Can you buy Ether with retirement funds? Learn more below.
- Cryptocurrency sales are more popular than ever
- Ether is the second most popular cryptocurrency
- Upgrades to Ethereum 2.0 can make all the difference
Cryptocurrency – Ether and the Basics
Ethereum, a cryptocurrency, was launched back in 2015. It is a decentralized software platform that enables Smart Contacts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party. The applications on Ethereum are run on its platform-specific cryptographic token, known as ether. Ether is like a vehicle for moving around on the Ethereum platform and is sought by mostly developers who want to develop and run applications inside Ethereum. According to Ethereum, it can codify, decentralize, secure and trade just about anything.
As the second most popular cryptocurrency, Ether offers opportunities in much the same manner as Bitcoin, with the possible benefit of it not being quite as well-known. Cryptocurrencies, such as Ethereum, are generally as secure as possessing physical precious metal.
Can You Buy Ether With Retirement Funds?
The United States Internal Revenue Service has deemed that you cannot purchase life insurance, collectibles, or perform direct and indirect prohibited transactions with retirement funds, but that’s it. Therefore, you can buy Ether with retirement funds, as well as other alternative investments, following the Self-Directed IRA steps below:
- Working with IRA Financial Group, purchase cryptocurrencies, such as Bitcoins, Ethereum, Ethereum Classic, or Litecoins with a Self-Directed IRA is quick and easy.
- Establish a Self-Directed IRA account with IRA Financial Group.
- Rollover retirement funds, cash or in-kind, tax-free to new Self-Directed IRA account.
- The IRA assets will then be transferred to the LLC tax-free in exchange for 100% interest in the newly established IRA LLC.
- As manager of the LLC, you will open a bank account for the LLC at any local bank. IRA Financial Group will draft an LLC Operating Agreement identifying you as manager of the LLC and the IRA as the sole member.
- You, as manager of the LLC, will then have checkbook control over all the assets/funds in the IRA LLC to make the Ethereum or other cryptocurrency investment.
- A cryptocurrency account will be opened in the name of the IRA LLC. We have helped hundreds of clients establish cryptocurrency accounts for their self-directed IRA LLC at most of the popular cryptocurrency exchanges.
- As manager of the LLC, you then wire the IRA LLC funds to the new cryptocurrency account opened at the exchange. The account will be opened in the name of the IRA LLC. You will have the option to keep the cryptos on an exchange, such as Coinbase, or move them to a digital or hardwallet you control and where you hold the private key.
- Since the LLC is owned 100% by an IRA, it will be treated as a disregarded entity for tax purposes. No Federal income tax return is required to be filed and all income and gains from the cryptocurrency investment will flow back to the IRA without tax.
With the coming upgrade to Ether, and the cryptocurrency’s network, many more transactions are possible at any given time. Ether may no longer be relegated to second-place, existing in the shadow of Bitcoin. With a Self-Directed IRA you can invest in the cryptocurrency of your choice. The IRS has ruled that it can be held as property, and there are major tax benefits to having used your Self-Directed IRA to make the purchase.