How To Buy Cryptocurrencies With A Crypto IRA

Cryptocurrency IRAs have many advantages, including tax-saving benefits, 24/7 trading, and diversification.

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What Are Cryptocurrencies? 

The world is becoming digitized, and money is following suit. Blockchain technology has enabled a new type of money, digital currencies, also known as cryptocurrencies, which have the potential to help people around the world. Cryptocurrencies are decentralized, meaning they aren’t controlled by a single person, company, or country, unlike fiat currency. This is one of many reasons why people invest in cryptocurrencies with a crypto IRA.

Cryptocurrencies and blockchains are powered by technology. For example, blockchain keeps records of transactions, and they cannot be duplicated, reversed, or otherwise manipulated, and all transactions are publicly viewable at any time. As the usage and trust for cryptocurrencies grow, their prices could increase as well. Possibly one of the best ways to take advantage of cryptocurrencies is with a cryptocurrency IRA.

 

Invest in Crypto

 

The two largest cryptocurrencies are Bitcoin and Ethereum. Both can be used as investments within cryptocurrency IRAs. They can also act as stores of value and can be used to make transactions. Bitcoin is by far the largest cryptocurrency, while Ethereum comes in second place. Bitcoin is the crypto that headlined the cryptocurrency revolution, and Ethereum’s network is currently in the process of improving with Ethereum 2.0.

 

Basics of Cryptocurrency IRAs

Cryptocurrency IRAs are tax-advantaged retirement accounts that allow you to invest in different cryptocurrencies, like Bitcoin, Ethereum, Litecoin, and even digital gold. There are two main versions of cryptocurrency IRAs: traditional cryptocurrency IRAs and cryptocurrency Roth IRAs.

 

Crypto IRA vs Crypto Roth IRA

Both types of IRAs offer tax advantages but in different ways. A traditional crypto IRA offers the advantage of being able to invest pre-tax money at the beginning, providing a larger starting amount to grow over time but requires taxes to be paid upon withdrawal at income tax rates. Whereas a crypto Roth IRA requires initial investments to be made after taxes are paid, which leads to tax-free¹ withdrawals.

 

Advantages of a Cryptocurrency IRA

There are many advantages of cryptocurrency IRAs. Many investors utilize cryptocurrency IRAs for their unique benefits, including significant tax advantages, diversification, 24/7 self-trading, and potential growth.

Capital gains taxes, along with other taxes, can take a substantial portion of your wealth away every year. But owners of cryptocurrency IRAs benefit from having tax-deferred retirement accounts. This means they could have the potential to keep more of their wealth if they withdraw their money after the age of 59 and a half.

Cryptocurrency IRAs can provide diversification outside of stock markets, bonds, and other traditional investments because they are low-correlation assets. If assets like stocks, gold, and mutual funds fall in price, diversifying with cryptocurrencies could help protect your portfolio due to their low correlation to traditional markets.

 

Invest in Crypto

Another advantage of cryptocurrency IRAs is that the Bitcoin IRA platform allows investors to buy, sell, and swap their assets 24/7. This is unlike the traditional stock market which restricts investing activity to the stock market trading hours, which is 9:30 am to 4 pm Eastern time, weekdays only.

But possibly the biggest advantage of cryptocurrency IRAs is the potential growth of cryptocurrencies. Companies and individuals alike have been promoting and investing in these digital assets. Banks like JP Morgan are researching cryptocurrencies as well as making their stablecoin. This institutional support could help boost the growth of cryptocurrencies, and cryptocurrency experts like Anthony Pompliano predict far more growth in the future. If you want to invest in cryptocurrencies too, then you can consider buying crypto with a cryptocurrency IRA.

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Can I Buy Bitcoin and Ethereum in My Crypto IRA?

Our cryptocurrency IRAs offer options like Bitcoin and Ethereum in addition to five other assets. Other assets include Litecoin, Bitcoin Cash, Stellar Lumens, Zcash, as well as physical gold. Each of these assets has unique characteristics and strengths. For example, Litecoin enables faster transactions compared to Bitcoin, and Zcash’s strength is its focus on user privacy.

