It is now reasonably common for people to want to invest in cryptocurrencies as part of their retirement portfolio. So much so, in fact, that you can now start a bitcoin IRA. Doing so, however, does mean you have to identify the correct kind of Ira for your needs. Not every provider allows for cryptocurrencies yet, which means you will have to do a little bit of research. Furthermore, you are likely to have to switch to a self directed IRA. Not just that, you will need a bitcoin wallet.
Open a Bitcoin Wallet before You Start a Bitcoin IRA
Once you have opened your self-directed IRA, you will need to transfer capital into it. In order to then purchase cryptocurrencies, you will need to set up a bitcoin wallet, which your new IRA can use. A wallet is very similar to a safe deposit box, only it exists in the digital world. Within it will be all the information that is needed to purchase, sell, and use cryptocurrencies. There are lots of different vendors out there who provide wallets, so you will have to compare what is out there. Make sure you pay particular attention to what level of security there are few.
Before you set up your bitcoin wallet for your IRA, you need to make sure that the custodian of your IRA is involved as they may have a preferred strategy. Sometimes, it is possible to establish a cryptocurrency wallet using the name of your IRA. However, other custodians want you to set up an LLC (limited liability company) inside your IRA, and this LLC will hold the Bitcoin wallet. You need to know which of the two your custodian requires before you get started.
Using the name of your IRA to set up a wallet is the most direct and simplistic way to do it and it is likely that most custodians will use this as standard in the not too distant future. However, because the concept of Bitcoin IRAs is still relatively new, there are not many providers who actually allow this just yet. Those that do are often far more expensive than other providers as well. It is not unheard of for some of them to charge as much as 15% in commission on the balance of your IRA. In other words, this is yet another thing that you need to investigate.
If you do find an IRA provider that does not charge exorbitant fees and it allows you to set up a wallet in the name of your IRA, you will have struck the proverbial gold. Thankfully, using the alternative option of creating an LLC is not very complicated nor does it cost a lot of money. However, you will have to pay charges to maintain your LLC registration, which should not cost more than a few hundred dollars each year. Considering the fees this will save you on your IRA, it’s actually offers fantastic value for money.