We’ve already went over the finer points of Bitcoin investing using a self-directed IRA. However, cryptocurrency is such a new retirement investment that even those with prior experience face questions. Today, we’re answering three major questions in this handy Q and A guide. Don’t let your questions stop you from this whole new digital world of investment potential.
The short answer is, yes. The only types of investments the IRS specifically forbids is collectibles and life insurance. However, the IRS doesn’t specifically list cryptocurrencies as an alternative investment. But this shouldn’t cause concern, as the IRS has been historically hesitant to endorse investments, as this can backfire later on.
Just like real estate or other alternative investments, cryptocurrency must go through a custodian administered self-directed IRA. With this structure, you’re handing over a transaction fee and access to your cryptocurrency wallet PIN. This risks safety and increases administrative cost.
Another option is to invest using an LLC as an extension of the IRA. This gives you "checkbook control" over your investment funds, since you become the manager of the LLC. However, like an LLC for any other purpose, it requires legal work to establish. Plus, you have to establish a checking account to link with the LLC. Lastly, investor confidentiality isn't maintained since LLC agents must have their names filed with state records. We eliminate some of these pain points by establishing an IRA linked trust, where you as the trustee gain immediate access to Bitcoin and other cryptocurrency investments.
We can examine this question using Bitcoin as an example. According to Arthur Hayes, CEO of the BitMex cryptocurrency exchanges, Bitcoin prices can reach $50,000 in 2018. Here are some price factors to consider:
We’ve answered some important questions regarding regulations, pricing factors and how to structure and administer your self-directed Bitcoin IRA. We can answer more of your questions and walk you through our online platform, which streamlines the entire setup and investing process. Contact us today if you have additional questions.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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