Menu Close

IRA Financial Group Blog

Ripple Lawsuit, Solo 401(k) Employer Contributions and more | Client Q&A

AdMail Podcast
3 Minute Read

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about the Ripple lawsuit, Solo 401(k) employer contributions and how long it takes to start trading on Gemini with an IRA.

Question 1 from YouTube: What are your thoughts on the SEC Ripple lawsuit? Is there risk to XRP? Thanks!

The SEC filed suit against Ripple, which is the largest owner of XRP. The SEC maintains that XRP is a security and not a cryptocurrency. The SEC alleges “that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” If it is deemed a security and not a crypto, the value might plummet.

The SEC is basically using the Howey Test to determine if XRP is a crypto or a security. The key fact we need to consider is if XRP is a common enterprise. It can only be used on the Ripple protocol, which is the big issue. XRP is the third largest market cap in the crypto space, just behind Bitcoin and Ethereum.

The value of XRP has certainly taken a tumble from a high of around 68 cents, all the way down to around 22 cents. It still remains a popular investment in the crypto space, but that could change if the SEC wins its suit against Ripple. Stay tuned!

Question 2 from Brawesh S in New York, NY: Hi – I have a Solo 401(k) plan with you. Question – my wife makes $60K W-2 and I make $210K W-2. We each did $19,500 employee contributions, how do the Solo 401(k) employer contributions work?

The $19,500 contributions that Brawesh and his wife each make are as the employees of the business. Anyone that participate in a 401(k) plan, can make these contributions, dollar for dollar. You cannot exceed this maximum for 2020 (and 2021), plus, you can only contribute your earned income, if it’s less than the maximum.

Since they are W-2 employees of their business, they can contribute an additional 25% of their earned income as the employer. Brawesh’s wife can make an additional contribution of $15,000, giving her a total of $34,500 that she can contribute to the Solo 401(k) plan. Assuming Brawesh is under the age of 50, he can only contribute the maximum allowable contribution for 2020 of $57,000, since his earnings exceed the maximum.

However, if they combine their earnings and then figure out the 25% employer contribution, Brawesh can actually allocate more to his wife’s employer profit sharing contribution. This works because one spouse earns much more than the other.

Question 3 from YouTube: How long does it take from the moment I transfer my Roth IRA contribution funds until I can trade Bitcoin on Gemini under your platform?

The best part of IRA Financial’s relationship with Gemini Exchange is that you can open your account on the exchange in the name of the IRA. You don’t need an LLC or third-party broker. This allows you to get up and running (and trading Bitcoin) in just a few days.

The best way to sign up for a Roth IRA is with the IRA Financial app. Once you create the plan and fund it, you will then follow the instruction of using your IRA to open an account on Gemini. Once the account is funded, you can trade immediately. Best of all, there is no annual tax reporting since the cryptos are traded within a tax-advantaged retirement plan!

AdMail – Keep it Coming

We hope you enjoyed the latest episode of AdMail. Mr. Bergman will continue to respond to questions each week so long there is a demand for them! If you have any questions for him, email him at [email protected].

As with his other podcasts, you can check out AdMail on SoundCloud. Be sure to subscribe to know when the next one pops up! Thanks for listening and have a great day, Self-Directed Nation!

Related Articles

[10:44 PM] Valerie Marszalek-Boik