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Bitcoin and other cryptocurrencies have become very popular with investors in recent years. As these digital assets gain more acceptance, they are now included in retirement accounts, giving rise to Bitcoin IRAs.
A Bitcoin IRA is a retirement account that lets you hold Bitcoin and other cryptocurrencies as part of your retirement savings. Including Bitcoin in your retirement portfolio can add growth potential and protect against inflation. However, cryptocurrencies can be very volatile and risky, so it’s important to be cautious.
This blog will give you an easy-to-understand overview of the best Bitcoin IRAs available in 2024. Let’s get started.
How Does a Bitcoin IRA Work?
A Bitcoin IRA is like a special savings account for your retirement, but instead of putting your money into stocks or bonds, you invest in cryptocurrencies like Bitcoin. Think of it as a digital version of your retirement savings.
What’s Inside?
In a Bitcoin IRA, there are three main parts:
- Crypto Exchanges: These are like online stores where you can buy and sell cryptocurrencies. They help you add Bitcoin and other digital coins to your retirement account.
- Custodians: These are the companies that hold and take care of your digital coins. They make sure everything follows the rules set by the government. You can’t just keep your Bitcoin under your mattress like cash—you need a custodian to keep it safe.
- Secure Storage Solutions: Since your Bitcoin is digital, it needs a special place to stay safe from hackers and thieves. These storage solutions keep your Bitcoin protected, just like a bank keeps your money safe.
Pros:
- Diversification: Bitcoin gives you a different way to save for retirement, which can help balance your savings and reduce risks.
- Potential for Growth: While Bitcoin’s value can go up and down a lot, some people believe it could grow a lot in the long run, potentially giving you more money for retirement.
- Tax Benefits: Buying and selling assets in a Bitcoin IRA can help you save on taxes, which means more money for your retirement fund.
Cons:
- Extra Costs: Crypto IRAs often come with fees for setting up the account, making transactions, and managing your account. These fees can add up over time.
- Limited Choices: Some Bitcoin IRA providers only let you trade on certain exchanges, limiting your options for buying and selling Bitcoin.
- Risky Market: Bitcoin’s value can change a lot in a short time, so there’s a risk of losing money, especially if you’re close to retiring.
- No Tax Tricks: Unlike regular investment accounts, you can’t use some tricks to lower your taxes, which could mean paying more in the long run.
Investing in a Crypto IRA comes with unique risks. One major risk is that the companies managing these accounts (called custodians) might not be required to act in your best interest. This means they don’t have to prioritize your financial well-being, which can be a concern.
Best Bitcoin IRAs for 2024
1. iTrustCapital
iTrustCapital is one of the best Bitcoin IRAs for investors looking to add cryptocurrencies to their retirement portfolios. Here are some key features of iTrustCapital:
- Wide Range of Cryptocurrencies: iTrustCapital offers access to a diverse selection of cryptocurrencies, allowing investors to choose from 34 different digital assets. This variety gives investors flexibility in building a diversified crypto portfolio within their IRA.
- Precious Metals Options: In addition to cryptocurrencies, iTrustCapital also allows investors to hold precious metals like gold and silver in their IRAs. This combination of crypto and precious metals provides further diversification and hedging opportunities for retirement savings.
- Low Fees: iTrustCapital boasts competitive fee structures, with no monthly or setup fees. This fee transparency is appreciated by investors, as it helps to minimize costs and maximize returns over time.
- User-Friendly Platform: The iTrustCapital platform is designed to be user-friendly, making it easy for investors to manage their accounts and execute trades seamlessly. With intuitive navigation and comprehensive account management tools, investors can stay informed and in control of their retirement investments.
Pros:
- Wide Range of Cryptocurrencies: iTrustCapital offers access to 34 different cryptocurrencies, allowing investors to diversify their portfolios.
- Precious Metals Options: Investors can also hold precious metals like gold and silver in their IRAs, providing additional diversification and hedging opportunities.
- Low Fees: iTrustCapital boasts competitive fee structures, with no monthly or setup fees, helping investors minimize costs and maximize returns.
- User-Friendly Platform: The iTrustCapital platform is designed to be user-friendly, making it easy for investors to manage their accounts and execute trades seamlessly.
Cons:
- Custodial Wallet: iTrustCapital utilizes custodial wallets to store crypto assets, meaning investors must trust the platform to store their assets securely.
- Funding Limitation: Investors can only fund their IRAs with U.S. dollars, limiting the ability to directly contribute crypto assets to their accounts.
2. Bitcoin IRA
Bitcoin IRA, established in 2016, is a company that lets regular folks invest in cryptocurrency using their retirement savings. It’s like having a special account where you can put your money into digital currencies like Bitcoin, Ethereum, and others, all while saving for your retirement.
Setting up an account with the Bitcoin IRA company is super easy – you can do it in just a few minutes using their app or website. Once your money is in the account, you can start buying and selling cryptocurrencies right away, 24/7, from the comfort of your home.
