How to Hold Bitcoin Inside Your IRA
One of the best ways to reap all the benefits digital currencies have to offer is by holding them inside a Digital IRA (also known as a Bitcoin IRA), which is a unique “self-directed” IRA that allows special types of assets that most conventional retirement accounts are prohibited from containing.
With a Digital IRA, you are immediately eligible to use your retirement funds to purchase Bitcoin.
If you’re looking to capitalize on the growth potential, anonymity and freedom that digital currencies offer, PLUS do it on a tax-deferred basis within your retirement account, this is the best available option for you.
Most people are not aware of a self-directed IRA, so the concept of using it to create your Digital IRA is confusing for some. However, it’s reassuring for many to know that using a Digital IRA does not confine your investment choices to digital assets only.
On the contrary, the self-directed account structure of a Digital IRA gives you all the capabilities of a traditional retirement account (such as investing in stocks or mutual funds), but with the added freedom to invest in non-conventional assets like digital currency.
It’s a simple process to transfer or roll over your existing retirement account (such as an IRA or 401(k)) into a Digital IRA, and at BitIRA, it’s our mission to give you all the information that you need to make this move with confidence. Plus, when you’re ready, we’re here to facilitate the entire process.
Here is a brief overview of Digital IRAs, what they are, how they work and what you need to do create your own.
What Makes Digital IRAs Different?
Although Digital IRAs can serve all the same functions as conventional retirement accounts, there are two key differences that set them apart:
1) Self-Directed Account Classification
Digital IRAs are a type of “self-directed” retirement account. That means you accept responsibility for the asset choices in your account. Unlike the investments within traditional retirement accounts that are overseen by brokerages and financiers, you maintain complete control over the investment vehicles in which your money is stored. You always have BitIRA to help facilitate the process, plus a certified custodian to handle your retirement account’s administration.
2) New Permissible Investment Options
By assuming full responsibility of your investment choices with a self-directed account, the IRS grants you legal authority to invest in a broad range of assets, including digital currencies, as well as many other non-conventional assets (listed below).
What Makes Digital IRAs the Same?
The new ability to purchase digital currencies for an IRA is a thrilling concept. However, it’s equally as important to note what is not changing when you convert your retirement to a self-directed IRA:
1) Access to the Same Asset Classes
By creating a Digital IRA, you do not need to commit the entirety of your retirement savings to digital currencies. Instead, you still have access to the same types of asset classes as most conventional IRAs offer, such as stocks and mutual funds.
2) Use Any IRA Classification
Your Digital IRA can be set up with any of the classifications that you are used to, such as Traditional, Roth, SEP and SIMPLE.
Approved Assets for Digital IRAs
Digital currencies have been eligible to place into retirement accounts ever since 2014, when the Internal Revenue Service issued Notice 2014-21, which distinguishes digital currencies as personal property. Per the rules governing self-directed IRAs, this made all cryptocurrencies eligible for placement within your IRA.
Remember, with your Digital IRA set up as a self-directed IRA, you also have access to wide spectrum of non-conventional assets. Here is a brief summary of approved assets for Digital IRAs:
- Leading digital currencies.
- Precious metals like gold, silver, and platinum.
- Real estate in commercial, residential, or raw land.
- Private equity in businesses and loans.
And, don’t forget: Digital IRAs can hold all the same of investments offered by most standard retirement accounts, such as:
- Mutual funds
New Digital IRA Accounts
The simplest method to start a new self-directed IRA capable of holding digital currencies and other non-conventional assets is by using a Digital IRA specialist like BitIRA.
One of our Digital Currency Specialists can make the process quick and easy, assisting you each step of the way, including:
- Completing Paperwork
- Overseeing Rollovers
- Explaining Asset Options
- Ensuring Security
- Assisting with Contributions & Distributions
- Offering Ongoing Support
You can learn more about this process by visiting our page on how Digital IRAs work.
Existing retirement accounts and their assets can easily be rolled over into your new Digital IRA. In fact, rollovers can often be done penalty-free and without taking distributions:
- Roth or Traditional IRA
- Thrift Savings Plan (TSP)
Please note, some of these accounts do have eligibility requirements to be rolled over into a Digital IRA. Your Digital Currency Specialist can help you determine whether your current account qualifies.
Your new Digital IRA can be set up as either a Roth or Traditional IRA for tax purposes — although your investment gains remain tax-free until taken as a distribution according to IRS Notice 2014-21. Consult your tax professional to decide which arrangement is best suited to your needs.
Opening Your Digital IRA with BitIRA
Learn how you can start leveraging the benefits of a Digital IRA by contacting BitIRA today. You can speak directly with a Digital Currency Specialist to get an in-depth explanation of the process, ask any questions you may have, and discover the opportunities currently available.