Bitcoin IRA Fees to Know
There are generally two ways to purchase cryptocurrencies with IRA funds:
- Bitcoin IRA Broker/Custodian Controlled approach.
- Wallet Control IRA LLC solution.
Both structures have some advantages and disadvantages.
Bitcoin IRA Broker/Custodian Controlled
With the Bitcoin IRA Broker/Custodian Controlled approach, you purchase the cryptocurrency through brokers. The broker has association with the Bitcoin IRA facilitator.
From there, a cryptocurrency investor will open a self-directed IRA account with a custodian. You, the IRA investor, will then transfer or rollover your retirement funds tax-free to the new IRA custodian.
Then, the custodian will transfer the funds to a broker who will purchase the cryptocurrencies for the IRA investor.
The cryptocurrencies are typically purchased by phone and you’re limited to investing in the cryptocurrencies that the broker offers. Once the broker purchases the cryptocurrencies, they are go into a digital wallet. This typically requires multiple signature verification.
However, you do not control the cryptocurrency wallet or its private key. Additionally, selling or exchanging the cryptocurrency requires interaction with the broker. You will not be able to do this online. Finally, commissions are imposed on each side of the transaction.
- Very Hands-off
- No need to interact with cryptocurrency exchanges
- High fees – commissions can range from 15%-25% of IRA funds invested.
- Lack of control over the cryptocurrency wallet.
- No access to wallet private key.
- Lack of ability to trade cryptocurrencies 24/7 which is how the cryptocurrency market operates.
- All cryptocurrency trades must go through the broker, which is typically done by phone and only during business hours.
- IRA custodian fees are based on the value of the IRA assets invested.
Wallet Control IRA LLC
With the Wallet Control IRA LLC, the IRA investor establishes an IRA account with a self-directed IRA custodian.
You will then roll over your retirement funds tax-free to the new custodian. The IRA assets will be transferred a new limited liability company (LLC). The transfer will be tax-free.
The individual retirement account completely owns the LLC, and you will be the manager of the LLC. Because the IRA owns 100% of the LLC, it will be treated as a disregarded entity for tax purposes. No Federal income tax return needs to be filed. Also, all income and gains from the cryptocurrency investment will flow back to the IRA without tax.
Because you’re manager of the LLC, you will open a cryptocurrency exchange account at the exchange of your choice. Next, you simply link the account to the IRA LLC bank account.
Next, the IRA LLC funds will be wired to the cryptocurrency exchange account. Therefore, you have the ability to invest in any cryptocurrency. Additionally, you have the opportunity to trade the cryptos anytime. You also have the ability to hold the cryptos you purchase in a digital or hard wallet. The best part is, you’re in complete control over the wallet.
- Invest in all cryptocurrencies
- Control costs by selecting cryptocurrency exchange of your choice
- Control cryptocurrency wallet – control over private key
- Buy, sell, or exchange cryptocurrencies at anytime through a PC or mobile application
- Flat low annual IRA custodian fee – no asset valuation fees
- LLC set-up cost
- More involvement by IRA investor
Whichever platform you choose to invest your retirement funds into cryptocurrencies, it’s important that you know the financial risks that comes with cryptocurrency investments. Therefore, it’s important that you’re financially stable to bear the risks and a potential complete loss of your investment.
Get in Touch
Do you still have questions about Bitcoin IRA Fees, cryptocurrency investments or which platform you should choose? Contact IRA Financial Group directly at 800-472-0646. Our IRA specialists are on-site to answer all of your questions regarding Bitcoin IRA fees.