What is a Bitcoin IRA?
A Bitcoin IRA or Digital Currency IRA is an Individual Retirement Account in which Bitcoin or other approved digital currencies are held in custody for the benefit of the IRA account owner. It functions the same as a regular IRA, only instead of holding paper assets, it holds the popular digital currency, bitcoin, in custodian managed wallets. Bitcoin IRAs are usually self-directedIRAs, a type of IRA where the custodian allows more diverse investments to be held in the account.
The Bitcoin IRA model is similar to Gold, which is one of the more popular self-directed IRAs and can include other types of retirement accounts such as, Roth IRAs, SEP IRA, SIMPLE IRA, HSA, Thrift Savings Plan (TSP), and 401(k)s.
Investors often use bitcoin as a long-term hedge against inflation, to diversify their portfolio. Internal Revenue Code requirements state that the bitcoin must be stored in a specific manner.
Bitcoin IRA, bills themselves as America’s #1 Bitcoin IRA Provider and they manged to meet the IRS requirements by partnering with BitGo and Kingdom Trust. BitGo is the industry leader in multi-sig security, full custody and multi-user access controls and Kingdom Trust offers Self-Directed IRA solutions for individual investors, investment sponsors, family offices, advisory firms and broker-dealers.
Bitcoin IRA provides a Free Bitcoin Investor Kit for United States residents.
Investopedia offers the below information about IRA’s and Digital Currency Tax Implications.
IRA Rules
The other issue pertains to IRAs that are inherited. A recent Supreme Court decision has ruled that money received by heirs in these accounts are no longer considered retirement assets. This effectively means that creditors can now get their hands on that money if you go bankrupt or become otherwise unable to pay a debt.
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