Bitcoin IRA offers a wide variety of cryptocurrencies to choose from – more than 60, including popular ones like Bitcoin and Ethereum. Even if you don’t have a lot to start with, they have an option where you can begin with just $100 and add $100 every month.
When it comes to keeping your investments safe, the Bitcoin IRA company takes it seriously. They use fancy encryption to protect your trades, store your digital coins offline (where hackers can’t reach them), and even insure your assets for up to $700 million.
Now, there are some fees involved, like a custodian fee and a security fee, but the exact amounts aren’t listed online. If you’re interested, you’ll need to talk to someone from Bitcoin IRA to get all the details.
Pros:
- Diversification: Bitcoin IRA offers access to a variety of cryptocurrencies, allowing investors to diversify their retirement portfolios and potentially mitigate risk.
- Tax Advantages: Investing in cryptocurrencies through a Bitcoin IRA provides tax advantages similar to traditional IRAs, including deferred capital gains taxes.
- Secure Storage: Bitcoin IRA provides secure cold storage solutions for digital assets, offering peace of mind to investors concerned about the safety of their retirement savings.
- User-Friendly Platform: The Bitcoin IRA platform is designed to be user-friendly, making it easy for investors to manage their accounts and execute trades.
Cons:
High Fees: Bitcoin IRA may have higher fees compared to other IRA providers, including setup fees, transaction fees, and annual account maintenance fees.
3. BitIRA
Even though BitIRA is relatively new, starting in 2017, it’s gained a reputation for being super safe when it comes to handling and storing cryptocurrencies. That’s why we think it’s the best Bitcoin IRA for security.
BitIRA takes security seriously. They use fancy encryption to keep your transactions safe, especially when they’re happening online where they’re most vulnerable. Once a transaction is done, it’s moved to physical keys that are kept offline in super secure locations, guarded 24/7 by armed guards and tech experts.
But what’s really cool is that BitIRA insures all your digital assets from start to finish. So whether your crypto is in transit or sitting in storage, it’s protected from things like hacking, theft, or damage.
To get started with BitIRA, you’ll need to invest at least $5,000, and you’ll work with someone who knows all about digital currencies to set up your account. They offer lots of different cryptocurrencies to invest in, like Bitcoin, Ethereum, Ripple, and Litecoin.
While BitIRA doesn’t show its fees upfront, its strong focus on security and insurance coverage makes it a solid choice for anyone looking to invest in cryptocurrencies without worrying too much about safety.
Pros:
- Your digital assets are stored in secure offline storage facilities, guarded round-the-clock.
- Comprehensive insurance coverage protects your digital assets throughout the entire process.
- Advanced multi-encryption encoding ensures the security of transactions.
Cons:
You are required to open accounts with a digital currency specialist, adding an extra step to the process.
4. Equity Trust
Equity Trust has been around since 1974, originally offering financial services before diving into self-directed IRAs (SDIRAs) in 1983. They’re our top choice for self-directed investments because they know their stuff when it comes to both traditional and alternative investments, and they don’t charge any transaction fees. Plus, they give you personalized guidance to help you along the way.
To start an Equity Trust SDIRA, you’ll need to talk to one of their representatives. Once your account is set up, you can trade in up to nine different cryptocurrencies, like Bitcoin and Ethereum, without paying any fees, and your trades settle in just one day.
Equity Trust takes security seriously, using lots of different security measures like multi-factor authentication and secure cold storage to keep your digital assets safe. They even insure all your digital assets from start to finish.
If you need help managing your account, Equity Trust has SDIRA specialists ready to assist you, and they provide educational resources to help you understand your investment options. They also give you a dashboard to handle your transactions, but you’ll need to give directions to an account specialist to invest funds from your account.
Just keep in mind that Equity Trust charges annual administration fees based on the size of your account, ranging from $225 to $2,250, along with a $50 setup fee.
Pros:
- With more than 40 years of experience in self-directed IRAs, Equity Trust has a ton of knowledge to help you out.
- They let you invest in both traditional and alternative things, so you’ve got lots of options for your money.
- Best part? They don’t charge any fees when you make transactions, which can save you a bunch of cash.
Cons:
- The downside is that their administration fees can be pretty high, so it’s something to keep in mind.
- Also, you’ll have to go through a representative to open an account, which might be a bit of a hassle for some folks.
5. Coin IRA
Coin IRA started up in 2017 and is our top pick for the best Bitcoin IRA because it keeps its fees low and makes sure its customers understand everything they need to know.
They’ve got this cool free guide called “How to Add Bitcoin and Other Cryptocurrencies to a Crypto IRA” that helps people learn all about investing in cryptocurrency IRAs. Plus, they have experts who can walk you through setting up your account.
You can invest in popular cryptocurrencies like Bitcoin, Ethereum, and Litecoin with Coin IRA, and they keep your assets safe in cold storage, which is super secure.
To open a cryptocurrency IRA with Coin IRA, you’ll need to invest at least $5,000, whether you’re starting fresh or transferring funds from another account. And the best part? They don’t charge any setup fees, maintenance fees, or fees for keeping your assets safe.
