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 legal structure allows you to hold your own private keys (either on your own, or for enhanced security, collaboratively with chosen third parties) while using retirement funds. This is both more secure and cheaper in the long run.
This structure helps you avoid the 1% fee on Bitcoin purchases charged by many “Choice” IRAs. That 1% fee is easily thousands of dollars on a rollover converted to Bitcoin. Instead you have access to opening your own institutional Bitcoin exchange account under your sole control, with pricing on purchases usually at 35 basis points (depending on which Bitcoin exchange you select).
You can hold your keys on your own or collaboratively with others. You can, but are not required to, use a concierge service like Unchained Capital to help with key management. You can use a hardware wallet, cold storage, and/or multi-sig. You can even choose to lend your Bitcoin and earn tax-free interest income (BlockFi, Celsius, etc.). We’ll never know how you choose to hold your keys, nor do we want to know any of your addresses. We just set up the legal structure that gives you full flexibility. And unlike other Bitcoin IRA structures, the 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:
- Costs. While a “normal” custodial Bitcoin IRA may have low upfront costs, it typically has marked up trading fees and annual account value fees. Other times 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.
- 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.
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:
- No Markups. We guide you through getting a properly titled exchange account on a major exchange (several exchange options available with fees as low as 35 basis points on purchases, no matter which state you live in) under your own sole control. Most marketing companies and “Choice” IRAs instead simply act as a Kraken middleman and slap on an additional 1% fee! Avoiding that 1% fee saves thousands of dollars on a rollover converted to Bitcoin.
- Asset Choice. In addition to Bitcoin, you 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.
- 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.
- Store however you want. You can store your keys however you want, and we’ll never know any of your addresses.
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 assists in alternative investing in tax-advantaged retirement accounts. We are not a registered financial advisory firm or money services business (as we never direct your actual investments, which remain under your control). The practice of Vandrew LLC is limited to federal tax matters, with specific focus on IRAs and 401(k)s.