Bitcoin is a cryptocurrency which has been around for a few years now; and in 2017 it gained worldwide attention after its price skyrocketed from $2000 to $20,000 in a matter of just a few months. Of course, there is a lot of controversy still surrounding both bitcoin and other digital currencies in general, but all indications appear that this is a new way of thinking and a currency which looks set to change the way in which we deal with money.
Needless to say, as cryptocurrencies become more popular, an increasing number of people are expressing their curiosity about, how IRAs can be used in the purchase of bitcoin, as well as what the IRS has to say about it all. If you have any of these burning questions about buying bitcoin with your IRA, here are some answers:
What are the bitcoin IRA fees?
The fees which you will pay when buying bitcoin with your IRA will be paid to the service provider who you have decided to work with on converting your IRA to bitcoin. The fees which you pay contribute towards the service itself, the security which is added to your account, as well as the setting up of a Kingdom of Trust IRA account. Fees may vary in amount, but they do always need to be paid.
What kind of accounts can be rolled over to a bitcoin IRA?
You are able to rollover any funds from existing Roth IRA, IRA, SEP IRA, Simple IRA, 401k and 403b accounts, and turn them into a self-directed bitcoin IRA account.
How do I invest in a bitcoin IRA?
The best way to approach this is to use an all-in-one company who will deal with the entire process of converting you investment into a bitcoin IRA account. Specialists within these companies will be able to set up the account, rollover the funds which you currently have and then make executions on the bitcoin exchange.
What taxes will I pay?
As it stands right now, the official IRS ruling states that if you ave digital currencies, you can hold them legally as an asset in a self-directed IRA account. The IRA will have tax deferred status in this case, and you won’t be required to pay taxes on the funds which you withdraw, until you reach the age of 59 and a half.
Do I pay penalties for transference of assets?
Assuming that you do so to the letter of the law put forth by the IRS, you won’t pay any penalty charges for transferring your assets. Using a company to look after the setting up of your bitcoin IRA can ensure that you avoid all penalty fees, owing to the fact that it will abide by each requirement from the IRS.
Hopefully this has answered some of the questions which you have had about bitcoin IRAs. If so, you’re ready to start investing!
Photo Credit: btckeychain