You can build financial diversity and strengthen your retirement accounts’ security by adding Bitcoin or a Bitcoin ETF to your traditional individual retirement account (IRA). While some would argue that global financial market volatility precludes using anything except a savings account, the truth is when you diversify your IRA with alternative assets like Bitcoin, Ethereum, Litecoin, Monero, Namecoin, and other crypto tokens and coins.
The addition of digital assets, such as cryptocurrencies, instead of or in addition to tangible assets, takes cryptocurrency management expertise and added security due to sensitive data such as HEX keys. After researching many Bitcoin IRAs, we developed a shortlist of the best, comparing their efficacy and quality based on the following criteria:
We have also put together a brief FAQ to answer the most frequently asked Bitcoin and cryptocurrency IRAs questions.
Frequently Asked Questions
How Do Bitcoin IRAs Work?
You can use a Bitcoin IRA to diversify your retirement investment portfolio. This type of IRA lets you invest in Bitcoin and/or other cryptocurrencies without directly purchasing any tokens or coins. Unlike fiat currency, the Internal Revenue Service (IRS) considers cryptocurrency as property. It taxes their purchases similar to the way it does stocks and bonds. It makes it advantageous for a Bitcoin IRA owner to use a custodian similar to a stockbroker or a financial manager to manage the retirement account. These management firms let their clients trade cryptocurrencies on their platforms. In addition, these firms offer secure offsite or online storage, known as wallets, for each clients’ digital assets.
How Should I Choose a Bitcoin IRA Company?
Carefully consider the experience and expertise of the firm, as well as the security it provides for online and offline wallets and the fees it charges. The investment firm you choose should have experience in both cryptocurrencies and IRAs. The security provided is paramount since, unlike bank accounts, it does not benefit from FDIC insurance. Most cryptocurrencies have no fiat currency backing. Only a handful of such tokens exist. If an investment firm gets hacked, its clients could lose their total investments kept in e-wallets, but those kept in physical vaults remain safe and can benefit from insurance.
Concerning fees, consider that Bitcoin IRAs can incur added costs. Aside from the typical trading fees and administrative fees, they are often based on the total invested amount. In addition, these accounts also incur storage fees, especially with offline storage, such as a safety deposit box. All of these fees can cut into investment profitability.
Are These Investments Safe?
Just as with FOREX trading and purchasing stocks and bonds, you should know what you are doing. Cryptocurrency, like other forms of investing, comes with certain risks and uncertainties. Many investment firms recommend buying and holding cryptocurrency. This means purchasing it for a long-term investment instead of attempting to day trade, a common practice in stock trading. Finding an experienced investment firm can help reduce the risk. Look for investment firms offering many security features and multiple layers of encoding and encryption for transactions. The firm should also provide many cryptocurrencies to choose from and traditional storage methods such as safety deposit boxes.
What Are the Key Benefits?
Like diversifying through precious metals, adding cryptocurrencies to your retirement portfolio reduces your risk by spreading it across many fintech options and blockchain businesses. Talk with your certified public accountant or financial advisor about which digital currencies could best benefit your retirement account and help you avoid heavy capital gains taxes.
How We Chose the Top Bitcoin IRA Custodians
This top three list began with a dozen Bitcoin IRAs in consideration. Our top priority was experience. We looked for firms equally experienced in IRA management, cryptocurrencies, and other alternative investment opportunities. Next, we considered security, especially their online safety, since providing as close to hacker-proof safety protects their clients’ digital assets. Finally, the best companies offer lower fees that make it more affordable to manage a Bitcoin IRA.
Best of the Best
Established in 2017, BitIRA offers high-level security for both storage and cryptocurrency transactions. You need at least $5,000 to open an IRA, and you must do so through one of their digital currency specialists. Within this IRA, you can buy, sell, and trade six cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and Ripple. It offers unlimited insurance coverage – dollar-for-dollar insurance – so clients can protect their investments. In addition to the investment insurance, BitIRA also provides a $1 million consumer protection insurance policy and a $1 million cybersecurity policy. The former includes fraud and theft protection, while the latter protects against hacking.
Each BitIRA transaction uses multi-encryption encoding to maintain security. After online transactions complete, the firm moves the physical keys to grade-5 nuclear bunkers. At this facility, they enjoy around-the-clock protection from computer security specialists and armed guards.
