A virtual currency IRA allows you to diversify your retirement savings account by investing in digital currencies like Bitcoin. But be wary, as these investments come with their own risk due to volatile cryptocurrency valuations.
Investors considering opening a crypto IRA should research all available options and fees carefully. There are several online brokers and robo-advisors which allow investors to buy and sell cryptocurrency using their IRA account.
What is a crypto IRA?
A crypto IRA is an individual retirement account (IRA) designed to enable investors to hold cryptocurrency as assets. Cryptocurrencies have the potential to appreciate in value as mediums of exchange and stores of value, making them attractive long-term investments. Many investors purchase cryptos in their IRAs in order to diversify their portfolio and defer paying taxes until withdrawing them later on.
Investment of crypto assets via an IRA requires the assistance of a custodian that offers these services, along with low fees and secure storage solutions for their digital assets. Reputable custodians typically offer multiple security protocols – including safe storage and encryption – in addition to insurance coverage to safeguard investors’ investments in digital form.
Investors can open a crypto IRA or transfer funds from an existing traditional or Roth IRA into it, while some providers also enable transfers from other retirement accounts such as 401(k)s or SEP IRAs.
How do I set up a crypto IRA?
Self-directed retirement accounts (SDRs) make investing in crypto possible with an IRA, provided by national banks, investment firms, online brokers and robo-advisors. Koinly ranks the best providers of traditional and Roth IRAs based on fees, customer service quality, investment options available and other factors.
Keep in mind that cryptocurrency investments may perform well, but their values could still decrease over time. Thus, it’s wiser to prioritize saving for retirement first rather than getting caught up in cryptocurrency-induced hype or FOMO.
As cryptocurrency investments can be highly volatile, they may not be suitable for retirement investments. Investors who would like to include crypto as part of their portfolio should consult a custodian that specializes in this form of account; such firms typically charge higher fees due to the extra work and security requirements associated with working with cryptocurrency, making due diligence before investing in one essential.
Can I buy crypto with my IRA?
Although it’s technically possible to purchase crypto with an IRA, doing so requires working with a custodian that specializes in this form of investment as well as conducting extensive research on the crypto market as a whole, any future regulatory developments and potential coins that might take their place within it.
Self-directed IRAs (SDIRAs) allow investors to incorporate Bitcoin and other cryptocurrencies into their retirement portfolio with tax advantages similar to traditional IRAs and 401(k)s, and their potentially enormous growth potential of crypto assets.
SDIRAs are available to individuals and can be opened either with new money or transferred from other retirement accounts such as 401(k), 403(b), TSPs, pensions or SEP IRAs. You should always be wary of fees charged by your chosen platform for trading, transaction and key storage fees as this could reduce potential returns over time.
Can I sell crypto with my IRA?
People looking to add cryptocurrency holdings to their retirement portfolio may do so for various reasons, including belief in long-term growth potential and diversification benefits. But before adding crypto assets to an IRA account, it is essential that investors be aware that there may be fees involved with such an investment strategy.
Some Bitcoin IRA providers charge annual maintenance fees and trading fees per buy or sell transaction, which can quickly add up. Over time this could have an enormously detrimental effect on your finances.
Others, like IRA Financial, do not charge an annual asset custody fee and offer lower trading fees. Furthermore, our IRA custodian stores digital assets in a safe and insured cold storage environment so more of your hard-earned dollars remain invested for long-term growth. For more information or assistance in meeting your unique goals and needs please don’t hesitate to get in touch – we look forward to helping!