Pros:
- The platform is easy to use, even for beginners.
- You can set up automatic trades at certain prices, which is convenient.
- There are no fees for setting up or maintaining your account, saving you money.
Cons:
- You need a minimum of $5,000 to start investing, which might be too much for some.
- The trading fees are a bit higher than some other options, which could eat into your profits.
6. Alto CryptoIRA
Alto CryptoIRA is all about cryptocurrencies, offering a wide range of digital assets, including Bitcoin.
They’ve teamed up with Coinbase, a well-known platform, so you can trade over 200 different cryptocurrencies right from their exchange.
But that’s not all. Alto also has another option called Alto IRA, where you can invest in things like venture capital, art, real estate funds, and private equity.
Pros:
- Low minimum investment requirement of $10, making it accessible to many investors.
- Undirected cash is stored in FDIC-insured accounts, providing added security.
- Partnership with Coinbase, a reputable custodian and publicly listed company, ensures reliable asset management.
Cons:
- Some investment opportunities are restricted to accredited investors, limiting access for some.
- Integration with Coinbase excludes residents of Hawaii from participating in the program, reducing accessibility for certain individuals.
7. My Digital Money
My Digital Money is a newer IRA provider that allows customers to trade in cash. While it’s based in the U.S., it launched in April 2021, making it less established compared to other options on this list. Due to its relative youth, investors should approach My Digital Money with caution, especially given the limited information available about the company.
My Digital Money has a partnership with Genesis Capital, a crypto lending platform. However, Genesis filed for bankruptcy in January following the fallout from the collapse of the crypto exchange FTX. Despite this, My Digital Money assures customers that Genesis does not hold custody of their assets.
Nevertheless, this partnership highlights the importance of security and asset storage in the cryptocurrency world. My Digital Money has announced plans to seek a new liquidity provider, a move that’s unsurprising given the concerns associated with the Genesis name.
Regarding investment options, My Digital Money allows trading in 19 different cryptocurrencies.
Pros:
- Low minimum investment requirement of $1,000, making it accessible to many investors.
- Free practice accounts are available, allowing users to familiarize themselves with the trading platform without financial risk.
Cons:
- Transaction fees can be relatively high, especially for accounts under $25,000, with a rate of 1.9%.
- Being a newcomer in the industry, My Digital Money lacks the extensive track record and information available for more established platforms.
- Partnered with Genesis, a crypto platform that filed for bankruptcy earlier this year, which may raise concerns about reliability and stability.
Things You Should Know About
A. High Risk, High Cost
Bitcoin IRAs have become popular because of the excitement around the high value of cryptocurrencies. They offer a way to diversify your retirement savings, but they also come with big risks. The prices of cryptocurrencies can change very quickly, which means you could lose a lot of money if the value drops. For example, if you buy Bitcoin when it’s very expensive and the price drops by two-thirds in a few months, you could lose a significant portion of your retirement savings. It’s important to think carefully about whether you can handle this kind of risk.
Another drawback of Bitcoin IRAs is that they often have high fees. You might have to pay a monthly fee (like $20), a percentage of your account balance as a holding fee, and additional fees for setting up the account, buying cryptocurrencies, and transferring funds. These costs can add up and are usually higher than the fees for regular IRAs, which typically have lower transaction fees and no maintenance or account opening fees.
B. Contribution Limits and Compliance
You can only invest a certain amount in your IRA each year. For 2022, the limit is $6,000, and for 2023, it’s $6,500. If you’re 50 or older, you can add an extra $1,000 each year, making the limits $7,000 for 2022 and $7,500 for 2023.
You can’t just buy cryptocurrencies on your own and put them into an IRA. You need to use a special company, like Bitcoin IRA or BitIRA, to do this. These companies help you follow the rules, but using them can be expensive.
C. Trading and Tax Implications
Another challenge with Bitcoin IRAs is that you can only trade your cryptocurrencies during regular market hours on business days, even though cryptocurrency prices change all the time. This can be a problem if the prices drop suddenly and you want to sell quickly.
For taxes, the IRS treats cryptocurrencies like property. This means any gains (or profits) you make from your Bitcoin IRA will be taxed. The tax rate depends on how long you’ve held the cryptocurrency, just like with stocks.
Final Thoughts – Crypto IRA Companies
Investing in a Bitcoin IRA can be an exciting way to diversify your retirement savings. Different providers offer various features, so you can find one that matches your needs, whether you want low fees, lots of cryptocurrency options, high security, or great customer support. However, remember that investing in cryptocurrencies can be risky due to price swings and security issues. Make sure to do your homework, compare the options, and talk to a financial advisor to see if a Bitcoin IRA is right for your retirement plans.
ZenLedger can help you easily calculate your crypto taxes, and also find opportunities for you to save money and trade smarter. Get started for free now or learn more about our tax professional-prepared plans!
Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide tax, legal, or financial advice. You should consult your tax, legal, and accounting advisors before engaging in any transaction.
