More and more people have become interested in investing in Bitcoin, mainly due to the sudden spike in value in both Bitcoin and Ethereum in 2017. Because of this increase in interest, the US government now allows people to invest in these coins are part of their individual retirement account (IRA). However, that does not mean that you can simply go out and buy some bitcoin and put them in there. Rather, you have to make sure that you follow all the appropriate rules and regulations. Thankfully, when you sign up for the best Bitcoin IRA – coin IRA, your custodian will help you with that.
Things to Remember for the Best Bitcoin IRA – Coin IRA
The most important thing to remember is that there are limits to how much you can invest in an IRA. If you are younger than 50, the maximum is $5,500 per year. If you are over 50, the maximum is $6,500. That is the total amount. When you open an IRA, it is important to create a diverse portfolio, which means you should invest in a variety of other things as well. Most will allocate percentages of their entire account to things such as stocks, bonds, real estate, precious metals, and cryptocurrencies. How you design this is up to you, so long as your contributions don’t exceed the aforementioned amounts each year.
Secondly, you can’t just buy a bunch of bitcoin and put them in your retirement account. Instead, you have to work with a properly registered bitcoin IRA custodian. Thankfully, more and more of those exist. They will ensure that the way you make your purchases is fully compliant with the legal mandates as set by the government. It is important to understand that there are numerous things that impact their involvement, including:
- The extreme volatility of the cryptocurrency market.
- The fact that cryptocurrencies are live 24/7.
The two above factors mean that the way the custodian values a cryptocurrency can change on an hourly basis. However, you can only liquidate them during regular business hours. Hence, there is a chance that you will lose out on quite a bit of value.
A cryptocurrency is classified as property by the IRS (Inland Revenue Service). What this also means is that your investments will be taxed in the same way as other investments, meaning you have to consider the capital gains rate both on short term and long term.
There are many different rules and regulations to abide by when you open a Bitcoin IRA. Because these accounts are self-directed, you have full responsibility over them yourself. Hence, it is very important that you pick a custodian that you trust and who will be happy to help you make the right investment decisions. At the same time, you must make sure that they do not charge you any exorbitant fees for their services and that they are fully transparent about their methods of working.