When it comes to assets, bitcoin is the new kid on the block. Gold, cash, bonds, and equities have all been around for more than a hundred years. Bitcoin is barely a decade old.
In this definitive bitcoin IRA investors’ guide, we take a look at everything you need to know about the digital currency and how to use it to secure a happy retirement.
Coin IRA helps its customers establish self-directed, cryptocurrency-based Individual Retirement Accounts (IRAs), and facilitates the purchase and sale of cryptocurrency through a regulated cryptocurrency liquidity provider.
There are several benefits of obtaining a Bitcoin IRA. They provide a secure, easy, and hassle-free way of investing in cryptocurrency for a retirement fund.
Investing in Bitcoin can help diversify your investment portfolio. They hold potential for long-term gains and can help beat inflation.
The most significant advantage of investing in Bitcoin through IRA is tax saving. If you invest in cryptocurrency directly, you must pay capital gains tax when you sell it at a profit.
However, if you hold it in your IRA, all the gains you make are shielded from taxation.
If you are considering obtaining a Bitcoin IRA, there are a few things you should keep in mind before doing so. Bitcoin IRAs can cost more to set up and operate as compared to other IRAs.
You will also have to pay a fee for trading apart from the other costs. They have investment minimums, which can be fairly high.
Be sure to evaluate Bitcoin IRA providers carefully on these aspects before making a decision.
The Best Bitcoin IRA Companies for 2022
Comparison of the Best Crypto IRA Companies
Bitcoin IRA is one of the oldest and most well-established companies for cryptocurrency IRA trading. They offer an easy-to-use, turnkey service that doesn’t require you to create an LLC.
Founded in 2017, Coin IRA was one of the first companies in the United States to offer investors the ability to add cryptocurrency to their retirement plans.
iTrustCapital is a beginner-friendly platform for crypto IRA trading that's more affordable than other companies. You can buy and trade both popular cryptocurrencies and physical assets like gold there.
A Detailed List of the Best Bitcoin IRA Companies
The Bitcoin IRA market is competitive - a boon for retirement savers.
There are now numerous companies offering savers the opportunity to augment their portfolios with bitcoin.
1. Bitcoin IRA - Best Overall
Bitcoin IRA is our top pick for the best Bitcoin IRA company. It was established in 2016 and was the first IRA company to allow individuals to invest in cryptocurrency through their retirement accounts.
It offers traditional, rollover, and Roth IRA accounts as well as a Bitcoin (401k). The account opening process is easy and takes only a few minutes. You can invest in Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, and Ethereum Lite.
Bitcoin IRA is the world’s largest processor of on-chain transactions and has over 2 billion in digital assets in its wallet. It accounts for 20% of all global Bitcoin transactions.
The company takes security seriously. All digital assets are stored offline in cold storage accounts and are secured by a $100 million custody insurance from BitGo Trust.
You can begin trading within three to five days of transferring the funds. The platform allows you to buy, sell, or trade 24x7. The minimum investment required to set up an account is $3000. However, there is no cap on investment.
The company is not transparent about its pricing structure. There is a one-time investment fee that depends on your initial investment amount. They also charge a custodian security fee and other charges on asset conversion, buying, and selling.
2. Coin IRA - Best Pricing
Many of today’s leading Bitcoin IRA companies emerged from firms that initially offered investors gold-related products.
Coin IRA is one such company. It provided one of the first places where savers could add crypto to their IRAs.
The company prides itself on providing clients options with their self-directed IRAs.
3. BitIRA - Best Security
BitIRA takes the top spot for security. Though it started in 2017, the company has set itself apart by offering the highest security levels. They use multi-encryption coding for each of your investments.
They also offer proper cold storage. While offline, your funds are stored in grade 5 nuclear bunkers, so they are inaccessible to hackers and cybercriminals. No other digital IRA company offers this feature.
BitIRA also offers end to end insurance coverage for your digital assets, and this insurance is comprehensive. It covers your assets right from their time of issue through transit and storage.
