100 STEEM Bounty : Looking for an IRA that can potentially do crypto
I need to move my 401k into an IRA and am looking for some guidance from you guys. (I live in the US, PA to be more specific). I do not work for any company at this stage.
I currently have some money in a 401k from my previous employer and I must move it fairly quickly into an IRA.
The things that are important to me:
- Low fees. Fees eat into your profit margin like there is no tomorrow
- I want to be able to trade anything. Stocks, fonds, ETF, Foreign stocks etc
- I also want to be able trade in general so functionality in that regard is appreciated
- I also want to be able to hold crypto and trade crypto
Given that I would love your input on what your think good IRA options are and why.
Lol, these comments...
So here's the deal. An IRA can invest in almost anything except collectibles. See https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-investments So you can buy, stocks, bonds, crypto, real estate, businesses, etc.
BUT!
The vast majority of IRAs are set up with traditional brokerage houses like BAML, TD Ameritrade, etc. Those are the ones with low fees.
So you could open/rollover your IRA at a brokerage and buy your stocks, bonds, ETFs, foreign stocks (or at least their ADRs). So far though, I don't think any bitcoin ETFs have made it through the regulatory hurdles to get listed. I know I saw a headline that Bloomberg wants to bring one to market, so that may be a possibility somewhat soon.
There's also the news that the NASDAQ is looking into crypto, so that may be a possibility in the short to medium term future as well.
If you want your IRA to hold cryptos directly, then you are talking about an IRA not held at a brokerage account. These are called self-directed IRAs. But these violate your low fees rule. Typically the administrators charge something like 2% of assets under management (AUM). But you can really buy anything. A common strategy is to open an LLC opened by your IRA so you can then hold title to things in the LLC's name rather than the IRA's name. It makes for smoother transactions that way since people get all weird when you try to buy something in an IRA's name.
Another issue with self-directed IRAs is that you can't do anything yourself. This is to prevent self-dealing which is a giant no-no from the IRS. The point of the IRA (and all qualified funds like 401ks, 403bs, etc) is that the money is set aside for the future and you have not taken possession of the funds. That's why there's a tax deferral on it. So in order to do any transactions in the self-directed IRA you have to tell the administrator to do it for you. Those extra steps are, in my opinion, super annoying, take a lot of time, and cause those higher fees.
But if you want to investigate self-directed IRAs, there are a bunch of administrators out there. One that I used to have dealings with was https://www.trustetc.com/ - this isn't an endorsement, just letting you know they exist.
Hope that helps.
If the LLC was offshore I wonder if you could avoid taxes?
http://www.irafinancialgroup.com/selfdirectedira.php
If you take money personally out of the llc that is owned by the ira then that is self dealing and/or a distribution. It doesn’t matter where the llc is located.
On an audit, the IRS would probably rule that this transaction is an early distribution, which would mean that you would be subject to the 10% early distribution penalty (unless you somehow qualify for one of the exceptions to it). Even worse, the IRS could claim that the entire arrangement is not an IRA in the first place, in which case the entire amount in your IRA would suddenly be taxable income. These are dangerous waters. Consult a financial advisor (CPA or if the sums are large enough a lawyer who specializes in these types of situations). Not for the faint at heart.
up-voted this also because of this post: https://steemit.com/taxes/@nealmcspadden/are-solo-401-k-s-magic-fairy-tax-dust-spoiler-no
Are you sure you want an IRA? If you have a choice, which it appears you do, a Solo 401k might be worth checking out. They are different from your employer provided 401k plans. Solo 401k plans are for business owners. Even small or new businesses qualify, but you must have proof of business ownership (LLC does the trick). The perks of Solo 401k are substantially better than IRA (roth or traditional). Solo 401k plans are self-directed. I'm semi confident there is a custodian on the market that covers crypto investments. If this sounds new to you, please compare IRA vs Solo 401k before going further down the IRA path.
Can you explain why?
