Holding Bitcoin in an IRA or 401(k) can potentially remove all future appreciation from taxation.
I can cut through all of the confusion and guide you through the entire process of setting up the legal structure to hold Bitcoin or other cryptocurrency in a Traditional IRA, Roth IRA or, for the self-employed, a self-employed 401(k). You can roll over any existing IRA funds (or 401(k) funds from a former employer) into a Keykeeper IRA on a tax-free basis.
There are many Bitcoin IRA solutions in the market. Why should you choose this one?
Because unlike most “Bitcoin IRAs”, our structure allows you to hold your own private keys while using retirement funds. This is both more secure and cheaper in the long run. And unlike our competitors, our fees are upfront instead of nickels and dimes adding up over time.
Why is holding your own keys important?
As the saying goes, “not your keys, not your Bitcoin.” When you don’t hold the private keys for your Bitcoin, your funds are by necessity exposed to:
- Hacks. There have been 30+ successful hacks to date of Bitcoin exchanges and other custodians.
- Solvency Risks. If you hold your keys in a custodial solution and that provider goes out of business, your funds could be gone.
- Regulatory Seizure. Funds in custodial solutions are subject to being arbitrarily frozen should a “chain analysis” company find the source of your coins to be unsavory.
- Costs. While a “normal” custodial Bitcoin IRA may have low upfront costs, it typically has marked up trading fees and annual account value fees. Sometimes the annual value fee is particularly sneaky and only kicks in when your account value starts to appreciate. With the Keykeeper IRA, there are never annual fees based on account value or trading fees, and you can trade with a normal exchange account of your choice.
With the Keykeeper IRA, you can eliminate all such issues. You can secure your keys however you like: hardware wallets, cold storage, multi-sig, and more. Plus, with our solution you get:
- Asset Choice. In addition to Bitcoin, and can invest in other alternative assets (real estate, private notes, etc), at no additional fee.
- Actual Advice. Most self-directed IRAs are set up by marketing companies. I’m a tax lawyer, not a marketing firm. I can therefore give you tax advice throughout the entire setup process. I can also guide you through setup of the checking account and the Bitcoin exchange account.
- No Markups. We guide you through getting a properly titled exchange account on a major exchange (several exchange options available, no matter which state you live in) under your own sole control. Most marketing companies setting up Bitcoin IRAs instead simply act as a Kraken middleman and slap on an additional 1% fee!
- Lowest Annual Fees. Most self-directed IRA marketing companies act as a middleman with an IRS-licensed IRA provider, marking up that provider’s fees. On the other hand, we’re a law firm and don’t mark up anything.
- Special Solutions for Californians to Avoid State Taxes and Fees. If you set up a self-directed IRA with a typical marketing company and you happen to live in California, did you know your state will levy an $800 annual fee onto your Self-Directed IRA-LLC? You can’t escape this fee by forming an IRA-LLC structure in another state, as it is imposed based on residence of the Manager (you). Because the self-directed IRA marketing companies have no solution to this problem, they actually often advise their customers to form an out-of-state IRA-LLC and pray not to get caught by California. This is terrible advice, as there are scores of published tax court cases where people trying to avoid the $800 annual fee were caught and had to pay all back years’ fees plus interest and penalty. The good news is that because we’re a law firm and not a marketing company, we’re able to offer a modification to the traditional structure that marketing companies can’t. Our special California structure preserves all the benefits above, while avoiding the $800 annual fee in a completely legal way totally compliant with California tax regulations.
The one-time setup fee to create the legal structure for a Keekeeper IRA is $1995, which covers every fee you would be charged in the entire first year of operation. In Year 2 and future years, normally the only recurring fee is $150 annually.
The Keykeeper IRA can be set up as either a Traditional IRA or a Roth IRA, or for the self-employed, a self-employed 401(k).
Disclaimer: Vandrew LLC is a law firm which sets up the legal structure necessary to hold Bitcoin in an IRA. We are not financial advisors or money transmitters and we do not engage in direct sales of Bitcoin or any other investment.