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Bitcoin Roth IRA Investments

Bitcoin Roth IRA Investments

Bitcoin Roth IRA Investments

In case you haven’t noticed, the price of Bitcoin (BTC) continues to climb once again.  Some numbers to consider:  As of this writing, BTC is now at $7,930.  On December 14, 2018, Bitcoin was at $3,179.  Just one month ago, $5,253, which represents more than a 50% gain.  If you thought Bitcoin and other cryptocurrencies were dead in the water, think again!

Obviously, this doesn’t guarantee that Bitcoin will see another meteoric rise, however, it does signify that it’s not fading out to nothing.  While we don’t offer investment advice, Bitcoin is something that’s worth keeping and eye on.  If you’re considering investing in BTC or other cryptos, we believe a Roth IRA might be the perfect investment vehicle.

UPDATE: According to this recent CNBC.com article, the rise of Bitcoin can be attributed to a few factors.  First, the back and forth trade wars between the US and China are causing investors to hedge against the falling yuan.  Next, Asia has been quiet, but is now back in full swing in the Bitcoin market.  And lastly, investors are optimistic as more mainstream financial institutions, such as Fidelity, are starting to offer Bitcoin investments.

What is a Roth IRA?

A Roth IRA is a very, tax-advantageous account used for retirement planning. The main benefit is that all qualified withdrawals during retirement are tax-free. The one drawback is there is no immediate tax-break as in traditional IRAs. But, that’s more than made up for when you don’t have to pay taxes on your distributions. This includes both the contributions and earnings.

Is the Roth option right for you? It’s largely considered that there are two factors when deciding between a Roth and traditional IRA: your age and your income. The younger you are, the more you can take advantage of the benefit of tax-free growth. Further, the lower your annual income, the more after-tax contributions make sense. However, if you are already earning your peak income, it might make sense to fund a traditional plan, which will lower your taxable income in a given year.

Self-Directing Your Roth IRA

If you wish to invest in alternative investments, such as Bitcoin, you’ll need a special IRA – in this case, the Self-Directed Roth IRA. Many financial institutions that offer Roth IRAs, limit the types of investments you can make. Therefore, you need a custodian that will allow for Bitcoin investments. IRA Financial is among the leaders in alternative asset investments using retirement funds. This is because we don’t tell you what you can and cannot invest in. We simply let you know if it’s an approved IRA investment.

On top of that, IRA Financial offers both “checkbook control” and “private key control” for your Bitcoin Roth IRA investments. The former allows you to link a checking account or debit card to the plan and gives you the freedom to invest whenever you want. The latter is designed for Bitcoin and other cryptocurrency investments. It allows you to link to a crypto exchange, such as Coinbase, or directly to your digital or hard wallet.

Read This: Bitcoin 401(k) Gains Trust Among Millennials

Bitcoin Roth IRA Investments

Now that you know the advantages of the Self-Directed Roth IRA, here is how you can use it to invest in Bitcoin:

  1. Establish a Self-Directed Roth IRA LLC with IRA Financial.
  2. Rollover funds to the plan.
  3. IRA Assets then transfer to the LLC.
  4. As manager of the LLC, you open a bank account for the LLC.
  5. Utilizing Checkbook or Private Key Control, you can then make your Bitcoin Investment.
  6. Enjoy the benefits of tax-free gains on your investment.

You can choose a crypto exchange to buy, sell and trade your Bitcoin. Alternatively, you can use a hard wallet (or digital wallet) to invest with your cryptos. The choice is completely up to you. The great thing about using retirement funds is that all gains from the invest flow back into the account, tax-free. Since Roth IRAs are funded with after-tax funds, all withdrawals will be tax-free! (So long as the account has been open for at least five years and you are age 59 1/2 or older.)

Conclusion

Bitcoin and other cryptocurrencies are here to stay. Where they go from here is anybody’s guess. It’s safe to assume they will continue to be a very volatile investment that can see huge gains or the complete opposite. The decision to invest in them should not be taken lightly. Always speak to a financial adviser before making risky investments.

Contact Us

If you have any question about how the Bitcoin Roth IRA works, feel free to drop us a line on our contact page, or give us a call @ 800.472.0646 today!

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