Bitcoin IRA Rules
For an increasing majority of investors, cryptocurrency holds tremendous promise. As the future of money, Bitcoin, Ethereum, and other digital currencies are an attractive and profitable investment opportunity. Much like cash or stocks, digital currencies are a legally eligible asset class to diversify an investment portfolio.
As such, you will never pay taxes on capital gains, allowing your Bitcoin or other cryptocurrency to appreciate in value without immediate tax liability.
Like any IRA account, the Bitcoin IRA is intended to be drawn upon only after retirement. Spending or withdrawing your Bitcoin before 59 ½ will result in early withdrawal penalties. Selling the digital currency in your retirement account is approved, so long as it is used to reinvest in an IRA or is held in your BitGo wallet in a liquid position.
After you reach retirement age, you are eligible to begin withdrawing funds, and you will begin to pay taxes on your funds at this time.
The Internal Revenue Code specifies that your IRA funds may not be held by you directly. Instead, your retirement funds must be held by a custodian for your benefit.
CryptoWallet IRA works with federally-approved custodian Kingdom Trust, who will hold your Bitcoin IRA funds. Kingdom Trust services clients in all 50 states, specializing in alternative investments, and protecting over $12 billion in assets overall.
Together with Kingdom Trust, CryptoWallet IRA will facilitate the rollover of your existing retirement account into a self-directed IRA account. This type of rollover is nothing new, self-directed IRAs set up with the intention of holding digital currency have been around since 2014, when IRS Notice 2014-21 recognized cryptocurrencies as property for tax purposes.
As a passive, non-discretionary custodian, Kingdom Trust does not provide investment advice for clients, but does work closely with CryptoWallet IRA to ensure that investments are stored properly and meet IRS requirements.
Unlike a traditional retirement plan invested in the paper markets, the funds you store in your CryptoWallet IRA account are not dependent on the value of the U.S. dollar. For this reason, cryptocurrency investment is an ideal hedge against inflation when the dollar weakens in the global economy. CryptoWallet IRA has formed a complementary relationships with Kingdom Trust, and together they have helped thousands of clients protect their retirement funds with digital currency.