The company offers traditional SEP, Roth, and SIMPLE IRA accounts. It allows you to invest in Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, ZCAsh, Stellar Lumens, and Bitcoin SV.
The account opening and set-up process are slightly longer here. It can take anywhere between a week to three weeks for your account to be ready to purchase cryptocurrency.
The fees charged by Bit IRA are also higher, owing to some of the security features they offer. They charge a $50 account set-up fee, $195 in annual maintenance charges, and 0.05% of your total assets per month in storage fee.
Currently, you need to invest a minimum of $5,000 when opening an account. They also charge a custodial fee which varies based on your account.
4. iTrustCapital - Lowest Fees
iTrustCapital is our top choice for the company with the best trading platform due to its low cost and transparent fee structure, and easy-to-use interface.
Established in 2018, the company allows users to buy and trade cryptocurrencies and precious metals such as silver and gold through their retirement accounts. It offers traditional, Roth, and SEP IRA accounts.
Customers have a choice of investing in Bitcoin, Ethereum, Polkadot, Bitcoin Cash, Litecoin, EOS, Stellar, and XRP.
You can complete your IRA account application in minutes. Once you finish setting up the account, you can trade round the clock from your dashboard. All trades get executed in real-time.
You need to invest a minimum of $2,500 to set up your crypto IRA account. The biggest advantage of iTrustCapital is its transparent pricing and low fees. There are currently no monthly fees and a 1% trade fee.
The company has partnered with an institutional wallet provider named Curv to provide protection of digital assets through cryptography. Customer crypto assets are further protected by a $50 million insurance cover from Munich Re.
What is a Bitcoin IRA?
A traditional IRA or individual retirement account is a tax-deferred saving account comprising cash, stocks, bonds, and other securities.
A Bitcoin IRA (sometimes called a crypto IRA) is just a new form of retirement savings account that enables you to invest in crypto assets too.
Note here that we said “crypto assets,” not just bitcoin. Financial institutions used the term Bitcoin IRAs for brand recognition purposes.
How Does a Bitcoin IRA Work?
Bitcoin IRA's work in fundamentally the same way as regular IRAs. As before, you invest your pre-tax gross pay, reducing your tax liability.
But instead of saving in cash or traditional securities, you convert your money into bitcoin.
In practice, owners of Bitcoin IRAs appoint a custodian to manage their self-directed accounts.
This agent converts your dollars into cryptocurrencies on the exchange on your behalf, speeding up the process.
Just remember, they do not have a fiduciary responsibility towards you, so think carefully before making an investment or following their advice.
What You Should Know Before Investing
Bitcoin IRAs are becoming increasing in popularity. Past rises in crypto prices are leading some investors to believe the trend will continue in the future.
The value of bitcoin, for example, increased from $1,000 per coin in January 2017 to more than $19,700 by December 2017.
The returns on the upside, therefore, are impressive. There is, of course, no such thing as a free lunch, though.
The market can go up, but it is also highly volatile.
After reaching its December 2017 high, the price of bitcoin fell by more than two-thirds to $6,252 in February 2018, wiping out savings in the process.
Owners of Bitcoin IRAs also incur substantial costs.
It is not uncommon for service providers to charge account fees in the region of $20.
For these IRAs to make sense, therefore, you need to have a lot of money behind you AND be prepared to accept a high level of risk.
Bitcoin IRA Rules & Regulations
$6,000 limit for people under 50 years of age. There’s a limit on the value of crypto assets you can deposit in your IRA per year, just as there is for a regular IRA. Currently, the threshold for people under the age of 50 is $6,000. For those 50 or older, it is $7,000.
You cannot buy cryptocurrency separately and then deposit it in your Bitcoin IRA. You must use the services of a dedicated firm to carry out the transaction for you.
You still have to pay taxes on bitcoin capital gains, even though it is a form of cash.
The price of bitcoin varies wildly from day to day and hour to hour. Thus, you can usually only trade the currency during regular trading hours.
