- Buy and sell online 24/7
- Maximize retirement growth in a self-directed IRA
- Assets are insured by Lloyd's of London
What is Bitcoin IRA?
Bitcoin IRA was founded in 2015 by Camilo Concha, Johannes Haze, and Chris Kline. The company is based in Sherman Oaks, California, and helps investors connect to cryptocurrency wallet services and custodians that can provide them with a self-directed individual retirement account (IRA). Since 2017, Bitcoin IRA has processed more than $1.5 billion in transactions and it currently has over 100,000 users.
Some people find crypto IRAs appealing as a way to invest in digital currencies but still avoid paying capital gains taxes like they would with regular non-retirement investments. For those wondering how to buy Bitcoin, how to invest in Ethereum, or how to add precious metals to their retirement portfolios, Bitcoin IRA could help you achieve your goals.
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What does Bitcoin IRA offer?
Bitcoin IRA is an IRA provider that offers a full-service experience for those seeking to add cryptocurrencies to their retirement portfolio. It’s important to note that you can’t transfer cryptocurrencies you already own into Bitcoin IRA. Instead, you could roll some of your existing retirement assets into an IRA, or you could use U.S. dollars to purchase crypto assets as part of your Bitcoin IRA.
Basically, Bitcoin IRA helps you find a custodian for a self-directed IRA and guides you through the setup process. A custodian is typically a financial institution like a bank or a trust company. These custodians must be approved by the Internal Revenue Service. Because the IRS treats Bitcoin and other cryptocurrencies as property for the purposes of an IRA, you need to use a custodian to hold these kinds of alternative assets in an IRA. This is similar to how it works to hold real estate or other approved alternative investments in an IRA.
Through Bitcoin IRA, you could invest in the following virtual currencies:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Digital Gold (DG)
- Ripple (XRP)
- Litecoin (LTC)
- Stellar Lumens (XLM)
- Zcash (ZEC)
It’s also possible to use Bitcoin IRA to invest in physical gold. When you invest in gold, it’s held in a Brink’s facility and assigned its own serial number.
Bitcoin IRA also has mobile apps available for both iOS and Android users.
Bitcoin IRA accounts
It’s possible to open a Bitcoin IRA as a Roth or traditional IRA. However, it’s also possible to roll assets from existing retirement accounts into a Bitcoin IRA. You could roll assets from an existing IRA, Roth IRA, SEP IRA, SIMPLE IRA, 401(k), or 403(b) into your new account. You could also choose to roll all of your assets or just a portion of them. Just make sure you understand any tax consequences that might result from a rollover.
In addition to a basic IRA, you could also open an Earn account with Bitcoin IRA. This account allows you to earn an interest yield on your assets. You could earn up to 6.00% APY on cash in your Earn account (as of Jun. 24, 2021). The only crypto assets that earn a yield with Earn are Bitcoin and Ethereum, and they earn 2.00% and 2.70%, respectively (as of Jun. 24, 2021). The minimum is higher with an Earn account, requiring that account holders start with at least $10,000.
Bitcoin IRA security
Bitcoin IRA takes security seriously and offers storage through BitGo Trust. Your digital assets are stored offline, using cold storage. Additionally, the trading platform uses SSL security that is in line with banking best practices.
BitGo Trust works with Lloyd’s of London for its custodial asset insurance policy. However, it’s important to note that these assets aren’t covered by SIPC insurance. Even so, though, Bitcoin IRA only works with self-directed IRA custodians regulated in the United States.
Pros and cons of Bitcoin IRA
- Diversify your retirement portfolio with crypto assets
- Potential to take advantage if there’s continued growth in cryptocurrency prices
- Keep your crypto in an IRA and receive tax-advantaged treatment
- Ability to add physical gold to your retirement portfolio
- Fees can be higher with a self-directed IRA
- If you access your assets before age 59 1/2, you could be subject to early withdrawal fees
- Bitcoin and other cryptocurrencies are highly speculative and subject to volatility, so you could sustain large losses
- Can’t add existing cryptocurrency assets to your Bitcoin IRA
Who can open an account with Bitcoin IRA?
