You may already have an Individual Retirement Account (IRA) loaded with stocks and mutual funds, but adding cryptocurrency to it is another story.
This isn’t because having crypto in an IRA is against the law. On the contrary, IRAs are designed as “containers” capable of holding just about any investible asset, from precious metals to artwork. And crypto is clearly an investible asset.
The big brokerages just don’t want the headaches of managing crypto assets.
That’s opened the door to about a dozen smaller players willing to offer cryptocurrency-specific IRAs. Basically, they’re self-directed IRAs the company helps you set up.
Crypto IRAs work pretty much the same way as a brokerage IRA with one major exception – you can put crypto in them.
So why would you want to open a crypto IRA?
The main reason is to get the tax advantages of an IRA. You get to defer taxes on your gains until you withdraw your assets in retirement. That includes gains made from trading within your IRA account, which is a huge advantage if you want to sell some or all of an asset that’s done well to invest in another promising asset.
But there are some things you need to know.
What to Know About Crypto IRAs
Most crypto IRA companies charge a fee (usually several hundred dollars) to open an account. And the fees for trading crypto within the account tend to be on the high side, typically about 1%. Some also have monthly service fees as well as other fees, so you need to check out the fees before you choose a crypto IRA company.
Note that crypto IRAs don’t allow you to transfer crypto directly into the IRA. You need to fund a crypto IRA first with U.S. dollars. Then you buy the crypto from within the IRA.
In addition, you typically will not have the private keys to your crypto assets. By law, crypto in an IRA must be held by a custodian. However, most of these companies have partnered with well-respected companies like Coinbase to serve as their custodians. You’ll want to make sure the custodian has insurance that protects your crypto (but it’s better if the IRA company has additional insurance).
Finally, crypto IRAs are subject to all the same rules as any other IRA. That includes contribution limits and a 10% penalty on withdrawals prior to reaching age 59½.
Still, a crypto IRA can be a good option for those with a significant amount of cryptocurrency looking for a way to defer taxation on their gains.
You have a lot of companies to choose from.
Here’s an overview of their offerings…
9 Companies That Offer Crypto IRAs
Fees: None to open account; no monthly fee; 1% trade fee.
Number of cryptos offered: 125+
Insurance: Through Coinbase; cash insured by FDIC.
Minimum to start: $10
Pros: Minimal fees; relationship with industry giant Coinbase a plus; high number of cryptos offered; very low minimum.
Cons: Nothing stands out.
2. Bitcoin IRA
Fees: Setup fee 5.99% of initial deposit; monthly account fee of 0.08% of assets; trade fee 2%.
Number of cryptos offered: 60+
Custodian: Digital Trust
Insurance: Yes, up to $700 million
Minimum to start: $3,000
Pros: Easy to use; 24/7 real-time trading; full phone support; robust educational materials; strong rollover options; interest earning program; strong security.
Cons: High fees, and plenty of them.
Fees: Undisclosed, but third parties report a $50 setup fee and a $195 annual account maintenance fee.
Number of cryptos offered: 9
Custodian: Equity Trust
Minimum to start: $5,000
Insurance: “End-to-end” coverage of $100 million; cash insured by FDIC.
Pros: BitIRA claims to have the best security in the business; all crypto is fully insured at all times; all crypto is stored offline in cold storage; good educational resources.
Cons: Fees are confusing and not clearly stated; only nine cryptocurrencies supported as of this writing.
Fees: No fee to open account; 2.5% purchase transaction fee (1% to sell); annual maintenance fee of $195; annual storage fee of 0.05% on IRA balance.
Number of cryptos offered: 6
Custodian: Equity Trust
Minimum to start: $10,000
Pros: Strong security; assets kept in cold storage; personal advisors; excellent rollover support; easy to use.
Cons: High fees, and plenty of them; small number of cryptos offered; high minimum to start; transactions limited to regular business hours.
Fees: Setup fee of $1,295; annual fee of $300.
Number of cryptos offered: Unlimited
Minimum to start: None
Pros: Company helps you set up personal IRA only you control, so you can add any asset – not just any crypto, but property, precious metals, and stocks; you also have full “checkbook control” over the account and sole control over the assets.
Cons: Pricey setup fee; having total control means there’s no custodian, so you’re in charge of your own storage and security.
Fees: Undisclosed, but third parties report a $50 setup fee, a $195 annual maintenance fee, and a 0.05% digital asset storage fee.
Number of cryptos offered: 8
Insurance: Through custodians
Minimum to start: $20,000
Pros: Reasonable fees; personal advisors; strong security, multiple storage options; can help you buy and sell cryptos outside your IRA.
Cons: Small number of cryptos offered; high minimum; fees not disclosed on website.
Fees: Free to set up; no monthly fee, crypto transaction fee 1%.
Number of cryptos offered: 25+
Custodian: Coinbase and Fireblocks
Insurance: Via Coinbase and Fireblocks
Minimum to start: $2,500
Pros: No fees for set-up or monthly maintenance; competitive trading fees; most major cryptos offered (as well as gold and silver); offers 24/7 trading.
Cons: No financial advisors.
8. Regal Assets
Fees: No setup fee; $100 annual administration fee; $150 annual storage fee (both waived in first year).
Number of cryptos offered: 20+
Custodian: Regal Assets
Insurance: Up to $2 million on crypto IRAs.
Minimum to start: $5,000
Pros: Can put both crypto and precious metals in IRA; reasonable fees; experienced account executives.
Cons: Website needs an FAQ page; primary focus on precious metals.
Fees: No setup fee; $25 annual fee; crypto trading fee 0.30% on trades under $100,000.
Number of cryptos offered: 5
Minimum to start: None
Pros: Established company founded in 1982; reasonable fees; robust trading tools; can earn interest on crypto assets; access to crypto, equities, options, and futures in one place.
Cons: Sophisticated tools may overwhelm beginners; inconsistent customer service.
This guide to crypto IRAs is a great jumping-off point for those of you who are looking for a way to defer taxation on your crypto gains. But before you get started with any of these companies, I encourage you to do your own research to figure out what’s best for your particular situation.
Up next, make sure you check out my guide to protecting your crypto right here.
Advisory Board Member, Alternative Wealth Daily
Follow me on Twitter @DavidGZeiler.
P.S. I put together this resource in response to a question submitted by an Alternative Wealth Daily reader just like you. What questions do you have about cryptocurrency investing? Let us know in the comments section below, and we’ll do our best to get you the answers you need!