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Crypto Loans, Reporting Solo 401(k) Distribution and more | Client Q&A

AdMail Podcast

In this week’s episode, IRA Financial’s Adam Bergman Esq. answers questions about cryptocurrency loans, IRA options for the disabled and reporting Solo 401(k) contributions.

Question 1 from YouTube: A video addressing crypto loans inside of a Self-Directed IRA and using the loaned/borrowed “money” to purchase another asset/crypto be interesting.

Companies like BlockFi and Nexo will allow you to lend your cryptocurrency. You would then receive interest on the cryptos you lend. If you invest in them with a Self-Directed IRA, the interest would go back to the plan without tax.

Leveraging out your Bitcoin and other cryptos is an interesting way to grow your retirement savings. And yes, you can use the money you earn to reinvest in other alt coins, or look at other investments. You can take those earnings and put it in the markets, invest in real estate, or just about anything else. The best part is so long as the funds remain in your plan, they grow on a tax-deferred basis (or tax-free in the case of a Roth).

Question 2 from YouTube: Options for an Inherited IRA for the disabled?

Generally, there is no specific options for a disabled individual who inherits an IRA. Mr. Bergman thinks the best way to handle this situation is setting up a trust as the beneficiary. Setting up a trust as a primary beneficiary usually requires your spouse’s consent. The trust would inherit your IRA, and can make smart decisions for your disabled love one. Of course, you have to find a trusted trustee.

Keep in mind that if a non-spouse inherits your IRA, they have ten years to withdraw the entirety of funds from the IRA. You can no longer stretch out payments over your lifetime. However, nothing has to be withdrawn until that ten-year period is up. The funds will continue to grow in a tax-advantaged way until they are withdrawn. Of course, you should talk to a trusts and estates lawyer to set up the plan to ensure your wishes are met.

Question 3 from James B in Albuquerque, NM: Where do I report my Solo 401(k) contributions on my 1040 for 2020? I am self-employed and a sole proprietor.

Reporting your Solo 401(k) contributions used to be on page one of your Form 1040. That has changed and is now reported on Schedule One. Schedule C employees will report both elective deferral and profit contributions on the Schedule One of the 1040. If you have W-2 income, employee deferrals will be reported on this form as well. However, the profit sharing contribution would go on the 1120.

Distributions are still where they have always been. However, your contributions will goon this new form. You can check out the form here on the IRS website. If you look at line 15, you will notice where to add in your contributions.

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!


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