IRA Financial’s Adam Bergman discusses why tax attorneys and other smart investors use a Self-Directed Roth IRA to buy Bitcoin and other cryptocurrencies.
In his latest podcast, Mr. Bergman talks about the power of tax-free investing in Bitcoin. Thanks to the rules of the Roth IRA, he thinks it’s the best vehicle to make investments with. In fact, when you self-direct your retirement account, you can invest in just about anything. So, how do tax attorneys buy Bitcoin?
Investing in Bitcoin
We must first preface this by saying IRA Financial is not telling you to invest in Bitcoin, or offering any other investment advice. Mr. Bergman, as an educated tax attorney, is describing the best way to invest in Bitcoin, if you so choose. This podcast is for educational purposes only.
Bitcoin is an emerging asset. There is still quite a bit of volatility in it (though not as much as in years past). On the plus side, it looks like Bitcoin, and other digital currencies, are here to stay. A few years ago, you could purchase one Bitcoin for pennies. As it picked up steam, the price soared and eventually topped out over $19,000 per “token.” As with many new asset classes, it came down to Earth and bottomed out late-2018 at around $3,200. However, as of this writing, it’s over $10,000.
Obviously, if you bought into Bitcoin before it hit the limelight, you scored big. The underling technology, called Blockchain, is what makes it so unique. This technology, is groundbreaking not only for cryptocurrencies, but across all platforms where online security is a must.
It’s because of this technology, and because cryptos are decentralized, that gives them staying power. Investing in Bitcoin should be seriously considered if you are interested in diversifying your holdings. Mr. Bergman himself invests in Bitcoin, but only a small percentage of his portfolio. So how does Mr. Bergman invest in Bitcoin?
The Self-Directed Roth IRA
Those that are familiar with the Roth IRA know it’s arguably the best retirement plan around. It allows you to contribute after-tax money to your retirement savings which will produce tax-free income during retirement. If you invest in Bitcoin outside of a retirement account, you’ll be looking at tons of taxes. However, when investments are made inside of an IRA, taxes are deferred until you start distributing funds. In the case of a Roth IRA, taxes are never due on qualified distributions!
The caveat is that the IRA must be “self-directed.” Generally, you can’t open an IRA at a local bank and invest in what you want. You need a special custodian, such as IRA Financial, to make alternative asset investments. By self-directing your Roth IRA, you can invest in anything not prohibited by the IRS, including Bitcoin.
Just think – you invest $5,000 in Bitcoin and it turns into $1,000,000. If you invested with a Roth, that million dollars would be tax-free once you’ve reached age 59 1/2. That’s the age you can start withdrawing retirement funds without being penalized. Note – the Roth must be opened for at least five years as well.
The IRA Financial Difference
IRA Financial has partnered with Gemini Exchange, a leading cryptocurrency custodian and exchange, to invest in Bitcoin directly from our app. Now, you can skip the middle man and buy, sell and trade all your cryptocurrencies from the palm of your hand.
Our Self-Directed Roth IRA is easy to setup, either through the app or with a simple phone call. You can rollover existing funds or start with new contributions. Since you have checkbook control of your account funds, you can invest in whatever you want, whenever you want.
When you choose to buy Bitcoin with your retirement funds, you can benefit from the tax advantages of the plan and also help diversify your portfolio. Be sure to check out our SoundCloud page for all of Adam Bergman’s podcasts. Thanks for listening and happy investing!