According to third-party sources, the company charges a setup fee of $50, a fee of 0.05 percent per month for its secure offline storage facility, and a $195 yearly account maintenance fee. While this may sound expensive, it ranks as one of the lowest costing accounts.
– BitIRA keeps the physical keys to your digital assets in guarded storage bunkers.
– The firm offers complete insurance for clients’ digital assets.
– Every online transaction receives the protection of multi-encryption encoding.
– You can only open a BitIRA by meeting with one of its digital currency specialists.
2. Regal Assets
Established in 2010, Regal Assets integrated cryptocurrency into its options for investors in 2017 to flesh out its alternative options, increasing its initial options in precious metals. As a result, it offers the most significant number of cryptocurrencies for trading, at 14. Like BitIRA, it includes Bitcoin, Ethereum, Ripple, and Litecoin, among those its clients can buy, sell, and trade on its platform.
It costs a bit more to open a Bitcoin IRA account with Regal Assets than with other firms we considered. You need to have an opening investment of at least $25,000. One option for doing this includes rolling over your traditional IRA. This company also requires you to go through one of its specialists to open an account, although you start the process with an online application you complete on your own. The specialist is a good thing, especially if you need to roll over a Roth IRA to open your Bitcoin IRA.
Regal Assets offers a depth of experience that other companies cannot since it earned the first cryptocurrency trading license issued to an investment firm. While it costs more to open an account vis a vis the investment minimum, it charges flat fees. In the first year of your account, the fees are waived. After that, you pay a $100 yearly administration fee plus a $150 storage fee, which covers more than the cryptocurrencies. It also covers precious metals storage in multiple offshore storage facilities.
The diversity offered by Regal Assets’ cryptocurrency IRAs and its hard asset investments and storage makes it the number two choice for investors. If you have significant money to invest, you can vault this to the number one spot.
– Regal Assets offers 14 popular cryptocurrencies and lets its clients invest in others indirectly.
– It charges flat fees.
– It insures its clients’ digital assets up to $250 million.
– It requires what many consider a significant initial investment.
– You can only open a Regal Assets IRA by meeting with one of its digital currency specialists.
3. Bitcoin IRA
Established in 2016, Bitcoin IRA began the trend of letting investors add cryptocurrency to their IRA. As the biggest cryptocurrency IRA company, it offers 24/7 real-time trading, something the others do not. You can also set up and manage your account online. The security provided is military-grade, so your crypto remains safer. You can set up your IRA account with an e-wallet on its website or using its app. You need to fund your account before trading. Once funded, you wait three to five days before you can buy, sell, and trade.
It offers the same four big cryptocurrencies to trade plus five others. Bitcoin IRA offers the lowest minimum opening costs. With just $3,000, you can open a regular account. You can also start small with the Saver IRA. You only need an initial deposit of $100 to open it so long as you set up a monthly recurring investment of $100 by linking to a bank account. This makes a great choice for Millennials who want to start saving early in life or for the self-employed.
The firm offers reliable security via 256-bit encrypted SSL trading and digital asset insurance of up to $100 million. It also stores digital assets in cold storage accounts once the online transaction completes.
This company does charge far more fees. According to third-party sources, you pay a one-time fee of 10% to 15% based upon the opening investment, a $240 annual fee, a $75 asset conversion fee, plus buy and sell fees of 5 percent for purchasing and one percent for selling.
– Bitcoin IRA offers the easiest setup and trading options.
– It provides secured offline digital asset storage.
– It insures clients’ digital assets for up to $100 million.
– It charges significant setup and maintenance fees.
Final Verdict: Which Company Should You Choose to Buy Bitcoin with IRA?
Indeed, you can buy and sell crypto on your own without an IRA, but if you plan to buy and hold it, placing it in your IRA can make more sense. You can also invest in exchange-traded funds (EFTs) that include cryptocurrencies by opening these IRAs.
BitIRA ranks number one for having a reasonable opening investment and real-time trading plus terrific security. Bitcoin IRA makes it easiest to set up an account but requires the greatest fees. Its Saver IRA makes it really simple for those with little money to start saving for their future. Regal Assets owns the sweet spot for investors with more disposable income. It offers a wide variety of cryptocurrencies plus precious metals. Your decision depends on you. Choose the investment first that best fits your needs.