This guide profiles the best Bitcoin IRA options for 2024, highlighting the opportunities and challenges inherent in this new breed of investment vehicles.
In the swiftly evolving financial landscape, the integration of cryptocurrencies into retirement planning has emerged as an interesting trend. Bitcoin IRAs, combining the potential high returns of cryptocurrencies with the tax advantages of traditional retirement accounts, offer a potentially lucrative approach to portfolio diversification. A crypto IRA’s main advantage over non-IRA crypto trading accounts is that there should be no capital gains tax on profits.
Crypto IRAs in the US are all required to be compliant with US tax and investment law and have qualified custodians and appropriate insurance coverage. They all deliver the same tax benefits, which are dictated by the US Retirement Income Security Act (ERISA) and Title 26 of the Internal Revenue Code.
They are not permitted to use hypothecation of investor deposits to earn returns for the company. As such, assets should remain safely in cold storage until investors either swap or withdraw them. US law requires that deposits into IRAs are made with cash, so crypto investors cannot move existing crypto portfolios into a crypto IRA.
In security terms, analysis of the offerings from a range of providers reveals they’re all using the same custodians (Bitgo and Ledger Enterprise for the most part). Unlike crypto lending or staking platforms, none of them pay interest on your investments (as they can’t hypothecate). Ultimately, their fees and the range of cryptocurrencies they support are the main differentiators between them. Depositor’s returns will be primarily influenced by gains made on cryptocurrencies purchased, and careful tax planning around withdrawals.
The Best Bitcoin IRA Providers for 2024
The following are the major Bitcoin IRA providers, each with unique offerings:
Founded in 2018, iTrustCapital offers a platform where clients can diversify their retirement portfolios with cryptocurrencies and precious metals. Offering access to 34 cryptocurrencies, including Bitcoin, Ethereum, and Litecoin, along with gold and silver, iTrustCapital provides a broad spectrum of assets for diversification. The platform includes a real-time trading feature, allowing clients to buy and sell assets 24/7 directly from their IRA accounts, leveraging the tax advantages that IRAs offer.
Security
iTrustCapital utilizes a third-party custodian, Fortress Trust, to custody client assets. Fortress Trust is a regulated state-chartered trust company. As a Qualified Custodian, it holds client assets in individual retirement accounts solely for the benefit of each client. The company says Fortress, in turn, utilizes more than one custody provider including BitGo and Fireblocks. Fortress Trust was set to be purchased by Ripple late in 2023, but the deal ultimately did not proceed. At the same time, an integrated Fortress Trust partner (Retool) was hit with a $15 million hack of customer funds. While the hack was not explicitly of Fortress Trust, the timing was unfortunate.
Fees
iTrustCapital charges a 1% transaction fee for cryptocurrency trades, and specific fees for gold and silver transactions. There are no monthly account or setup fees. The minimum to open an account is $1000, and the minimum contribution is $500.
Pros
- Direct trading of cryptocurrencies and precious metals within IRAs.
- No monthly or setup fees.
Cons
- Investments can only be funded with U.S. dollars, not existing crypto assets (common to all providers).
- No availability for residents of New York and Hawaii.
Established in 2017 as a facilitator of self-directed IRAs, BitIRA empowers investors to diversify their portfolios with 16 leading cryptocurrencies including Bitcoin, Ethereum, Litecoin, all within a structure compliant with IRS guidelines. The company’s exchange partner is Galaxy Digital. All trades with BitIRA are channelled through Galaxy Digital.
Security
BitIRA says its custodian is Equity Trust Company – a custodian specializing in alternative assets in tax advantaged portfolios. However, BitIRA also says its custody is managed by Ledger Enterprise – so it appears that Equity Trust is outsourcing its crypto custodian duties to Ledger Enterprise.
Fees
BitIRA is not transparent about its fee structure stating there is “no one size fits all” solution and requiring users to talk to “specialist” for fee details. Research reveals a set up fee of $50, an annual account maintenance fee of $195 and a storage fee of 0.05% per month.
Pros
- Compliant with US law.
Cons
- High minimum investment requirement of $5000 may deter some potential investors.
- Specific fees and costs require direct inquiry for clarity.
- Website information is vague and contains a lot of ‘puff’ but is light on details about insurance and custody.
Since its inception in 2016, Bitcoin IRA has been at the forefront of combining traditional retirement investment strategies with the burgeoning cryptocurrency market. Bitcoin IRA operates as a self-managed platform that facilitates the purchase and sale of cryptocurrencies within an IRA that offers tax benefits.
It supports the conversion of existing retirement accounts to crypto IRAs and includes the option to invest in gold. While leveraging this platform can result in tax savings, it’s important to note that the associated account fees can be quite steep. There is a $3,000 account minimum.
Security
Custody and insurance for Bitcoin IRA are outsourced to Bitgo.
Fees
Deposit fees range from 0.99% to 4.99%. A transaction fee of 2% applies and there is a monthly security fee of 0.08%.
Pros
- Opportunity to invest in gold
- Assistance with IRA transfers
- 60+ cryptocurrency options
- Apple and Android Mobile Apps
Cons
- High fee structure
- Fee details are not transparently disclosed
Like all other providers listed Alto CryptoIRA is compliant with US tax and retirement laws and distinguishes itself by providing access to over 200 cryptocurrencies through its integration with Coinbase, one of the largest and most reputable crypto exchanges in the U.S.
Security
Coinbase also manages custody for Alto CryptoIRA.
Fees
There is a 1% transaction fee for crypto trades. Additional service fees apply to various operational activities, such as wire transfers and account closures. No establishment fee or ongoing monthly or annual fees.
Pros
- Provides one of the largest selections of cryptocurrencies for IRA investments.
- Offers real-time trading capabilities and a mobile app for convenience.
- The partnership with Coinbase enhances the reliability of asset storage and trading.
Cons
- Focuses exclusively on cryptocurrencies, which may not suit investors looking for a mix of traditional and digital assets in their IRA.
Launched in 2017, Coin IRA offers 17 cryptocurrencies including Bitcoin, Ethereum, Litecoin and Solana.
Security
Like BitIRA, Coin IRA also outsources its custody services to Equity Trust who in turn outsource to Ledger Enterprise.
Fees
There are no fees for account setup, maintenance, or cryptocurrency storage. Self-trading within a Coin IRA account incurs a fee of 1.25% for buy trades and 1% for sell trades. For assisted trades, the transaction fee is 2.25% for buy trades and 1% for sell trades. The minimum investment required to open a Coin IRA account is $5,000.
Pros
- Transparent Fees. Clearly outlines additional costs, promoting a transparent investment process.
- Support – provides comprehensive resources and personalized consultancy services to navigate the complexities of cryptocurrency investments.
Cons
- No mobile apps
- High minimum investment ($5000) to open an account.
My Digital Money (MDM) offers retirement portfolios with digital assets and precious metals (gold, silver and platinum), through both Individual Retirement Accounts (IRAs) and Standard accounts. 18 cryptocurrencies are available.
MDM has a “Play Money” account feature that allows new users to familiarize themselves with the platform without any financial risk, simulating trades with a fictitious $100,000.
Security
Like several other platforms, MDM uses Equity Trust for custody.
Fees
Setting up a crypto IRA involves a one-time setup fee of $50, a platform transaction fee of 2.15% and a 0.75% custodian transaction fee. There are no monthly or annual fees.
Pros
- Modern user interface and dashboard. Apple and Android mobile apps
- A test account for trading practise.
Cons
- Transaction fees are on the high side at 2.15%.