How Your Bitcoin is Stored & Secured
Any wealth stored in the form of cryptocurrency is at risk of being hacked.
For that reason, many Bitcoin IRA providers advanced technologies to keep it safe.
Some agents use “multisig wallets.” These work by insisting that two or more trusted people provide access authorization.
Other agencies use what they call “true cold storage,” where they store all your money and data on servers with no connection to the internet.
Finally, some companies provide end-to-end insurance products.
These protect you if you find your account compromised for any reason, such as theft, mistakes, fraud, or hacking.
Fees Associated with a Bitcoin IRA Rollover
If you already have an IRA and want to convert some of it to a Bitcoin IRA, you can.
You may, however, have to pay a fee, depending on the provider.
Most companies include the cost of rollover in their regular fees. Bitcoin IRA is a good example.
It certainly is. Changes in the rules and the emergence of Bitcoin IRAs now mean that anyone with an IRA savings account or qualifying employer 401(k) can diversify into cryptocurrencies.
Please note, though, that Bitcoin IRA agencies do not have a fiduciary responsibility towards you. These accounts are self-directed.
You can buy bitcoin through an IRA, whether you have a traditional, rollover or Roth.
You place the order through your Bitcoin IRA agent, and then they go to the exchange, collect your bitcoin, and deposit it in your account.
Bitcoin IRA agencies will take a percentage fee based on the total amount of money you spend.
So, for instance, if you request $5,000 worth of bitcoin and the charge is 1 percent, you’ll pay $50.
You cannot transfer bitcoin (or other cryptocurrencies) held elsewhere to your IRA. You can only add cryptocurrencies directly.
No investment product is entirely safe. But, in many ways, Bitcoin IRAs present investors with more risks than traditional assets.
The first is the risk of hacking, theft, crashes, and other digital maladies. Even though they are finite, cryptocurrencies are not impervious to hacking, crashes, or computer failures.
Bitcoin IRA providers offer a one-two combination of IT defenses and insurance to put investors at ease.
Software, debugging, and “cold rooms” slash the risk of a breach. At the same time, insurance provides additional backup, should you lose your money.
Bitcoin IRAs are also potentially dangerous for another reason: price volatility. Bitcoin is notorious for significant percentage moves both up and down.
Thus, for people saving for retirement who need a stable store of value, cryptocurrencies might not be the best option. With that said, it all depends on your investment horizon and expectations.
If you’re in your thirties and plowing money into a Bitcoin IRA, you still expect to wind up considerably better off in twenty years, even if there is volatility along the way.
A self-directed IRA, sometimes abbreviated SDIRA, is a form of individual retirement account. It allows you to hold a range of assets that are usually prohibited.
SDIRAs still have custodians like regular IRAs, but they only provide an administrative function. If you own one of these accounts, it is your responsibility to allocate your savings.
In general, SDIRAs are only available through specialized firms. Furthermore, these agencies are not allowed to give specialist financial advice.
They have no fiduciary responsibility to you. The burden of research and due diligence falls on you.
Yes. Under the current rules, the IRS treats items in your IRA, such as cryptocurrency, as a form of property for income tax purposes.
Converting your 401k savings into bitcoin is relatively straightforward. If you want to do it, you’ll need to go through the following process.
Open a self-directed Bitcoin IRA. You can use any qualified custodian to open an SDIRA through which you can buy bitcoins. Once you set up your new account, you can begin transferring the savings in your 401k.
Get a specialist agent to perform the transaction for you. Bitcoin IRA custodians have the training, security, and financial facilities to safely transfer funds from your existing account, convert them into the cryptocurrency of your choice and deposit them in your new one.
Check your digital wallet. At the end of the process, you should be able to see the new funds in your digital wallet. Your custodian should also provide you with a receipt, showing you the price at which they bought the coins, the number of coins you have, and their fee for the transaction.
