Bitcoin is the cryptocurrency which took the world by storm last year as it shot up to prices which not even the smartest of investors could ever have expected. The price of Bitcoin has fallen since its near $20k valuation in the middle of last year, but that has not deterred would-be investors as seeing this as a viable option, especially when it comes to investing using an IRA.
I have been asked numerous questions about Bitcoin IRA fees and much more, and here I want to answer some of those burning questions.
Why Do We Pay Fees?
Bitcoin IRA fees are considered a one off payment for services by companies who facilitate the buying of Bitcoin through your IRA. These fees cover things like setting up a Kingdom of Trust IRA account, the offering of security as well as support services to the client.
What is The Blockchain?
In basic terms, the blockchain is the ledger where new transactions and interactions are added, collected in the ledger and verified in blocks, or groups. When we refer to a block we are referring to a cluster of transactions which take place across the ledger. This is the real genius behind Bitcoin because each 10 minutes, the ledger is updated and all can see whole network transaction history.
How Do I Invest Using My IRA?
The large majority of companies will offer a full service in terms of walking your through the process from beginning to end. Again you will pay the fee for this comprehensive service which will se a company tie up with your financial institution, to facilitate the buying of Bitcoin through your IRA.
Will Buying Bitcoin Mean That I Incur Penalties?
The hort answer to this question is no, or at least you shouldn’t incur penalties when buying digital currency using your IRA. The reason for this is that the IRS have ruled that digital currencies can be legally held, as long as the IRA account is self-directed. In terms of your tax obligations, a Bitcoin IRA account will have the status of tax deferred and only after you are above the age of 59 years and 6 months, will you begin to pay taxes.
Can I Use My Bitcoins to fund an IRA?
Whilst this may very well be set to change in the future, as it stands right now you can not roll the Bitcoins that you currently own – or any other cryptocurrency for that matter – into an IRA. The IRS have stated that all cryptocurrency-based IRAs, must be bought with dollars.
Minimums and Caps?
The current minimum is $20,000 with no cap on your investment. This is something which could change in the near-future, but as things stand, these are the current parameters.