For individuals looking to build their crypto wealth, a crypto IRA may be your best bet. Cryptocurrency IRAs allow you to avoid capital gains tax, so long as you keep your investments in your IRA account. Deferring capital gains taxes can be more beneficial than it seems on the surface. It allows investors to reinvest the untaxed gains, which can lead to more significant compound growth over time, ultimately resulting in a larger overall investment portfolio and potentially lower tax liability upon withdrawal.
Although cryptocurrencies are volatile investments, the asset class has outperformed almost any other investment over the last decade.
Historically, the crypto market has traded in clear cycles of bull and bear markets with painful crashes following unbelievable pumps. So far, not counting the recent one (yet), every time the crypto market has crashed (at least Bitcoin and Ethereum), it has always recovered and reached new all-time highs. If you're a long term believer in a decentralized future, you may want to consider opening an investment retirement account with a platform that gives you access to cryptocurrency with the tax benefits of an IRA.
The Best Crypto IRAs
- Best For Beginner Cryptocurrency Investors: iTrustCapital
- Best For Those Seeking a Licensed Investment Professional: Digital Asset Investment Management
- Best Full-Service Solution: Bitcoin IRA
- Best Alternate Asset Experience: Broad Financial
- Best For Crypto IRA Investors: My Digital Money
- Best For Tax-Deferred Gains: BitIRA
Let's look at the best crypto IRAs. There are several options on the market which you can compare –– these platforms typically have slightly higher fees than regular crypto exchanges, but the tax benefits often make the tradeoff well worth it.
1. iTrustCapital: The Best Crypto IRA for Beginner Cryptocurrency Investors
iTrustCapital is the leading digital asset IRA trading platform that allows you to directly buy and trade cryptocurrencies and physical gold in real-time through their retirement accounts.
They have completely transparent pricing with crypto being a 1% trade fee and gold $50 over spot. They also provide the following:
- IRA setup at iTrust Custodial Services
- Facilitation of any transfers to your IRA
- IRS and tax reports by iTrust Custodial Services
- Unlimited storage with institutional custody partners
- Platform support and maintenance
2. Digital Asset Investment Management: Best for Those Seeking a Licensed Investment Professional
When you’re looking for a licensed professional who can help you manage your portfolio, reach out to DAIM or Digital Asset Investment Management. This advisor can help you complete a great many tasks that will vastly improve your digital holdings, including:
- Diversifying your portfolio
- Learning more about crypto
- Planning for the future or retirement
- Understanding the tax liabilities associated with digital investments
- Gaining access to pure crypto
- Investing in assorted digital assets
If you like, you can integrate DAIM with your retirement accounts, pairing with investments like a Roth, traditional IRA, SEP, SIMPLE or 401(k) account. Along with this level of functionality, you get the best reporting, 24/7 access to your account, a wealth of information and professional investment advice that doesn’t shy away from digital or crypto assets.
3. Bitcoin IRA: The Best Full-Service
Bitcoin IRA has an award-winning experience due to an easy-to-use platform, accounts setup in only few minutes, full-service IRA rollovers, educational content, and Bitcoin IRA experts who are there to answer any questions. Bitcoin IRA offers over 60+ cryptocurrencies, 100% offline cold storage, custody insurance up to $700 million, and 24/7 buying and selling.
Bitcoin IRA is a full-service solution that allows you to invest in Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash and Ethereum Classic with your IRA. This is an amazing selection compared to most of Bitcoin IRA's competitors. The firm works to make the complex process of crypto investing simpler and safer.
Bitcoin IRA is especially great for large crypto investors because of its low fees and fantastic custody insurance. Your digital assets are stored and insured for up to $700 million with BitGo Trust, which is powered by BitGo Inc.’s technology. BitGo Inc. is the world’s largest processor of on-chain bitcoin transactions, processing 20% of all global Bitcoin transactions and holding over $2 billion in assets in wallet.
Whether you need help with a rollover, traditional or Roth IRA—it only takes a few minutes to open an account with Bitcoin IRA.
4. Broad Financial: The Best Crypto IRA for a Variety of Alternate Assets
Broad Financial is a flexible platform that allows you to self-direct your IRA on the trajectory that you prefer. This crypto IRA trust has flat fees—there are no asset-based fees or transaction fees. You have an unlimited selection of tokens to invest in, and you can choose any exchange you like to make these trades.
The fee structure features:
- $1195 one-time setup fee
- $100 one-time custodian setup fee
- $380 annual maintenance fee (payable in $95 quarterly installments)
- Free lifetime customer support
- Tax-advantaged accounts
A significant advantage that helps Broad Financial stand out from the crowd is that you can hold your private keys. When you can hold your private keys, you gain certain benefits that the competition cannot provide, like:
- Choosing the storage format you prefer
- Using an existing wallet
- Customizing your security for your own peace of mind
You can also invest in:
- Real estate
- Private loans
- Precious metals
- Small businesses, etc.
With this level of flexibility, you can move your retirement funds to the places you prefer, saving you both time and energy while increasing your net worth.
5. My Digital Money
My Digital Money is a U.S.-based crypto trading platform that partners with My Equity Trust to provide self-directed crypto IRA products. With a one-time setup fee of $50, you can invest with your IRA funds and earn tax-free or tax-advantaged profits that bolster your retirement portfolio.