There are several factors that you should consider when hiring a Bitcoin IRA custodian. These include:
- Fees. Custodians do a lot of work to maintain your account. For that reason, they invariably charge a fee. Fee structures differ considerably from one provider to another. Most charge a combination of custodial fees (which you pay regardless of any transactions you make), and transfer fees, paid as a percentage of any assets you buy.
- Accreditation with the Better Business Bureau. Membership of the BBB generally indicates that you’re working with a quality and legitimate organization.
- Check their security. Good Bitcoin IRA custodians should publicize the security measures that they use to keep your money safe.
- Customer service. Bitcoin IRAs aren’t the most straightforward financial product in the world.
Here is a comprehensive list of retirement accounts that are eligible for a Bitcoin IRA rollover:
- Roth IRA
- Traditional IRA
- SEP IRA
- SIMPLE IRA
- Pension plans
- Various annuity plans
- TSP (Thrift Savings Plans)
If you have a retirement account that is not listed, it may still be eligible for a rollover.
In order to find out, you can directly call the company representatives to see which of your accounts will qualify.
Here are some of the cryptocurrencies you can store in a Bitcoin IRA:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Ripple (XRP)
- Dash (DASH)
- Stellar Lumens (XLM)
- Monero (XMR)
- Ethereum Classic (ETC)
- Zcash (ZEC)
If you don't see your chosen cryptocurrency provided by a custodian, either stay patient and wait for them to add it or go ahead and give them a call.
Why Should You Invest in Bitcoin?
Bitcoin is one of the most exciting asset classes on the planet. It has the potential to revolutionize the economy by changing the nature of money.
Digital currencies are still in their infancy, but many commentators believe we’re at the start of something genuinely transformative.
Blockchain-powered digital money could potentially compete alongside government fiat, and even replace it, thanks to its inherent advantages.
Thus, holding bitcoin today could see your purchasing power rise dramatically in the future.
If people make the switch en masse, the value of bitcoin is liable to go up, not only in terms of fiat money but goods too.
Holding on to bitcoins, therefore, could increase your quality of life in retirement. You should note, though, that investing in bitcoin is fundamentally different from investing in equities.
When you buy a share of a firm, you’re purchasing the rights to a proportional share in that company’s future profits.
Purchasing a stock is not speculation but rather taking ownership of the productive potential of the economy.
Bitcoin is different. When you buy a coin for investment purposes, you’re essentially speculating that its value will rise in the future.
There’s no business backing it up. You’re hoping that people will move out of regular currency and into crypto, pushing up the price.
They might not.
How to Invest in a Bitcoin IRA
Here are the steps you need to take to invest in a Bitcoin IRA:
Step #1: Choose a Bitcoin IRA Provider
Several companies now offer Bitcoin IRA accounts. The first step is to research these companies and evaluate the benefits they provide and the costs associated with them. Choose the one that is best suited to your needs and budget.
Step #2: Begin Rollover or Transaction Process
Once you’ve finalized your Bitcoin IRA provider, you need to set up an account with them. This process is fast and straightforward. You can then fund this new account through a rollover, transfer, or cash contribution.
Step: #3: Invest in Bitcoin or Crypto
Depending on your provider and the funding process, it can take between three days to three weeks for your account to be ready for transactions. Once it is ready, you can invest in Bitcoin or any other cryptocurrency offered by your company.
A Bitcoin IRA can be a great way to invest in cryptocurrency for retirement. It offers an easy way of diversifying your investment portfolio and the potential for capital appreciation along with tax advantages.
It is crucial to choose the right Bitcoin IRA provider that matches your needs and suits your budget. Research the various options available and evaluate them on factors such as security, fees, and user experience.
With our list of recommendations for the best Bitcoin IRA companies, you are sure to find one that can help support your retirement investment needs. Check any of these companies out today.
Our #1 Bitcoin IRA Custodian
When it comes to customer service, fees, safety, and overall customer satisfaction, Bitcoin IRA checks all of the boxes.