Traditional individual retirement accounts (IRAs) have been around since the 1970s. But in the past couple of years, a new version has popped up. To keep up with the changing times, several companies have unfurled the crypto IRA.
And there’s good reason for it. Crypto is simply the most explosive asset class available to investors. And with the prospect of lawmakers proposing “taxing unrealized capital gains” there’s reason to believe they could become much more popular.
Keep in mind, not all of these crypto IRAs offer access to the entirety of the crypto market. For the most part, these tax-advantaged retirement accounts are limited to a handful of the largest cryptocurrencies… Think Bitcoin, Ethereum, Litecoin and the like. There are also account minimums (which vary), transaction fees (also vary) and accessibility worth considering.
For instance, the aptly named BitcoinIRA is a slick and streamlined crypto IRA that comes in the form of a simple smartphone app. What we like about this one in particular is that it grants access to several cryptocurrencies. It also has a relatively low account minimum of $3,000. BitcoinIRA also offers around the clock trading and offline cold storage. Furthermore, it comes with $100 million in insurance coverage.
That being said, BitcoinIRA isn’t the only option out there. In fact, there is seemingly a crypto IRA for all levels of investors. From the crypto-curious, to the seasoned hodler, we’ll break down some of our favorites and why we like them.
Crypto IRA for Beginners
As was mentioned above, BitcoinIRA is a strikingly simple way to go about setting up a crypto IRA. But for those that have never traded in crypto before, another option is BlockMint. This one offers one-on-one guidance from seasoned professionals. Once you open up an account, BlockMint will assigns users a crypto expert to help design a portfolio that fits your needs. With that assistance comes a price though. The account minimum to get started is $10,000. And it also collects a 2.5% fee for purchase transactions. On top of this, there is a 1% fee for selling and it charges 0.5% fee for storage.
If the fees BlockMint charges are a deal breaker for you, another possibility is iTrustCapital. This outfit offers a decent array of crypto options. And it only charges a $29.95 monthly account fee and 1% fee on trades. Also worth noting, the account minimum is only $2,500. Another perk with this crypto IRA is that it also offers the chance for some diversification. Users of this service also have access to gold and silver for those who like to dabble in trading precious metals as well. iTrustCapital also offers 24/7 crypto support and secured storage.
The Service With the Most Options
All of the crypto IRAs we’ve covered today have their advantages and drawbacks. But one of the main issues is accessibility. Anyone with a Coinbase account has access to more than 100 different tokens. And that number is constantly growing. However, most crypto IRAs only give the opportunity to invest in a handful of cryptocurrencies. An exception to this rule is Broad Financial.
Broad Financial lives up to its name by offering access to any crypto exchange. In turn, this gives folks the opportunity to invest in just about any cryptocurrency that want. On top of this broad selection of cryptos to choose from, this crypto IRA has no account minimums. That being said, there is a $1,295 fee for setting up an account. On top of this, there is a $300 annual custodial fee.
Another plus to setting up an account with Broad Financial is that customers can choose between a traditional crypto IRA or a Roth IRA. The former gives people the chance to invest their money pre-tax. And the latter taxes money before it goes into the account. The advantage here is that customers can reap the tax benefits when they hit retirement age… Instead of paying Uncle Sam when cashing out the account.
The Bottom Line on Crypto IRAs
This is by no means a comprehensive list of all the crypto IRAs on the market. There are plenty more out there. But these are the ones that offered the most unique services that we’ve found. They all serve a slightly different niche for investors. And they all have their drawbacks as well as strengths.
And keep in mind, just about anyone can set up a crypto IRA. For the most part, the only qualification is to be employed and be able to make contributions to it. And once your account is set up, you simply start adding funds and saving up for retirement.
However, it’s important to remember this is a retirement account. So you don’t want to withdrawal money from a crypto IRA until you hit 59 ½ years old. Otherwise, you can be changed a withdrawal penalty. And you’ll be taxed on the money you pull out. That being said, you don’t need to start taking your distributions when you hit 59 ½. You can continue letting your money grow for about another decade before required minimum distributions (RMDs) kick in. This can help maximize the payment dispersal once you hit retirement age.
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About Matthew Makowski
Matthew Makowski is a senior research analyst and writer at Investment U. He has been studying and writing about the markets for 20 years. Equally comfortable identifying value stocks as he is discounts in the crypto markets, Matthew began mining Bitcoin in 2011 and has since honed his focus on the cryptocurrency markets as a whole. He is a graduate of Rutgers University and lives in Colorado with his dog, Dorito.