While keeping cryptocurrencies in your IRA can increase diversification, the extreme volatility of cryptocurrencies makes them a poor option for a retirement investment. As you research the custodians of Bitcoin IRAs, remember that you'll want to make sure that the types of accounts, exchanges, and cryptocurrencies available fit your goals. Previously, it was difficult to find a custodian who would accept bitcoins in an IRA; the narrative has since changed with the creation of players such as iTrustCapital, Bitcoin IRA, BiTIra and Equity Trust. Of the two, the Roth version could have an advantage, Bogner says, especially if you think that the price of Bitcoin is going to explode in the future.
Therefore, to open a bitcoin IRA, you would work with special custodians who can store and trade cryptocurrency. This is because “Bitcoin IRAs are certainly not configured to accommodate traditional assets such as stocks, bonds and mutual funds,” Blaskey says. Although one platform has registered the name Bitcoin IRA, there are several brokerage houses that allow you to invest in cryptocurrency with a self-directed IRA. Recently, custodians and other companies designed to help investors include Bitcoin in their IRAs have become increasingly popular.
Because it is a self-directed IRA, the Bitcoin IRA offers tax advantages compared to buying cryptocurrency with a cryptocurrency broker or exchange. The Bitcoin IRA is the world's pioneering cryptocurrency IRA that addresses your investment needs with a full-service process. Most Bitcoin IRA providers include patented secure storage methods to help keep your digital currencies protected from theft once you buy them. It offers low fees using its advanced trading option, making it much more affordable than the Bitcoin IRA.
And, perhaps most importantly, consider Bitcoin and other cryptocurrencies as a small part of your overall retirement plan, not as its entirety. The Bitcoin IRA charges an initial commission on your initial investment, as well as a 2% transaction fee per trade. For investors nearing retirement, opening a Bitcoin IRA is probably not the most prudent option, given the volatility of cryptocurrencies. You can also set up a bitcoin IRA as a traditional account (for which contributions are tax-deductible and funds are taxed upon withdrawal) or a Roth account (with no tax relief on contributions, but distributions are tax-free).
While there are many references to Bitcoin IRAs, there is no specific account backed by the Internal Revenue Service (IRS) designed for cryptocurrency.