Cryptocurrency IRA Rules

The main difference between a cryptocurrency IRA and a conventional IRA is that rather than investing in stocks or bonds, your IRA funds are invested in cryptocurrencies, the most popular being Bitcoin.  But what makes cryptocurrencies such a great investment?

Cryptocurrencies are mathematically verified, decentralized, digital currencies which are recorded on an immutable public ledger you can view online.  This unalterable public record will display your crypto purchase within seconds of your transaction, without involving a third, such as a bank.  It is a peer to peer transfer — from your virtual wallet to your receiver’s — any time of the day or night, anywhere in the world, 365 days a year. Limited issuances of specific cryptos contribute to their value, as demand increases.  Bitcoin, for example, is limited to 21 million Bitcoins, and other cryptocurrencies have similar limits.  Once all of those units have been mined, no more will be issued.

That makes cryptocurrencies a great investment for those looking not only to benefit from coming cryptocurrency price growth, but also for those looking to hedge their investments against inflation and currency devaluation. Think of cryptocurrencies as the digital equivalent of gold and silver, but with the potential for even greater appreciation.

If you’re interested in learning more about how to invest in cryptocurrencies, contact Coin IRA to find out everything you need to know. Our experts will guide you through each step of the Cryptocurrency IRA process.

Like any other IRA, Cryptocurrency IRAs are subject to certain IRS rules and regulations.  

Types of Cryptocurrency IRAs
Traditional IRAs are funded with pre-tax dollars as are SEP IRAs (for the self-employed), and Roth IRAs are funded with after-tax dollars. Each offers some great advantages if you follow all the rules.   Please consult your tax professional for the type of IRA best for you.

Contributions to Cryptocurrency IRAs follow all the same rules as any other conventional IRA.  Please consult your tax advisor for the federal limits on contributions based on your age and contribution year.

Minimum Age for Distributions

Withdrawals (distributions) from a Traditional IRA (pre-tax funds) before the age of 59 ½ may result in penalties for early withdrawal, in addition to the income tax that will be due by April 15th of the year following distribution. Roth IRAs(after-tax funds) have a different set of rules and requirements regarding taxation, penalties and distributions.  Both options should be discussed with your tax professional before taking the leap.

Required Minimum Distribution (RMD)
Cryptocurrency IRAs must follow the same rules regarding required minimum distributions as their conventional counterparts. If you have a Traditional Cryptocurrency IRA (holding pre-tax dollars), once you turn 72, you’ll be required to start taking distributions, essentially claiming that income and paying the income tax.  For a Roth Cryptocurrency IRA (after-tax dollars), the rules regarding distributions are different. Since a Roth holds after tax dollars, there is no requirement to take RMDs, but please talk to your tax professional for the full story on how each of these can work to your benefit based on your specific financial circumstances and plan for the future.


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