We’ve put together a few frequently asked questions about Digital Currency IRAs, including issues related to compliance, account setup and security.
Should you have additional questions, please email us at firstname.lastname@example.org or call us at (800) 299-1567.
Absolutely! Cryptocurrencies have been eligible to place into IRAs since 2014, when the IRS issued Notice 2014-21, which declared virtual currency (such as Bitcoin) as personal property for taxation purposes. Although the tax agency did not explicitly state that Bitcoin could be placed into an IRA – the IRS never makes such official proclamations – this ruling made digital currency eligible for such use under the rules that govern self-directed IRAs.
BitIRA has set up a process to ensure that the purchase of your digital currency strictly adheres to the guidelines of self-directed IRAs. Our IRA Specialists can help you roll over your IRA or 401(k) to your new custodian without incurring any penalties. Once your account is set up, we ensure IRA compliance each step of the way, including to purchase your Bitcoin and then to store it with a digital currency wallet.
Rest assured that your new Digital Currency IRA follows every rule imaginable in order to remain compliant with IRS guidelines and regulations that pertain to the tax benefits that come with IRAs.
If you have an IRA, yes, it will be eligible for a rollover to a Digital Currency IRA. In fact, you can rollover your existing IRA to any other custodian as often as you would like. It’s also important to note that this covers any type of IRA, such as Traditional, Roth, SEP or SIMPLE.
If you have a 401(k) or another employer-sponsored plan (such as a 403b, 457 or TSP), your eligibility to rollover to a Bitcoin IRA is not always possible. For those folks who are eligible, it is usually because their account was set up with an employer that they no longer work for. But even if your account was set up with your current employer, there are certain times when you still may be eligible to move your plan. For more info, please contact us so that we can learn more about your situation and help you inquire about your eligibility.
As long as your current retirement account is eligible to be rolled over to an IRA, there will be no penalties to create a Digital Currency IRA.
See the prior question for rules pertaining to eligibility.
Absolutely! You can create any characterization of IRA that you’d like for your cryptocurrency, just as you could for any other asset class. In addition to moving Bitcoin to a Roth IRA, you can also setup a Traditional IRA, SEP IRA and SIMPLE IRA.
At present, the minimum for a Bitcoin IRA is $20,000. This is due to rules set up by our partner exchange service.
ACCOUNT SETUP AND MANAGEMENT
As of right now, we offer six digital currencies for placement in your IRA:
- Bitcoin Cash
- Ethereum Classic
The custodian that BitIRA has partnered with, Preferred Trust Company, has one of the most competitive fee schedules in the industry. Fees for every account will vary, so it’s impossible for us to tell you here what your fees will be.
When considering a service for your Digital Currency IRA, it’s critical that you understand these fees, as they could represent a large, ongoing cost. Here are some questions that you may want to ask before committing to a service:
- What are the ongoing flat fees? Do I pay these fees on a monthly or annual basis?
- Are there any variable fees? How does those work?
- If I hold more than one coin in my account, do I pay additional fees for those?
To learn what your custodial fees would be with BitIRA, please contact us.
Other companies in our industry will charge you at every opportunity, seemingly for any time you make any changes to your account. At BitIRA, we do NOT charge any fees to liquidate the cryptocurrency in your IRA.
There are a number of factors at play when creating your new account. For example, when rolling over funds, we find that the old custodian can often drag their feet on the transfer to your new custodian. Additionally, once your new account is funded with Preferred Trust Company, it’s necessary for them to do their due diligence to securely establish your account.
When it’s all said and done, we find that it can take anywhere from one to three weeks for your new account to be fully funded and ready to purchase digital currency.
When establishing BitIRA and our processes, the security of your retirement funds was one of our most critical considerations. At this early stage for digital currency, some technology has not yet been fully developed, so unfortunately the industry has been marred by some negative publicity. For example, notable hacks have rocked the Mt. Gox exchange and BitGo wallet.
Determined to produce the most secure solution possible, we have developed a proprietary process that offers you the world’s first and only insured cold storage solution for Digital Currency IRAs. Other companies may offer some of the security measures you’ll read about below, but NO OTHER COMPANY offers the combination of protocols that we’ve put into place.
To read about the features that make BitIRA “The World’s Most Secure Digital Currency IRA”, click here.
While your currencies are held in storage, they are fully covered against any theft. However, you’re also covered during the purchase and sale of your currencies by an additional $1 million Consumer Protection insurance policy from Lloyd’s of London, which protects against any internal cases of fraud or theft. Additionally, we hold a $1 million Cybersecurity Policy from Hiscox.
Simply put, there is no more secure option on the market for the storage of cryptocurrencies in your IRA.
As long as you keep your IRA funds within the umbrella of your account, there are no penalties; you can move from any eligible asset to another, and as often as you would like.
So, whether it’s three days or three years after you’ve created a Digital Currency IRA with BitIRA, you can call us up and liquidate your cryptocurrency holdings very quickly, and without penalty. As long as those proceeds remain within the umbrella of your IRA, you can use them to purchase another IRA-eligible asset (for example, equities, precious metals or cash). However, as with any other IRA, if you take any form of distribution before you are eligible to do so, there would be penalties.
Yes. Upon distribution, if you want to keep your cryptocurrency as opposed to converting it into cash, our partner custodian, Preferred Trust Company, will let you do so. Not all other custodians will allow this.
Do you have more questions?
If we haven’t answered your question here, please email us at email@example.com or call us at (800) 299-1567.