Bitcoin IRA (Individual Retirement Account) is a self-directed individual retirement account and can be defined as a new type of cryptocurrency investment platform that allows investors to protect their assets from inflation when they retire by investing in bitcoin and other digital currencies through an IRS compliant bitcoin IRA provider. Since bitcoin and other cryptocurrencies have had quite the run-up in value over the past several years, many bitcoin IRA providers have popped up all over the web. You can check out the below bitcoin IRA review to see how bitcoin stacks up in an IRA before you invest.
Let’s discuss the Pros and Cons of Bitcoin IRA
Bitcoin IRA pros:
1) Fast, Cheap, and Secure Way to Transfer and Store Funds
This bitcoin IRA review explains that bitcoin is fast and can be transferred anywhere in the world for a low, flat fee of $0.18 per transaction (or ~$0.04 using Bitcoin Cash). Bitcoin is also secure and decentralized, with no bank or government oversight. In short, bitcoin is accessible to everyone and provides financial inclusion for billions of people around the world.
2) Offers More Tax-efficient Way to Save for Retirement
You can check out the IRS website for more information on how you should save and pay taxes on your retirement savings. When you invest in bitcoin or other cryptocurrencies in an IRA, you are investing pre-tax dollars. Therefore, the gains on your investment will not be taxed at a rate of 15-25%. Instead, when you take distributions from your IRA during retirement, only the gains (or losses) will be taxed at your ordinary-income tax rate.
3) Allows you to Invest in Bitcoin with an IRA
Another positive bitcoin IRA review shows that the bitcoin that is bought into a bitcoin IRA can be transferred or traded like any other cryptocurrency. Bitcoin Cash (BCH) is also given to you when you roll over funds into a bitcoin IRA, and can be transferred or traded like bitcoin.
Bitcoin IRA cons:
1) Highly Volatile
Bitcoin has had quite a volatile ride over the past several years. Volatility means price can go up and down fast. The digital currency has also seen significant price volatility over the past several years, so it’s possible that digital currency could see significant price volatility in the future.
Bitcoin Cash is a spinoff of Bitcoin and can be bought/sold/traded just like Bitcoin. If Bitcoin Cash sees large price spikes/drops in the future (which is very likely), Bitcoin IRA will be forced to liquidate Bitcoin Cash and other cryptocurrencies at the market price of bitcoin which could lead to bitcoin IRA account holders incurring large bitcoin IRA penalties.
2) Their Fees are Higher Compared to Other Types of IRAs
What this bitcoin IRA review means is that, the broker is taking a higher cut of your investment to give you the option of investing in bitcoins. Usually, if they are offering lower fees by not charging a fee for the actual bitcoin, they may charge higher fees elsewhere for things like account management, investments, etc. Bitcoin IRA accounts will also incur bitcoin IRA custodial and bitcoin IRA transfer fees.
3) Providers don’t Follow Traditional IRA Rollover Rules
Bitcoin IRA companies don’t follow the traditional IRA rollover rules for all cryptocurrencies, this is a con of bitcoin IRA review because the IRA rollover rules for all cryptocurrencies do not apply to bitcoin IRA companies. Therefore, if a person decides to invest in an alternative cryptocurrency, they may not be able to use the same IRA provider as their cryptocurrency choice.
There are many benefits to investing in bitcoin with a self-directed IRA as seen in the bitcoin IRA reviews discussed above, but investors must do their due diligence. Only invest if you have done a thorough research and are satisfied with the results you get.