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Crypto IRA

pocket bitcoin 401k

The IRA Financial Crypto IRA allows you to use your retirement funds to invest in all types of cryptocurrencies, such as Bitcoin directly from your mobile device or PC securely, and cost-effectively. 

What’s special about this IRAFI Crypto Platform?

  • It is designed for Novice and Intermediate traders who want to get started without having to master a complex trading platform. 
  • No annual account valuation fees.
  • $100 flat annual fee
  • Most cost-effective way to HODL cryptos in an IRA
  • It has a unique profit and history tracking tool that allows users to have a clear picture of their activities and the outcomes.
  • It has direct education links to popular education sites to help users learn more about which coins to invest in. An example would be CoinMarketCap
  • It provides real-time pricing and profit/loss trends on-screen that other popular trading platforms do not offer.

What is the IRA Financial Crypto Platform?

The IRAFI Crypto™ platform brings together the leading self-directed retirement provider with a leading regulated crypto exchange to remake and enhance the self-directed retirement account crypto industry. Powered by Bitstamp, a global cryptocurrency leader, retirement account investors can now buy, sell, or hold cryptocurrency via the IRA Financial app or website quickly, easily, and cost-effectively. 

The IRA Financial Crypto™ platform is a dedicated platform for crypto traders. The platform will offer all retirement account owners the ability to invest in many of the most popular cryptocurrencies offered by the Bitstamp exchange, including Bitcoin, Ethereum, XRP, and much more with no annual custody asset holding fees. IRA Financial clients will be able to buy and sell cryptos 24/7 instantly or via a limit trading feature. The platform is available on Apple, Android & desktop. Cryptocurrency prices are updated in real-time with historical data on each coin, including total value & profit/loss at a glance. 

Benefits of Investing in Cryptocurrency in an IRA

Cryptocurrency is a form of digital money that is designed to be secure and, in many cases, anonymous. A primary reason that cryptocurrencies have become a popular investment class for investors around the world is the idea of gaining exposure to an emerging asset class. In addition, blockchain technology, which is the main technology that powers cryptocurrency, is expected by many to revolutionize the way financial transactions occur globally.

For many investors, there is a significant upside to investing in cryptocurrency. That is, the cryptocurrency market is still young, and many investors are projecting future prices that would make buying any of the major cryptocurrencies a good long-term investment. There is a strong expectation that cryptocurrency will be an important medium of exchange and store of value in the future.  Hence, the thinking goes that if cryptos, such as Bitcoin, have enormous upside, it makes tax sense to buy the cryptos in a self-directed IRA, especially a Self-Directed Roth IRA where all the gains can be tax-free.  If you believe that the price of the most popular cryptos, such as Bitcoin or Ethereum will be considerably higher in the future, then it makes tax sense to buy the cryptos in a Self-Directed Roth IRA so you can lock in tax-free gains so long as you are over the age of 591.2 and the Roth has been opened at least 5 years.

Types of Cryptocurrencies

Bitcoin has become the leader in a wave of cryptocurrencies built on decentralized peer-to-peer networks and has become the primary standard for cryptocurrencies. The currencies inspired by Bitcoin are collectively called altcoins and have tried to present themselves as modified or improved versions of Bitcoin. While some of these currencies are easier to mine than Bitcoin, there are tradeoffs, including greater risk brought on by a degree of lesser liquidity, acceptance, and value retention.

A Bitcoin holds a very simple data ledger file called a blockchain. Each blockchain is unique to each user and his/her Bitcoin wallet.

All Bitcoin transactions are logged and made available in a public ledger, helping ensure their authenticity and preventing fraud. This process helps to prevent transactions from being duplicated and people from copying bitcoins.

While every Bitcoin records the digital address of every wallet it touches, the Bitcoin system does NOT record the names of the individuals who own wallets. In practical terms, this means that every Bitcoin transaction is digitally confirmed but is completely anonymous at the same time. People cannot easily see your identity; however, they will be able to see the history of your Bitcoin wallet.

While Bitcoin is the most popular cryptocurrency, there are countless others. Some individuals invest in Ethereum, while others like XRP, Cardano, Polkadot, VeChain, or other cryptocurrencies. Other individuals like to invest in stablecoins. Regardless of your crypto preferences, countless cryptocurrencies can be held in a Self-Directed IRA.

Related: The Positive Impact of Cryptocurrencies

The following cryptocurrency investments have been popular with our Self-Directed IRA clients:

How are Cryptocurrencies Treated by the IRS?

Even though Bitcoin is labeled as a “cryptocurrency”, from a federal income tax standpoint, Bitcoins and other cryptocurrencies are not considered a “currency.” On March 25, 2014, the IRS issued Notice 2014-21, which for the first time set forth the IRS’s position on the taxation of virtual currencies, such as Bitcoins. According to the IRS Notice, “Virtual currency is treated as property for U.S. federal tax purposes.” The Notice further stated, “General tax principles that apply to property transactions apply to transactions using virtual currency.”

In other words, the IRS is treating the income or gains from the sale of a virtual currency, such as Bitcoins, as a capital asset, subject to either short-term (ordinary income tax rates) or long-term capital gains tax rates, if the asset is held greater than twelve months (15% or 20% tax rates based on income). By treating Bitcoins and other virtual currencies as property and not currency, the IRS is imposing extensive record-keeping rules – and significant taxes – on their use.

Related: Can I hold my Private Keys in a Crypto IRA?

Can I Legally Purchase Cryptocurrency in my IRA?

The Internal Revenue Code does not describe what a Self-Directed IRA can invest in, only what it cannot invest in. Internal Revenue Code Sections 408 & 4975 prohibit Disqualified Persons from engaging in certain types of transactions. The foundation of the prohibited transaction rules is based on the premise that investments involving IRA and related parties are handled in a way that benefits the retirement account and not the IRA owner. The rules prohibit transactions between the IRA and certain individuals known as “disqualified persons”.