You can open a range of IRA accounts, including:
- Simple IRA
- Traditional IRA
- Roth IRA
- Simplified Employee Pension Plan (SEP) IRA
Set up a cash account to start trading and then the MDM platform allows you to trade away from the prevailing markets, reducing risk and helping you purchase at the best price possible. You can also use limit orders that buy or sell at specific prices or after certain price changes.
You have complete control of your IRA funds, and you can always trade crypto independent of your IRA on the same platform, if you so choose.
Most crypto IRA companies take no responsibility for the security of your crypto. BitIRA turns this trend on its head and offers end-to-end insurance for your account.
You also get true cold storage for your crypto — it's kept on a hard drive in a vault that is physically guarded around the clock. You get this protection along with praiseworthy customer service that will make you feel comfortable even if you have never invested in crypto before.
The selection of cryptocurrencies currently available with BitIRA includes Bitcoin, Bitcoin Cash, Litecoin, Ethereum Classic, Ethereum and Ripple.
How Crypto IRAs Work
A crypto IRA falls under the umbrella of self-directed IRAs. Crypto’s volatility and looser regulatory structure likely scare investment custodians away from accepting responsibility for consistent returns.
Most financial institutions brand their crypto IRAs with the Bitcoin name because of Bitcoin’s popularity and relative stability even though most offer other cryptos like Ethereum as well. There are IRA investment opportunities available in other major coins including Ether, Litecoin, XRP and Bitcoin Cash. They usually have higher fees associated with them than traditional IRAs, but it may be well worth it to avoid capital gains taxes.
The average crypto IRA will have a holding fee, minimum monthly account fee, establishment fee and fees for purchasing assets and fund transfers. Traditional IRA accounts generally do not have any establishment or monthly maintenance fees.
Within an IRA designation, cryptocurrency accounts are automatically subjected to regulations they would otherwise avoid. IRA contribution limits apply to crypto IRAs as well, for example. Investors are also required to purchase the cryptocurrencies in an IRA from a designated firm. These firms use their monopoly to charge fees for their involvement. This is still an improvement, however, because these firms didn't exist only a few years ago, making it impossible to buy crypto with an IRA.
Additionally, crypto IRAs can only be traded during standard market hours. The crypto market is open for trading 24/7/365, so the value of an IRA can change significantly over a weekend while leaving the investor with no recourse. Crypto within an IRA account is subject to capital gains taxes as well.
Benefits of Crypto IRAs
The first and most obvious benefit of a crypto IRA is the tax benefits. Given the potential for abnormally high returns, these tax benefits make it well worth it to invest in digital assets through a crypto IRA. Cryptocurrency IRAs also incentivize investors to hold cryptocurrency over the long-term. If digital assets continue to see similar levels of adoption, then holding crypto for the long-term may be a great investment strategy that could outperform traditional assets.
If you want to trade crypto while holding your IRA, you need a good trading platform. Some things to consider when choosing where to trade crypto are the platform's security, altcoin offerings and customer support. Some platforms, like Uphold, allow you to earn interest on your digital assets. This is a great way to accumulate more cryptocurrency over time without needing to invest more into your trading account. Here are a few of the best to consider:
- securely through eToro's websiteBest For:Demo Accounts
Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more
- securely through Coinbase's websiteBest For:Coinbase Learn
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
Can You Buy Crypto In a Roth IRA?
Unfortunately, if you already have a Roth IRA, it's unlikely you'll be able to buy Bitcoin or cryptocurrencies with it. Most investment retirement accounts for cryptocurrencies are self-directed, and you'll likely need to open a new IRA account specifically for cryptocurrency investing, as most traditional IRAs don't support cryptocurrency. Luckily this is usually not too difficult with the best crypto IRA platforms. Alternatively, you may want to wait until cryptocurrencies are added to traditional Roth IRAs. However, this may be far in the future and Bitcoin may be much more expensive by the time this happens.
Retiring off Cryptocurrency With a Crypto IRA
If you are looking for a way to inject growth potential into a long-term portfolio, using a crypto IRA is a viable option. Crypto may also be a good last-minute hedge against inflation or low-interest rates for older people who are about to retire. However, remember that cryptocurrencies are inherently volatile, so if you're looking to preserve wealth (as opposed to growing wealth), you should consider a traditional retirement account. While it may be good to have some exposure to crypto as a retiree, it certainly shouldn't be your only investment.
It may be a bit premature to put everything into crypto even under the tax haven of the IRA. However, it may also be time to take a serious look at how this market can make your golden years even more fruitful.
Frequently Asked Questions
Can you put bitcoin in an IRA?
Absolutely. Through a crypto IRA company, you can hold Bitcoin and many other major cryptocurrencies in an IRA account. This account is subject to the same rules and has the same advantages of an IRA that holds fiat currency.
Is a bitcoin IRA Safe?
Holding crypto always comes with an added degree of risk. Reputable crypto IRA companies partner with a professional custodian for added security, but most of them assume no primary legal responsibility for your holdings.
Continue reading: BEST RETIREMENT ACCOUNTS
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