How to Open a Crypto IRA Account

by Carter Toni

Cryptocurrency offers exceptional advantages for retirement investing. Not only can the virtual currency serve as a hedge against inflation, but it can also protect you from stock losses in traditional IRA accounts or 401(k)s. 

Crypto is mined using blockchain technology. Therefore you can make trades without any interference from a central bank or governmental entity.

A Deflationary Currency

Because crypto supplies are limited, the currency is not used to keep pace with economic demand, which spikes prices and creates inflation. Instead, Bitcoin and other cryptocurrencies are deflationary in nature because their buying power increases with time.

The Ideal Way to Diversify a Retirement Portfolio

Crypto is therefore the ideal addition for diversifying your retirement portfolio. If you want to get the most out of trading crypto, you need to know how to open a crypto IRA account. Doing so will give you everything you need to know to add Bitcoin to your portfolio and reap major benefits with respect to inflation, security, and taxes.

Getting Started – What You Will Need

To open a crypto IRA, you will need to provide your name and contact details first. You will give this information to a custodian who will manage your account. The custodian handles contributions and withdrawals connected with your IRA per your instructions from Viva Capital.

How a Crypto IRA Is Different

A crypto IRA is different from a traditional IRA, as it is called a self-directed IRA or SDIRA. Therefore, when you establish your crypto IRA, it will be set up as an SDIRA. An SDIRA does not feature traditional investments, such as stocks, mutual funds, ETFs, or bonds. Instead, it is designed for alternative investments, such as crypto, art, private equity, silver, or gold.

Learning More about Your Account’s Features

By opening an SDIRA, you will have total control over your trades and purchases. Again, you will direct your custodian on what investments you wish to make. He or she will also explain the features of the IRA and how and when to invest.

Rollovers of Traditional IRAs and 401(k)s

If you wish to roll over funds from a traditional IRA or 401(k) plan, you can easily do so. Usually, you will set up a Roth SDIRA to do this, as you won’t have to worry about paying tax on the withdrawals in your account during retirement. Traditional IRAs and 401(k)s defer taxes until distributions are made.

Funding Your New IRA Account

After your custodian explains the features of your SDIRA, he or she will ask you how you would like to fund the account. You can link your bank account or you can roll over a traditional retirement account to get everything going.

Investing Prerequisites and Limits

Remember, even if you have more than one IRA, you still have to meet the cap for investing. This amount is set annually at $6,000 for investors younger than 50, and $7,000 for anyone 50 or older.

You also have to follow income limitations. For the tax year 2022, your modified adjusted gross income (MAGI) must be $129,000 as a single filer or $204,000 if you choose to file jointly and are married.

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