BitIRA | The Essential Guide to Digital IRAs
Frequently Asked Questions
Why can’t I hold digital currencies in the retirement account I already have?
Digital currencies are considered a special asset class by the IRS, much like real estate or precious metals. As such, they can only be held in a Self-Directed IRA administered by a qualified custodian.
What is a custodian?
Basically, an IRA custodian is a financial institution that holds your account’s investments for safekeeping and ensures your account adheres to the relevant IRS and government regulations.
Can I keep my mutual funds, stocks, bonds, ETFs, and/or other investments in my retirement accounts?
Absolutely.You can even keep all of your existing retirement accounts, and shift only the funds you want to buy cryptocurrencies with into your digital IRA. (Remember, you can buy and sell assets in your retirement accounts with no tax penalty.)
Opening a digital IRA with BitIRA gives you more options and more control over your investments and your financial future.
What types of retirement accounts qualify?
Nearly everything.
Most all retirement accounts qualify for conversion to a Self-Directed IRA, including Traditional IRAs, Roth IRAs, 401(k)s, 403(b)s, TSPs, and others. If you want to confirm your IRA is eligible, contact BitIRA today.
How long does the transfer process take?
Depending on the type of retirement account being converted, it usually takes just a few days. On average, expect the process to last ten business days (at least five, rarely more than fifteen).
What cryptocurrencies can I buy?
The following digital currencies for placement in your IRA (symbol in parentheses):
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Chainlink (LINK)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
- Zcash (ZEC)
- Stellar Lumens (XLM)
- Aave (AAVE)
- Basic Attention Token (BAT)
- The Graph (GRT)
- Livepeer (LPT)
- Maker (MKR)
- yearn.finance (YFI)
- Compound (COMP)
- Dai (DAI)
- Uniswap (UNI)
Can I trade digital currencies in my new account?
Yes.
After your first purchase, you may buy and sell digital currency assets at your discretion within the My BitIRA platform. As long as proceeds are reinvested within your new retirement account (to any asset of your choice, digital currency or not), they will remain untaxed.
Can I withdraw funds from my new account?
Yes. However, selling your digital currencies and withdrawing your proceeds from your account is treated as a distribution. Likewise, selling your digital currencies (or any other assets) and moving the proceeds outside your retirement account is treated as a distribution.
Unless your age qualifies you to take distributions (or if you qualify under certain exceptions), you will incur an early withdrawal penalty: usually, a minimum 10% penalty, plus these funds are included in your annual gross income and taxed accordingly.
How am I supposed to hold crypto in an IRA?
According to an official IRS ruling from Notice 2014-21, cryptocurrencies are treated as personal property for taxation purposes. Therefore we can deduce they’re allowable in an IRA.
Consequently, anyone who converts their existing retirement account to a Self-Directed IRA can allocate a portion of their savings into digital currencies with zero penalty. (Only in rare cases are penalties possible.) Since digital currencies are treated as personal property, they receive tax-deferred status, allowing them to appreciate in value without immediate tax liability. Any profit from buying and selling digital currencies within your account can be reinvested in other retirement assets and retained tax-free until taken as a distribution.
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DISCLAIMER: The decision to purchase or sell virtual currencies (also known as “digital currencies” or “cryptocurrencies”), and which cryptocurrencies to purchase or sell, is ultimately your decision alone. Purchase and/or sale decisions are highly individual and must be a function of each customer’s individual financial situation, goals, and risk tolerance. BitIRA is not a financial planner, investment advisor or retirement specialist. BitIRA is not responsible for your decision to purchase or sell digital currencies, or the timing or results of any such act (or failure to act). Any and all assistance BitIRA may offer or provide does not create a fiduciary relationship between you and BitIRA. Any and all purchases and sales are made subject to your own research, prudence, and judgment. BitIRA does not provide tax, investment, financial planning, retirement-specific, or legal advisory services and no one associated with BitIRA is authorized to render any such advice or service. BitIRA is not responsible for any consequences of you purchasing cryptocurrencies for IRAs, trusts or other persons or entities, or for any changes in the laws relating to such purchases or sales. Any written or oral statements by BitIRA, its principals, agents, or representatives, relating to future events constitute opinions only, and are not representations of fact.