In order to open an account with Bitcoin IRA, you need to meet the requirements necessary for an IRA. There’s also a $3,000 minimum to open an account with this particular bitcoin IRA company. To get started, you’ll need to roll existing retirement assets into the account or learn how to buy cryptocurrency assets (or physical gold) with U.S. dollars.
A Bitcoin IRA could work well for someone who wants to open a self-directed IRA and add alternative cryptocurrency or physical gold assets to their retirement portfolio. Because Bitcoin IRA does the heavy lifting, you can get help streamlining the account-opening and management process.
How much can you earn with Bitcoin IRA?
Investing is always risky and there are no guaranteed returns. What you could earn with a Bitcoin IRA will depend on your account’s assets, investment timeline, and risk tolerance. Some people believe that a crypto IRA is too risky, while others might consider it a useful way to diversify and hedge against market volatility.
If you use the Earn account with Bitcoin IRA, you have the potential to earn interest since your assets could be loaned out to others (which is how many financial institutions operate, not just Bitcoin IRA). For example, you could earn a yield on your cash, Bitcoin, and Ethereum when you use an Earn account.
If cryptocurrencies become mainstream, you might have the potential to earn a return as the prices go up. However, cryptocurrencies might never become mainstream, and you could lose your investment. Carefully consider how much of your retirement portfolio you want to risk.
FAQs about Bitcoin IRA
Is Bitcoin IRA legit?
Yes, Bitcoin IRA is a legitimate company. It facilitates a way for you to invest a portion of your retirement portfolio into crypto assets and physical gold. It provides full-service financial services for setting up a crypto IRA and rolling over existing retirement savings into your new Bitcoin IRA account.
Can I invest my 401(k) in Bitcoin?
Most 401(k) plans won’t allow you to invest your money in cryptocurrency assets, including Bitcoin. However, you could roll some of your existing 401(k) assets into a Bitcoin IRA and use those to invest in Bitcoin and other crypto assets.
How do I retire with Bitcoin?
In order to use Bitcoin in a tax-advantaged retirement account, you need to open a self-directed IRA with an approved custodian. Companies like Bitcoin IRA could help connect you with a custodian. Just remember that if you keep your assets in a self-directed IRA, you’re subject to potential early withdrawal penalties.
How to open a Bitcoin IRA account
In general, to open a Bitcoin IRA you need the same type of documentation you’d need to open any other IRA, including:
- Social Security number
- Driver’s license
Make sure you have the needed documentation before starting. You also generally need the information of your funding account. If you’re rolling funds over, you usually need your existing account number and custodian, along with how much money you want to move. If you’re funding the account with your bank account, you need your account and routing numbers.
Bitcoin IRA also requires a $3,000 minimum for its regular IRAs and a $10,000 minimum for its Earn accounts.
Other investing platforms to consider
If Bitcoin IRA doesn’t seem like the right fit for you but you’re still interested in using the blockchain to build your retirement, there are other platforms to consider. For those looking for a cryptocurrency IRA that is more accessible, iTrustCapital offers an IRA with a low 1% trade fee and a $29.95 monthly fee. There is an account minimum of $1,000, making it easier to open if you don’t have the minimum required by Bitcoin IRA.
You could also get access to more account types and trading opportunities using BlockFi. BlockFi offers retirement accounts as well as taxable accounts. On top of that, it’s possible to earn rewards and yields on your cryptocurrency balances. If you want to invest in crypto assets long-term, BlockFi could be a good choice, whether you use a self-directed IRA or a taxable account.
Read our BlockFi review.
For those interested in trading crypto assets, Robinhood could be a viable choice. It’s worth noting that Robinhood doesn’t offer retirement accounts. On top of that, you don’t actually own your coins like you would with a real cryptocurrency exchange. But if you’re more interested in short-term trading through an online brokerage and want access to Dogecoin, Robinhood might be a good fit.
Read our Robinhood review.