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How to Invest in Cryptocurrency With a Self-Directed IRA

Cryptocurrency has become a popular medium of exchange across the world. It provides a convenient and quick way to trade services and products all over the world. What is more, users get to avoid centralized oversight and government regulations associated with traditional currencies.

Digital transactions, including cryptocurrency run on self-regulating websites that are visible for everyone to see. Thanks to the self-regulating, cryptocurrency users cannot double spend. It also enhances stability, longevity and guarantees value. The good news is that digital currency can be used across the entire e-commerce industry. 

Vendors, businesses, and individuals can buy Cryptocurrency. Countries that have legalized the use of digital currency also allow citizens to purchase and use it. You will be glad to know that it is possible to invest in Cryptocurrency, including Bitcoin, Ethereum, and Litecoin, in a self-directed IRA.

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The profits you will earn in your self-directed IRA will be paid to the IRA without being taxed. However, taxable liabilities will still apply after retiring. 

What Exactly is a Self-Directed IRA?

Before we get started, it would be best to learn more about self-directed IRAs. These IRA are similar to conventional IRAs. They even follow the same rules as typical IRAs. The only difference is that self-directed IRAs can invest in both digital and traditional investments.

On the other hand, conventional IRAs can only invest in traditional assets selected by the custodians. 

With a self-directed IRA, you will have the freedom to choose your preferred investment plan from a wide range of investment options, including real estate, stock, gold, private equity, and Cryptocurrency. This allows you to safeguard your financial well-being with a self-directed IRA. 

 

Why is Digital Currency Important in a Self-Directed IRA?

Although several self-directed IRA custodians encourage members to trade digital currencies in a self-directed IRA, most members are still not sure if it is the right thing to do. Keep reading to discover the benefits of Cryptocurrency in a self-directed IRA. 

First, you have to report your gains on tax when you trade digital currency individually. Moreover, the tax authority requires individuals to report all goods and services purchased with Cryptocurrency. Monitoring all your transactions in the fast-paced digital currency environment is by no means an easy feat.

You will also use so much of your time. The good news is that you can overcome all these challenges by trading in Cryptocurrency with your self-directed IRA. 

Investing in Cryptocurrency in a self-directed IRA will allow you to enjoy various tax benefits. For instance, your earning will not be taxed if you own a Roth IRA, provided you are more than 60 years old and have had the account for more than five years.

On the other hand, you will pay tax when you take retirement distributions in a traditional IRA. 

How to Invest in Cryptocurrency? 

Self-directed IRA holder has multiple options when it comes to cryptocurrency investments. We will be looking at the three ways to invest in Cryptocurrency below: 

  • Buy and sell digital currency on online platforms. 
  • Invest in blockchain mining. 
  • Invest in hedge funds, Bitcoin trusts, and ETFs. 

 How does The Process work?

  • Begin by choosing an online platform that can allow you to invest with your IRA. 
  • It is worth noting that you cannot trade crypto personally and sell it to your retirement plan. 
  • Check the platform’s regulations to ensure they are in line with IRS guidelines. 
  • IRS regards digital currency as personal property. 
  • Cryptocurrency will enjoy similar tax treatments to similar investments in your IRA. 

 

Why Choose Advanta IRA? 

Do you want to start investing in crypto using your self-directed IRA? Well, Advanta IRA should be your go-to option. As the leading self-directed IRA custodian Advanta IRA provides reliable and professional services to individuals who invest in multiple products. We offer unmatched customer services and help each client during the investing process. 

When you choose Advanta IRA, our professional team will work around the clock to ensure all the administrate details of your crypto IRA are addressed to give you the peace of mind you need when investing in other investments. With Advanta IRA, you will not have to pay any commission. We have secure onsite cold storage to safeguard the safety of your digital currency. Our clients can trade in any cryptocurrency supported by the Ledger Nano Platform. The following are some of the cryptocurrency assets we accept: 

  • Traditional IRAs.
  • Roth IRAs.
  • SEP IRAs.
  • Individual 401(k) s.
  • Recordkeeping Plans.
  • SIMPLE IRAs.
  • Education Savings Plans (ESAs).
  • Health Savings Plans (HSAs).