Bitcoin is a form of digital currency that can be used to buy goods and services, just like a physical currency. What makes Bitcoin unique from other forms of digital currency that came before it is the use of blockchain technology to verify transactions. This technology enables Bitcoin to be a decentralized peer-to-peer (P2P) system.
Bitcoin’s decentralized nature makes it immune to government interference or manipulation, so there is less risk that your investment will lose value due to inflation or other economic factors. Its high liquidity means you will always be able to convert your Bitcoins into cash, and its high volatility provides the potential for high returns on investment.
Investing Bitcoin in an IRA
Investing in bitcoin through a self-directed IRA can be a great way to grow your retirement savings. Retirement savers interested in buying bitcoin directly through their IRA can take advantage of the tax advantages it provides and use already existing funds to purchase bitcoin.
If you’re looking to get in on this exciting new investment product, follow along as we walk you through the steps of how to invest in Bitcoin through an IRA.
Step 1: Find a Reputable Company
Bitcoin IRAs are an exciting way to invest in cryptocurrency, but you must have a trustworthy and knowledgeable custodian like Viva Capital to hold your assets.
Currently, only a handful of top-rated companies provide bitcoin IRAs, so you may want to read reviews before choosing one.
Some factors to consider when looking for a reputable company include:
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Regulation
Funds invested through an IRA have to be managed by a custodian approved by the IRS. This can ensure that your assets aren’t being mishandled and that your investment is still protected even after you pass away since your beneficiaries will also receive this protection.
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Guarantees
Suppose you’re investing a substantial amount of money into bitcoin. In that case, it’s essential to know that the company you’re working with offers guarantees on their investments in case their platform fails, theft, or they go bankrupt.
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Reputation
Other investors should be willing to work with the company, so find out what they think of it before you commit any money. Avoid companies that have a negative reputation among users and other investors.
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Customer Service
You want to make sure that the company is responsive and helpful when you need them to be available if something goes wrong. Good customer service can also help make sure that any questions you have are answered promptly and accurately, ensuring that there aren’t any surprises down the road when it comes time to pay taxes or withdraw the funds from your retirement account later.
Step 2: Select an Investment Plan
Once you have chosen the custodian, you will need to decide on the investment plan and how much money you want. Different companies offer different investment plans, so you must compare them before deciding on one. Some custodians set a minimum investment amount.
Step 3: Set Up an Account with the IRA Provider
Once you’ve decided on a bitcoin IRA provider and an investment plan, you can set up an account and fund it with cash or rollover funds from an existing retirement account. The process is similar to setting up any other type of IRA — you might need to provide your Social Security number, driver’s license number, and proof of address, such as a bank statement or utility bill.
Step 4: Select the Bitcoin IRA You Want
When investing in bitcoin, several options are available: individual retirement accounts (IRAs), Roth IRAs, and Roth 401(k)s. Each has its own distinct rules and tax implications, so it’s essential to understand the details before investing. Your IRA custodian or provider can help or just visit the IRS website for more information about each type.
Step 5: Fund Your Account
Once you’re satisfied with everything, you’ll need to send the funds from your IRA account to the company. This is done via a trustee-to-trustee transfer where the company serves as the trustee of the funds being transferred.
As soon as the funds arrive, they will be converted into Bitcoin or other cryptocurrencies on your behalf. You don’t have to worry about finding someone to buy or sell Bitcoin or how much Bitcoin is currently worth. The company takes care of everything for you so that all you have to do is enjoy your investment profits in retirement.
Self-directed Bitcoin IRA
Investing in bitcoin through a self-directed IRA can be a great way to grow your retirement savings. Retirement savers interested in buying bitcoin directly through their IRA can take advantage of the tax advantages it provides and use already existing funds to purchase bitcoin.
With a self-directed Bitcoin or crypto IRA, you can choose to hold Bitcoin as your investment within the account. You can also choose to hold Litecoin, Ethereum, Ripple, or any other 700+ cryptocurrencies. Your Bitcoin IRA provider can help you decide which assets are best for your retirement portfolio.
You can fund your self-directed Bitcoin IRA with either a traditional pretax IRA or a tax-deductible Roth IRA. If you have an existing retirement account, such as an employer-sponsored 401(k), you can also roll it over into a Bitcoin IRA.
To keep track of your investments, most companies will provide a secure online portal that gives details on things like your current portfolio balance, previous trades, the present value of your assets, and expected future gains.
Reap the Rewards
As the price of Bitcoin and other cryptos continues to climb, it’s hard not to be drawn in. Many people want to know how to get their hands on some digital currency. Fortunately, the investing process is not as complicated as you might expect.
When investing in crypto using your IRA, It is essential to choose the proper custodian and to do so. You may want to consult a professional financial adviser. But as long as your custodian follows the rules, investing in bitcoin or other cryptocurrencies using your retirement account could be a smart move.