I’m not a expert to be clear, but I’ve learned from people in the industry. Most notably Ben Williams (owner of www.iselfdirect.com). They specialize in self directed IRAs and Solo 401ks. Here are the biggest reasons that I know of.
Contribution Limit
IRA - $5500 / year
Solo 401k - +$50,000 / year
This is a no brainer for anyone who wants to invest more than $5500 per year in tax advantaged accounts.
Both offer pre and post tax options.
Borrowing period
IRA - 60 days to pay back any loan from account
Solo 401k - 5 years to pay back loans from account
This is a huge benefit if you are a savvy investor who knows how to leverage spread opportunities with loans from you retirement accounts. This, plus the contribution limit make Solo 401ks the absolute best tax advantages account for entrepreneurs and business owners. It can do anything (correct me if I’m wrong) an IRA can do with these 2 huge advantages.
Security
IRA - Falls under State Law protection
Solo 401k - Falls under Federal Law protection
There are more advantages than just these, but this list is strong enough to consider Solo 401ks as the way to go for sure!
Once again, I’m not an expert, but if you want to talk to one, feel free to contact www.islefdirect.com. They can answer all your questions and assist in implementation. Hope this helped!
P.S. I’m not affiliated with iSlefDirect. Just giving an honest recommendation based on my experience.
self directed 401k's are usually attached to a corporation. I have a (sole proprietor) 401k with my LLC, and have a traditional, SEP, and Roth IRA personally.
Are Solo 401ks Magic Fairy Tax Dust?
Awesome post. Make sure to put it in a top level comment, otherwise I cannot get u a piece of the bounty.
Ill just upvote your other comment
Heh you beat me to it
@knircky if you want to hold or trade crypto in an IRA in the US your best option by far is with Broad Financial group. They are the ones I used for my own IRA.
I made a post about my experience here https://steemit.com/steem/@yabapmatt/a-guide-to-investing-in-steem-through-your-ira
Fantastic! Great writeup. This has helped me quite a bit!
Great Information not just for @knircky but for all of us aslo looking for the same information.
@yabapmatt Wow that was so cool. I appreciate that,
Good information, I'll keep it in mind
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I can suggest you an IRA called regalwallet https://regalwallet.com/
that I am considering myself. It has reasonable fees, and you can hold cryptos there as well in cold storage. It is for both US and international costumers.
Nice! I have heard about regalwallet. It's is not bad.
You can quasi do bitcoin with GBTC stock. It seems to track bitcoin pretty well. Are you sure you want to do an IRA though? Hopefully you can avoid paying too much in fees.
https://goldiraguide.org/top-bitcoin-ethereum-ira-companies/
How to Add Bitcoins to Your IRA
In order to invest in Bitcoins for your retirement, you’ll need to have a self-directed IRA. Self-directed IRAs permit diversifying Roth or Traditional retirement assets beyond the usual stocks, bonds, mutual funds and certificates of deposit. They permit investors to hold real estate, tax lien certificates, promissory notes, gold and silver, private placement securities and more, as long as they can find a custodian to manage their account. Bitcoins fall into this category of nontraditional investment. https://www.rothira.com/invest-bitcoin-roth-ira
You will probably end up going with a company from this list.
https://www.innovativewealth.com/wealth-management/research/self-directed-ira-industry/the-ultimate-list-of-self-directed-ira-custodians-and-administrators/
It doesn't look like there is much transparency when it comes to fee structures. :(
That's great info. Thanks for sharing @mysearchisover
You may invest your money BTC, ETH. This are very profitable crypto coin right now. Best of luck.
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For US costumers, my friend is using an IRA called BitcoinIRA. Here is the link www.bitcoinira.com
It is the largest and one of the earliest IRA provider. It supports the following cryptocurrencies : Bitcoin, Ethereum, Ethereum Classic, Bitcoin Cash, Ripple and Litecoin
That one looks nice too. I am looking for an IRA and this post is really helpful. Thanks.