There aren’t too many ways to gain exposure to alt coins like Bitcoin as a way to earn money in retirement. Personally, I feel that a self-directed Bitcoin IRA is the best way to go. And at first it was the only option. But recently, the IRS allowed cryptocurrencies in 401(k)s.
But to answer the question, “Does a coin IRA help you add Bitcoin to your retirement?” It absolutely does and from personal experience, I can tell you that it is the smartest way to add it to your retirement and the best way to get the biggest advantages and benefits as well.
What do I mean? Besides having the opportunity to add Bitcoin to your retirement account, you also can make the most of certain tax breaks, diversification, a hedge against inflation, and other wonderful benefits.
Before I get into the benefits specifically, I’d also like to tell you how you can best go about opening a Bitcoin IRA for your retirement. Because getting started with a cryptocurrency IRA is the only way to begin taking advantage of these amazing benefits and solidifying your retirement for the future.
How to Get Started Opening a Bitcoin IRA
Let me get the technicalities out of the way first. Even though we call it a Bitcoin IRA, the account you want to open is technically a SDIRA account, otherwise known as a self-directed individual retirement account.
Now that we’ve cleared that up, it’s time to find the best Bitcoin IRA company to help you open the account, fund the account, and purchase your first cryptocurrencies like Bitcoin, Litecoin, and Ripple.
When I search for a Bitcoin IRA broker, I tend to focus on certain specific areas. The things to look for include:
- How they rank on online peer-reviewed websites including the Better Business Bureau, the Business Consumer Alliance, and Trustlink
- How they store your cryptocurrency after purchase
- Do they have offices in the United States?
- Are they known for safely processing Bitcoin purchases?
- Do they have an excellent reputation in the industry?
- Do their peers consider them an asset to the industry?
- Have previous customers shared numerous positive reviews about them online?
- Have they received any industry awards or accolades?
- Do they have years of experience in the alternative investment space?
Your cryptocurrency IRA company does not need to have excellent marks in each one of the categories above. But it would certainly help if they excel in the wide majority of these areas. Do not hesitate to ask these questions to determine how well the crypto IRA company you’re considering stacks up in these areas.
How to Fund a Self-Directed Bitcoin IRA
Now that you’ve narrowed down your options and chose a Bitcoin IRA company to work with, it’s time to begin the account creation and funding process.
Basically, to create the account you’ll have to contact your new Bitcoin broker and tell them about your wishes. They will get started and begin taking care of the entire account creation process on your behalf.
Even better, it’s easier than ever to fund a cryptocurrency IRA right now. In fact, they made it so easy that there are three ways to fund your account immediately so you can get started with this investment.
Your funding options include:
- Funding a cryptocurrency IRA with an account rollover – believe it or not, there may come a time where you leave your old job or retire and you have an old 401(k) with your employer that’s going to no longer be active. Instead of letting this account remain dormant, you decide to do something about it and want to use the proceeds to invest in cryptocurrencies. In this case, you will tell your crypto IRA broker to initiate a 401(k) to IRA rollover. The account specialist will contact your 401(k) administrator and provide the necessary information so they can begin the rollover process. With a direct rollover, they will send the proceeds to you and you will need to send the funds to your new IRA account administrator within 60 days or you’ll have to pay taxes and penalties. With an indirect rollover, the account administrator will send the funds directly to your new IRA custodian.
- Fund your cryptocurrency IRA with a transfer – funding your account via transfer is also an excellent option that might be possible depending on your situation. Do you have an existing traditional or Roth IRA? If you do, and you’d like to have the opportunity to purchase alternative investments, then you’ll need to transfer the funds from this account into a new self-directed individual retirement account that has the ability to purchase cryptocurrencies within. You can transfer all of the funds from your traditional or Roth IRA, or just use some of the funds to have money to invest in cryptocurrencies in your new account. It’s up to you. Even better, account transfers are allowed as often as you want to make them. Rollovers are only allowed to take place once every 12 months, so this is a big difference.
- Funding a cryptocurrency IRA with regular contributions – each year, you are allowed to contribute a certain amount of money to your self-directed IRA. In tax year 2021, you can contribute $6000 per year if you are below 50 years old and $7000 per year if you are 50 years old or older.
Cryptocurrency IRA Benefits
Before we go, I also want to share the benefits of a cryptocurrency IRA. They include the following:
- Tax advantages – the IRS has basically created a loophole for self-directed IRA account holders that allows them to make tax-deferred or tax-free investments. In a tax-deferred traditional self-directed IRA, you can lower your yearly gross income and you will not pay taxes until you begin taking distributions in retirement. Distributions begin at 59 ½ years old. Tax-free investors pay taxes upfront and do not have to pay taxes again ever.
- Cryptocurrency is trending right now – it may have cooled off at the moment, but the recent selloff presents a great opportunity. You can get Bitcoin and other cryptocurrencies much cheaper than you could three months ago, so strike while the iron is hot.
Do yourself a favor and open up a cryptocurrency IRA today. You will not be disappointed with this exciting long-term investment strategy.