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How Can I Buy Cryptocurrency In My IRA Or 401K, And What Are The Benefits?

August 19, 2021

First, as a general rule of thumb, IRAs and retirement plans can own anything outside of life insurance, contracts and collectibles.

Cryptocurrency is just one of the many options that you can choose when you have a self-directed IRA. Self-directed IRAs allow you to have the keys in your hand to choose alternative investments like real estate, promissory notes, and even cryptocurrency.

What is the big advantage to owning cryptocurrency (and any other investment) in an IRA?

Answer: The tax savings.

IRAs, HSAs, ESAs and 401ks. These are all tax-exempt vehicles that allow you – the fiduciary of that account – to find investments that grow either tax-deferred or in some cases completely tax-free.

Cryptocurrency Is A Great Catalyst For Tax-Free Growth.

Since cryptocurrency is such a speculative investment, people are buying at a low price and potentially seeing high amounts of profits. Now, it’s very volatile and people wouldn’t argue that there are lots of highs, and lots of lows.

But, if you’re looking to invest a small dollar amount and ride one of those highs, what better way to do that than in a vehicle that’s not taxed?

One of the problems with a lot of crypto investors right now is they’re not looking to the future – and that is that this is treated as income to them. So, when you get a high spike in cryptocurrency, that’s treated as income to you, and we’re taxpayers at the end of the day. If you want to eliminate the capital gains tax on your investments – especially when it comes to crypto – you need to understand the types of IRAs and other plans that can own crypto. Let’s go through them.

Types Of IRAs And Other Plans That Can Own Cryptocurrency.

First, the ones at NuView that can own cryptocurrency would be a traditional IRA, a Roth IRA, a SEP IRA, a simple IRA. We even have a QRP or a solo 401k that can own crypto.

We even have health savings accounts and education savings accounts that can own cryptocurrency. These are all tax-advantaged accounts, with the purpose of getting Uncle Sam out of your pocket when it comes to making profit.

So How Is It Done?

There are a couple of different ways that this can be done.  It really depends on your custodian, and the rules can change from place to place.

If you want to invest in the basic coins like Bitcoin, Ethereum or Lightcoin, there are certain third-party exchanges that are familiar with using IRA funds to trade on their platform. We have several at NuView.

That’s basically taking your NuView IRA and sending funds directly to a third-party trading platform.

Keep in mind:

We are not affiliated with any of these trading platforms. We share them with you as options to consider using. From that point on, you can make your own trades, directly on their platform.

All of the profit comes back to your IRA, so it’s not handed over to you as a distribution. Everything goes in and out of the IRA. Therefore, your profits are completely tax-deferred, or in some cases, completely tax-free.

We Allow You To Use Entities Like An LLC To Trade Crypto.

If you want to trade crypto on a third-party platform we’re not already working with, and it’s an off-market platform that gives you the altcoins you want to buy, there are other options where you can set up an entity like an LLC.

You can manage that LLC, if you choose to do that, and we can invest your IRA into the LLC.

Whether that’s a single member LLC or what-not, but basically your IRA goes to fund an LLC.

You could manage that LLC, and basically from that point on your LLC can join whatever trading platform that’s allowable. This gives you a little bit more freedom, but it also adds some costs for paying for the LLC, re-registering the LLC, etc.

There’s no perfect answer to all of it. It just comes down to what are you looking to invest in.

And at NuView Trust, we try to give you as many options for you to make the decision that works best for you.

This is what’s great about a self-directed IRA. The keys are in your hand, and you can invest in anything you want outside of the stock market – whether it’s cryptocurrency, real estate, private money loans or investments into startup companies like private equity firms.

A self-directed IRA at NuView allows you to do all of those things. Contact an IRA specialist here at NuView to walk you through the process and learn about how it works.

If this was helpful to you, make sure to stay connected with NuView Trust by doing the following:

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