Saving and investing are as old as the capital markets. They have existed in different forms since man learned how to trade. Whether for a house, kid’s college, a new car, general comfort, or even a weekend party, financial planning is a crucial part of our financial lives. How well we execute our savings and investment plans are the backbones to sustainable living and a happy future.
Introduced in the United States in 1974, Individual Retirement Accounts (IRAs) are tax-advantaged accounts you can use to save and invest for retirement. IRAs are provided by Internal Revenue Service (IRS) approved financial institutions, including brokerage firms, mutual advisors, mutual funds, and banks. They include a wide range of options, limitations, dividends, and penalties depending on the type of IRA or action performed within or outside the specified period.
Understanding IRAs and How They work
In planning for your retirement, you’re very likely to be familiar with or come across retirement plans with different names. For example, IRAs specifically refer to Individual Retirement Accounts that aren’t tied to an employer; you establish these types of accounts yourself with the help of a financial institution of your choosing acting as custodian or trustee. On the contrary, 401(k) plans are employer-sponsored plans offered by for-profit companies that you would open through your employer, and 403(b) plans are U.S. tax-advantaged retirement savings plan available for public education organizations, some non-profit employers, cooperative hospital service organizations, and self-employed ministers in the United States
Types of IRAs
No matter your income level, you should always keep your retirement plan in mind when making your current financial decisions. Obviously, an earner with higher income usually has more disposable income, and can take full advantage of the funding options, but anyone can contribute any amount up to the allowable limit. Let’s take a look at four main types of IRA and how they work.
Traditional IRAs: Contributions to a Traditional IRA defer income tax on the amounts you contribute until they are distributed to you after age 59 ½. The IRS sets the allowable annual contribution limits based on your age. Contributions are usually tax-deductible (consult your tax preparer) and withdrawals will result in a 1099 at the end of the year in which you took the distribution. You’ll then claim that income on your tax return for that tax year.
Roth IRAs: In Roth IRAs, contributions are made with after-tax dollars, and if left in the IRA for the requisite time period, withdrawals after retirement are tax-free. Eligibility to contribute is based on your income level (consult your tax preparer), and contribution limits are the same as for a Traditional IRA.
Simplified Employee Pension (SEP) IRAs: SEP IRAs are typically used by small business owners, freelancers, and entrepreneurs to make retirement contributions for themselves and their employees. SEPs have higher contribution limits and other requirements that make it necessary for you to consult your tax professional before moving forward.
Simple IRAs: In a Simple IRA, employees make direct contributions, and employers are required to make a matching contribution for the employee.
Cryptocurrency IRAs: The astronomic rise of Bitcoin and cryptocurrencies during the past couple of months has been ascribed to many variables. From institutional investor acceptance and investment, rapid digitization, mainstream acceptance, and even the pandemic, one thing is certain — the Bitcoin revolution is no longer a Generation Z or Millennial euphoria. It has transcended age groups. By outperforming stocks, bonds, and the most traditional asset classes like gold and oil, cryptocurrencies have continued to break and set new all-time highs in 2021.
Of course, the aim of having an IRA is to plan for the future by saving and investing in the best interest-yielding reserve assets. Historically, stocks, bonds, annuities, and mutual funds have been the go-to assets. However, with many more people now favoring Bitcoin as a reserve asset, digital assets are increasingly popular in retirement accounts. Cryptocurrency IRAs are self-directed IRAs that allow individuals to invest in cryptocurrencies inside their retirement portfolios.
Are Cryptocurrencies IRAs Legal?
In 2014, the IRS classified cryptocurrencies as property, qualifying them for IRAs.
Choosing a Cryptocurrency IRA
Some people are skeptical about a Bitcoin investment because of its perceived volatility. However, there are two questions you should be asking: First, is the rapid adoption of cryptocurrencies by the biggest companies in the world a coincidence? And second, how much scrutiny would a sizeable company do before investing in this new digital asset class?
Choosing a Cryptocurrency IRA is a decision that requires proper research, education, and some degree of familiarity with the asset. However, its never too late to start planning for your future, and you can start now. Before trusting a Crypto IRA provider with your retirement funds, here are a few questions you might need to ask yourself and the IRA provider:
- Does the Crypto IRA provider have experience and a strong reputation?
- Do they provide excellent customer service?
- Do they provide expert assistance with the transfer from my existing retirement account?
- Can they answer all my questions to my satisfaction?
- Can I quickly trade in or out of a crypto investment?
- How secure is the crypto stored inside my IRA?
Coin IRA is one of the pioneering companies in the United States offering Cryptocurrency IRAs.
There are many advantages to working with Coin IRA, but primarily is the wealth of experience they bring to each and every customer and the professional relationships they have established that customers benefit from – from reputable custodians to the top cryptocurrency exchanges. The Coin IRA website offers users and potential customers key information about cryptocurrencies, setting up an IRA account, and proactive customer support to answer questions and guide you through the process.
Coin IRA allows you to fund your IRA from an existing 401(k), Traditional, Roth IRA, SEP or Simple IRA, or to establish a custodial non-IRA account. With Coin IRA, cryptocurrency assets are securely locked away in military-grade cold wallets, protecting your digital assets from malicious attacks or loss.
Ultimately, Coin IRA saves you time, stress, and money by offering you an expert-assisted self-directed Cryptocurrency IRA, guiding you each step of the way. Coin IRA has built genuine trust with partners and account holders over the years. Visit coinira.com today to find out more!