Crypto IRAs

IRAs

IS IT RIGHT FOR YOU?

Digital assets are allowable investments within a retirement account. Most providers who offer access to digital assets within a qualified retirement account do so through what is called a 'Self-Directed IRA.' This places the onus of portfolio management on the individual. This means you will have to know when to buy and sell and in what percentages for a volatile asset that trades 24/7. This can often be a burden to individual investors, causing them to make suboptimal decisions and lose money over time.

Since 2018, we have helped clients navigate this new and exciting asset class by adhering to a diligent investment process and keeping our eyes and ears focused on this fast-moving space 24/7. Investing in crypto can greatly enhance a diversified portfolio and put you in a place to retire comfortably. But it needs to be done right, and that is where professional management can help.

See below for the account types we service.

1. Traditional IRA

A type of individual retirement account in which contributions may be tax-deductible, and investment earnings grow tax-deferred until withdrawal during retirement. Withdrawals from a Traditional IRA are taxed as ordinary income, and there are penalties for early withdrawals before age 59 1/2, with some exceptions.

2. Roth IRA

A type of individual retirement account in which contributions are made with after-tax dollars, and investment earnings grow tax-free. Qualified withdrawals from a Roth IRA during retirement are also tax-free, and there are no required minimum distributions during the account holder's lifetime.

3. SIMPLE IRA

A Savings Incentive Match Plan for Employees (SIMPLE) is an IRA Ideal for small businesses. Both the employer and employee can contribute to the employee's account. The contributions are pre-tax and grow tax-deferred until withdrawal. There are contribution limits and penalties for early withdrawals.

4. SEP IRA

Simplified Employee Pension (SEP) IRAs, are retirement savings plans for self-employed individuals or small business owners and their employees. Contributions are made by the employer and are tax-deductible, and investment earnings grow tax-deferred until withdrawal during retirement.

5. Solo 401(k)

These are for self-employed individuals or business owners with no employees. The plans allows for high contribution limits and tax-deferred savings potential. They do require administrative docs and may have fees.

HOW TO

CONTRIBUTING

Contributing to your Roth IRA. Here’s something that often gets overlooked, if you didn’t contribute for the prior year you can still do so up until April 15th. That means this year you could contribute a total of $13,000 if under 50 and $15,000 if over 50.

Here is another trick a lot of people miss. A Roth IRA conversion where you can take your regular 401(k) and roll it over to a Traditional IRA then convert it into a Roth. You will pay taxes on the money you convert. However if you are in a low tax bracket the timing could be ideal. The Roth IRA conversion gives you a chance to have a larger amount of money work for you with tax-free distributions. Another perk, there is no annual required minimum distribution. Money invested can keep vesting well beyond 70.5. People are living a more active life for longer years and this vehicle can support that lifestyle.

Comparison

Roth 401k vs Roth IRA vs Traditional 401k

Comparing these three should really be looked at as a comparison of a Traditional 401k vs a Roth 401k. The simple reason being that the 401k properties of both require them to be sponsored by and employer. A Roth IRA can be set up and managed by the individual without the involvement of an employer. Now that we got that clear what makes the Roth portion of the IRA and the 401k is that its distributions are taken tax free.

Further comparing a Roth 401k vs a Traditional 401k reveals that taxes is where the differences lie. The Roth 401k is contributed with post tax dollars. The Traditional 401k is contributed with pre tax dollars and allows for a write off. At time of distributions the Roth 401k are tax free and the Traditional 401k is taxed at ordinary income tax rates at time of distribution. The contribution limits are the same for both at $22,500.

401k Unroll Case Study

There is a way to unlock funds in your current 401k plan with your employer. Being confined to the small varity of mutual funds is not the only option. We have a way to get you Bitcoin in your IRA. The following case study will depict how funds that were from your previous employer can be stripped out from your current employers restricted retirement plan.

We had a client that worked at a major credit card company and had done a great job of amassing an impressive sum of money in is company’s 401k which was administered by Voya. This client had originally started his 401k with another employer over a decade ago. When he moved to his current company he rolled over his previous 401k. Which over the last five years grew to a handsome sum. But this roll over can be undone. He was then able to invest in digital assets with the funds that were spun out.

If you are looking to invest in Bitcoin in your current employer’s retirement plan, that is not directly possible at this time. But if you’ve started a 401k with a previous employer that balance can be rolled unrolled. The key is that original balance is designated with a source from the previous rollover, and that source is allowed to be rolled out and over. In order to do this we’ll help get you with a custodian who can administer digital assets. Once the funds land and are under our management we will either put the position on for you or you can self-direct a one time investment.

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