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Everything to Know About Digital IRAs
How to Put Bitcoin and Ethereum in an IRA
Digital IRAs are unique retirement accounts that allow you to invest in digital currencies (also known as cryptocurrencies) like Bitcoin and Ethereum, in addition to the conventional assets that you utilize already. If you'd like to take advantage of the speed, freedom, and privacy digital currencies have to offer -- and if you're looking to hedge against a falling dollar, risky stocks, and economic volatility -- then a Digital IRA could be well suited to your retirement goals.
That said, even if you understand the benefits of digital currencies, you may still be confused about how they work inside a Digital IRA.
But that's no reason to worry. You don't have to be a tech whiz or finance guru to effectively use digital currencies for retirement.
Opening a Digital IRA is quite simple, and we'll give you all the knowledge you need to invest with confidence. Below, we'll give you a brief introduction to what Digital IRAs are, the way they work, and how to take the first step toward opening one. Let's get started…
What is a Digital IRA?
A Digital IRA is simply an individual retirement account that can legally hold various types of digital currencies (or cryptocurrencies), such as Bitcoin and Ethereum (as well as many other investment types, which we'll cover momentarily). These accounts are also known as Cryptocurrency IRAs, Bitcoin IRAs or Ethereum IRAs.
In fact, an IRA capable of holding digital currencies is very similar to the retirement account you have now, but with two key differences:
- It's a "self-directed" account - This means that you are solely responsible for the investment decisions in your account. No third-party makes investment choices on your behalf. You hold complete control, and a certified custodian carries out your instructions and handles administration of your account.
- It can hold a wider range of investments - In addition to digital currencies like Bitcoin and Ethereum, Self Directed Digital IRAs are capable of holding several asset types that are strictly prohibited in conventional retirement accounts (we'll explain exactly what those are in a second).
Benefits of Using a Digital IRA
A Digital IRA gives you all the same advantages of a conventional retirement account, but with the added freedom to utilize alternative assets like digital currencies.
So what exactly are the benefits of digital currencies?
Well, there are a variety of benefits… and the ones you find most attractive will depend on your personal situation. Most people are drawn to digital currencies as a retirement investment for a combination the following reasons:
1) Tax-Free Growth: For as long as you hold digital currencies in a Digital IRA, any growth that your account experiences will be completely tax free. Only once you make a distribution might your earnings be subject to tax.
2) Long-Term Growth Potential: Digital currencies represent the start of a major disruption in the financial system. And with adoption continuing to spread in the realm of private enterprise, Kay Van-Petersen, one of the first analysts to correctly predict that Bitcoin would reach $2,000, now says that it will reach $100,000 in ten years.
3) Decentralized Infrastructure: Digital currencies are untouchable to centralized institutions. Governments and central banks have zero ability to influence the value or control the use of any digital currency.
4) Protection Against Inflation: Adaptive scaling makes digital currencies limited in supply and impossible to inflate. For example, there's a hard cap of 21 million Bitcoin that can ever be created. So, unlike fiat currencies (like the dollar), no government or other entity can create more on a whim.
5) Speed & Security: All digital currency transactions are mediated and confirmed through a peer-to-peer protocol of their Blockchain network, making them exceptionally fast and secure. And the currencies themselves are stored privately in heavily encrypted software wallets. FDIRA works with some of the most secure wallet providers available.
6) Privacy & Autonomy: Ownership and transaction information is concealed through multiple layers of encryption, and no third-party can interfere with digital currency transfers. That means your digital currency activity is fast, private, and unrestricted.
IRA-Approved Digital Currencies
Today, you can hold some of the most popular and fastest growing cryptocurrencies in your IRA: Bitcoin, Ethereum and Ripple. This is possible thanks to Notice 2014-21 from the Internal Revenue Service, which acknowledges digital currencies as personal property inside your account, thus allowing your investments to grow tax-free.
Bitcoin, Ethereum & Ripple
- Transactions executed through one of our partner exchange platforms
- Multiple layers of wallet security with multi-sig verification
- Coin value can be viewed 24/7 in wallet
Additional Investment Options
Like we said earlier, your new account isn't just limited to digital currencies. A Digital IRA can hold a long list of other approved investment types, including:
- Stocks, bonds & mutual funds
- Mortgages
- Real estate
- Raw land
- Private businesses
- Private loans
- Precious metals
Opening Your Account
The easiest way to get started with a new retirement account that can hold digital currencies is by working with a Digital IRA specialist like FDIRA.
Our Digital Currency Specialists personally manage the entire process for our customers, assisting you through all the necessary steps, including:
- Completing the necessary paperwork
- Rolling over funds from another retirement account
- Selecting your digital currencies
- Making new contributions
Your personal Digital Currency Specialist will always be available to answer questions and offer expertise, working to make opening your new account easy, straightforward and as little hassle to you as possible.
To learn even more about this process, visit our page on how Digital IRAs work
.
Digital IRA Rollovers
In many cases, the funds and assets in your existing retirement account can be easily rolled over into your new Digital IRA. Depending on your current circumstances, you may be able to roll over the following retirement accounts penalty-free:
- 401(k)
- 403(b)
- 457
- Thrift Savings Plan (TSP)
- Traditional or Roth IRA
Keep in mind, your Digital IRA can be structured as either a Traditional IRA or Roth IRA for tax purposes. We recommend that you consult a tax professional to ensure you make the appropriate choice for your situation.
Start Your Digital IRA with FDIRA Today
If you're ready to take the first step to opening your Digital IRA, or if you have any questions, contact FDIRA today. One of our Digital Currency Specialists will explain the process step-by-step and answer any questions you may have.
Click here to request your free Essential Guide to Digital IRAs, or call (800) 708-4033 to speak to one of our Digital Currency Specialists now.
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