Ever since Bitcoin and other cryptocurrency boomed in the summer of 2017, the world has been hustling to try and find ways in which they can invest in this new and exciting financial development. One area which many investors have looked to tap into is their retirement fund, and how they can use their IRA to fund cryptocurrency investment. One question which I am asked a lot is about a Roth IRA and what Roth Bitcoin IRA options they have. To help clear this up I wanted to write a quick piece on what a Roth IRA is, and how it can be used in the investment of Bitcoin.
What is the Roth IRA?
A Roth IRA is a form of an individual retirement plan which has many similarities to a traditional IRA plan. The difference with this kind of IRA account, however, is that unlike traditional IRAs which involve making contributions with pre-tax dollars, which you then pay income tax on upon retirement and withdrawal of funds; a Roth IRA is funded with after-tax dollars and contributions are not tax deductible. The benefit of this type of IRA is that you can withdraw funds at any time, without the need to pay either penalties or taxes. In terms of which is better between a Roth IRA and a traditional IRA will come down to your own individual situation, age and income status. The general school of thought is that younger and lower-income workers will benefit best from a Roth IRA, given the fact that they can benefit over time from the compound interest.
Can I Invest in Bitcoin With a Roth IRA?
The great news when it comes to investing in Bitcoin or cryptocurrency with your Roth IRA is that you absolutely can. In order to do this you have two options, the DIY option or you could use a full-service company to take care of everything for you.
If you choose to set up your own Roth Bitcoin IRA, you will be required to set up an LLC through which to manage your account. Once you have it set up, you will then transfer the money from your IRA through the LLC bank account exchange. From this point, you can begin to make investments on behalf of your LLC, in this case in Bitcoin. There are many risks attached to the DIY option and if you are going to do this, you must read in detail what the IRS says about it, in order to avoid penalties.
– Full Service
Using a company to take care of the setting up of your Roth Bitcoin investments from your IRA is the simplest way in which to do it. This will, of course, incur a fee for services but you can guarantee that you will avoid any issues with the IRS, as well as being able to count on the job being completed, without any worries or stresses on your behalf.
Time to get investing.