 

Can I Roll Over My IRA into a Cryptocurrency IRA?

Traditional IRAs, Roth IRAs, and 401ks can be rolled over into a self-directed crypto IRA on our platform. We make crypto IRA rollovers easy; the process requires just a few steps. Investors can start self-trading cryptocurrencies after their accounts are set up, but they should understand the tax implications of cryptocurrency IRAs first.

 

Cryptocurrency IRAs and Taxes

Non-retirement brokerage accounts require their users to pay taxes based on how much they have profited from their investments, known commonly as capital gains taxes. But this does not apply inside of cryptocurrency Roth IRAs. Trades within Roth IRAs are not considered taxable events, which not only saves investors from having to deal with paperwork but also exempts them from the taxes that would otherwise be due on their gains. Saving on this tax is important to investors to understand because long-term capital gains taxes can be as high as 20%.

 

Traditional IRA Roth IRA Traditional 401k Roth 401k
Pay taxes later Pay taxes now Pay taxes later Pay taxes now
Deduct contributions Tax-free growth Deduct contributions Tax-free growth
No employer matching No employer matching Potential employer matching Potential employer matching
No income limits Income limits No income limits No income limits
Typically up to $6,000/year Typically up to $6,000/year Typically up to $19,500/year Typically up to $19,500/year

 

Investing in potentially high-return assets like cryptos with non-retirement accounts can take a toll when tax time comes, as well as create administrative headaches in keeping track of trades. But as cryptocurrency potentially gains greater adoption and Bitcoin becomes more popular, crypto retirement accounts could provide an attractive way to invest in this asset class.

Paying less taxes isn’t the only tax-related benefit of cryptocurrency IRAs. Taxes are simplified on our platform. Not only does holding cryptocurrency assets within one of our IRAs offer tax-saving benefits, but we will also provide the necessary documentation for your cryptocurrency IRA during tax season. Holding crypto in a retirement portfolio is an attractive option for many savers, and we make the process of opening and maintaining a self-directed crypto IRA straightforward.

 

How Much Money Can I Put In a Cryptocurrency IRA?

The maximum contribution limits for the 2021 tax year for IRAs is $6,000 for those under the age of 50 years old or $7,000 for those over the age of 50 years old. Even though there are limits to cryptocurrency IRA contributions, tens of thousands of investors choose Bitcoin IRA because of the many benefits.

 

Why 100K+ Users Invest in Crypto with Bitcoin IRA

We’re the first Bitcoin retirement platform and we’ve been serving users since 2016. Since then, our platform has gained over 2,500 5-star reviews and more than 100,000 users. Plus, with our new IRA Earn program, investors can also earn passive income on their assets with up to 6%* per year, with low minimums, monthly payouts all from their secure IRAs.

Security is our top priority. Our platform is secured using SSL encryption, and all funds are held in cold storage wallets with our partner, BitGo, the world’s premier qualified custodian. BitGo is regulated in the United States and their cold storage wallets are protected by multi-signature technology. You could take advantage of these benefits by signing up for a cryptocurrency IRA.

 

How to Create a Cryptocurrency IRA Today

There are two main ways to create a cryptocurrency or Bitcoin IRA. The first way is to create a new cryptocurrency IRA and transfer money from your bank into the new IRA. The second way is to rollover funds from your current IRA into a new cryptocurrency IRA.

 

 

Cryptocurrency IRAs on our platform have the potential to offer countless benefits to users, and the digital assets we support have been endorsed by many institutions that expect them to continue to grow in price. If you want to make cryptocurrencies like Bitcoin and Ethereum a part of your future, then you can consider signing up for a cryptocurrency IRA today.

 

*Interest rates may vary.
¹ Joining and exiting the program requires approximately a 5 day settlement period.

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