The definition of a “disqualified person” (Internal Revenue Code Section 4975(e)(2)) extends into a variety of related party scenarios but generally includes the IRA holder, any ancestors or lineal descendants of the IRA holder, and entities in which the IRA holder holds a controlling equity or management interest.

Because the IRS treats cryptocurrencies, such as Bitcoins, as a capital asset, such as stocks or real estate, a retirement account is permitted to buy, sell, or hold cryptocurrencies in their retirement subject to the prohibited transaction rules found under Internal Revenue Code Section 4975(c).

Tax Advantages of a Crypto IRA

The advantage of using retirement funds to invest in cryptocurrencies is that, in general, all the income and gains generated by the investment would not be subject to any tax or penalty. Instead of paying tax on the returns associated with the cryptocurrency investment, tax is paid at a later date, leaving the investment to grow unhindered. Using a self-directed IRA to make cryptocurrency investments is tax advantageous because the tax on the interest payments can be deferred in the case of a pre-tax IRA or exempted permanently in the case of a Roth IRA.

In addition, self-directed IRA investments are made when a person is earning a higher income and is taxed at a higher tax rate. Withdrawals are made from an investment account when a person is earning little or no income and is taxed at a lower rate.

How Do Your Fees Compare with Other Crypto IRA Companies?

IRA Financial does not charge an annual asset custody or valuation fees which makes our fees significantly lower than the majority of the Self-Directed IRA crypto providers.  For example, several Self-Directed IRA crypto providers will charge trading fees plus a 1% annual asset custody fee.  Thus, if your IRA crypto has a value of $100,000, you would pay a $1,000 annual fee, plus trading fees.  In contrast, IRA Financial has a flat annual $100 fee, plus comparable trading fees.

How Does the IRA Financial Crypto Platform Work?

Step 1: Open an IRA or Solo 401(k) account via the IRA Financial app or website.

Step 2: Move IRA or 401(k) funds to a new IRA Financial account tax-free via transfer, rollover, or contribution.

Step 3: Once your self-directed IRA or 401(k) fund has been funded, you will be notified. Begin buying and selling cryptos 24/7 on your own without the need for any broker or the use of an LLC.

Why I Need a Self-Directed IRA to Invest in Cryptocurrencies

Unfortunately, none of the major financial institutions will allow you to use IRA or 401(k) plan funds to invest in cryptocurrencies or essentially anything outside of Wall Street. The reason for this is simple: banks do not make money when you invest in non-traditional equities, such as private equity or venture capital investments. They make money when you buy stock, mutual funds, and other financial products they market. As a result, a large number of individuals are turning to a Self-Directed IRA to invest in bitcoin and other cryptocurrencies.

Can you Explain Crypto Currency Investing?

We are very proud to have the industry’s best solution for buying Bitcoin and other major cryptocurrencies on an exchange in the name of an IRA or 401(k). IRA Financial was the first self-directed IRA company to allow their clients to invest in cryptocurrencies, such as Bitcoin, directly via a cryptocurrency exchange without the need for a third-party broker or the use of an LLC.  Now, investors can use their retirement funds to buy all the major cryptocurrencies directly through Bitstamp, one of the leading US cryptocurrency exchanges.   The IRA Financial Crypto™ Platform is unique because it allows retirement holders to hold cryptocurrencies in an IRA directly on an exchange.   The account is opened in the name of the IRA but controlled by you as the authorized representative on the account.  The IRA holder has 100% control over the account and can trade anytime.

Why did You Select Bitstamp as your Crypto Partner?

Bitstamp is the oldest and most reputable cryptocurrency exchange in the industry and has been operating since 2011. Bitstamp is regulated by the New York State Department of Financial Services (NYDFS). Bitstamp uses 2FA, SSL encryption, and cold storage for most of their crypto holdings, and have a dedicated security team working around the clock to prevent and respond to security attacks.

What Makes Bitstamp Security So Special?

Bitstamp’s main priority is to keep clients’ personal data safe and secure. Bitstamp employs best practices in terms of security, by utilizing advanced security technologies. Bitstamp has implemented the Multi-Sig technology to our hot wallet, where we keep only a very small portion of crypto assets, while the majority are safely stored offline, in cold storage systems.

Bitstamp has excellent security and is one of the safest cryptocurrency platforms. The exchange keeps 98% of assets offline in cold crypto storage. This is the most secure type of crypto storage because offline storage protects funds from hackers.

Do You Offer Crypto Limit Trading?

Yes. A limit order is a direction to purchase or sell crypto at a specified price or better. This feature allows retirement account investors to better control the prices at which they trade. A limit can be placed on either a buy or a sell order:

  • A buy limit order will be executed only at the limit price or a lower price. 
  • A sell limit order will be executed only at the limit price or a higher one.

Can I Open an IRA or 401(k) Directly with Bitstamp?

No – the IRA Financial Crypto™ platform is the only way you. Can buy cryptos on Bitstamp using a retirement account directly.

What is the Difference Between a Self-Directed IRA and an IRA Financial Crypto™ Account?

A Self-Directed IRA account with IRA Financial allows you to invest in any IRS-approved alternative investment like real estate, private placements, gold, investment funds, including cryptos for one low flat fee. Whereas an IRA Financial Crypto™ account will you to exclusively buy cryptos for the annual low fee of just $100, plus trading fees.  IRA Financial does not charge an annual custody fee based on the value of your cryptos.

Getting Started

We’re here to assist you. Contact IRA Financial to establish the Pocket Bitcoin IRA directly at 800-472-0646. You can also fill out one of our contact forms to speak with a tax specialist.


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