The IRS now considers digital currency to be personal property, allowing them to legally be held as retirement income inside a Self-Directed IRA.
Many retirement accounts and traditional IRA’s can be converted to a Self-Directed IRA with few if any penalties.
IRAs are retirement accounts that you can put money into tax-free until you retire. Once you reach retirement age, any earnings or profits from the crypto assets inside your crypto IRA will be fully taxed as income.
Here are 5 powerful reasons why anyone with a retirement account should jump on the opportunity.
Distributed and decentralized
Paper money is controlled directly by central banks and governments, which makes it easy to manipulate using invasive monetary policy, like quantitative easing, which devalues the currency.
Centralized systems for far too long have failed in terms of security and privacy.
Cryptocurrencies on the other hand are distributed, meaning that there’s no central points to attack or failure. No single user, miner, miner pool operator or developer can change a crypto coin’s protocol or how the crypto currency works. Unlike banks who have gotten trillions in bailouts from responsible Americans, crypto does not need any central banks or governments to function.
Fiat currency is not only controlled by government agencies and banks, but it’s mostly created by them as well. Since crypto assets are decentralized, they cannot be inflated or deflated artificially through monetary policy.
Digital currencies are designed to be limited in supply, which makes them resistant to the inflationary pressures of government currency.
There is a hard cap on the number of bitcoins that can exist: 21 million. The bitcoin network also adjusts for inflation automatically, with an adaptive scaling feature.
The dollar is a fiat currency. This means that new dollars can be generated instantly by the US Federal Reserve to control inflation, or to address economic problems like downturns in growth and rising unemployment.
When more money is printed by the banks and governments, those with little or no savings are the ones who suffer from it the most. The wealthiest citizens can store their money in sources outside a desperate fiat currency. Those who don’t have a savings account are forced to spend whatever extra money they do have on rising cost of products.
Privacy and security
The personal ownership information behind the digital currency transactions is concealed with heavy encryption.
Transactions are settled and confirmed through a peer-to-peer protocol on the blockchain network, making them quick and secure. The currencies themselves is stored in encrypted software “wallets.”
Digital currencies offer enhanced privacy and foster greater financial control, eliminating the chance for an overly intrusive monetary authority to access, or alter the value of your savings.
The crypto market is the most global market in history. It’s easier than ever to trade crypto assets without government or banks being involved in any way. Due to the peer-to-peer network, crypto markets are global by default.
Participants from any crypto market can engage in crypto to crypto trades 24/7 without special permission or acquiring additional licensing. This creates a financial system that is truly free!
If you live in one country with a volatile currency, and have assets overseas (such as real estate) then diversifying into
Tax-deferred status with self-directed IRA
When you invest in a digital currency inside your Self-Directed IRA, it’s treated as personal property. That means it enjoys the benefit of being tax deferred and free from immediate taxation.
The good news is that any gains from the buying and selling of digital currency within your account will be tax-free until distributions are taken.
A crypto currency is like cash. If you hold crypto currency in a qualified retirement account (such as an IRA) it’s tax deferred until you decide to withdraw or distribute the capital gains.
It’s never too late to start a crypto IRA. When you invest in crypto assets inside your Self-Directed IRA, it’s tax deferred and free from immediate taxation.
We have reviewed the top crypto IRA companies and share our findings. See our list of crypto IRA brokers and see how you can start investing in crypto for your retirement.