Young and experienced investors have a tendency to miss the boat on Bitcoin because they do not realize that such a powerful investment vehicle to help create a healthy retirement account for their future. And even more important, it’s also a great investment opportunity to create a diversified portfolio instead of keeping all of your eggs in one basket. Cryptocurrencies are volatile, to say the least, which is why investing for the long term is a smart idea.
Do you plan to invest in Bitcoin? And do you plan to invest by opening a Bitcoin IRA account? As I’ve said, this relatively volatile investment is also an intense way to create incredible wealth and live comfortably in retirement in the future. You can add alternative investments like precious metals and cryptocurrency to a self-directed IRA account.
The Real Truth Behind a Bitcoin IRA
Have you started to think about how a Bitcoin IRA actually works? If you’re like most people, you have no clue how to start investing in cryptocurrency through an individual retirement account.
Thankfully, it’s fairly straightforward and the overall concept is really basic.
But I’d like to make things even more simple. For the most part, a self-directed IRA is like a traditional IRA in many respects. But in this particular case, you have the ability to buy cryptocurrencies like Bitcoin and Ethereum instead of just traditional stocks and bonds. You can also buy precious metals and real estate in an alternative IRA account as well.
How Does a Bitcoin IRA Operate?
The best part of all? There are a couple of different types of options that you can choose for your self-directed IRA. You can go with a traditional self-directed IRA, or if you prefer you can choose a Roth self-directed IRA.
What’s the difference? When you open a traditional self-directed IRA, you are funding the account using pretax dollars. This lowers your overall yearly gross income and you aren’t required to pay taxes until you take distributions after you reach 59 ½ years old or older at retirement age.
A Roth self-directed IRA, on the other hand, is funded using money that was already taxed. So, this investment is tax-free at the time you begin taking distributions. Since you’ve already paid taxes on the proceeds that you deposited into the account, the IRS does not possess the ability to ask you to pay taxes again.
This is an exciting IRS loophole that intelligent retirement investors make the most of. Are you willing to take a chance on a lucrative investment like Bitcoin?
For each of these accounts, the contribution limit remains the same. For the tax year 2021, you are allowed to contribute $6000 into your account if you are 49 years of age or younger. And you can contribute $7000 to your account if you are 50 years of age or older.
The Top Bitcoin IRA Options for Small Business Owners and the Self-Employed
The beauty of being a self-employed individual or small business owner is that you have even more exciting options, which of course include the best bitcoin IRA account options. And these options possess even greater advantages and opportunities as opposed to a traditional self-directed IRA and a Roth self-directed IRA.
What are your other options? They include:
- SEP IRA
- Simple IRA
- Solo 401(k)
And what makes these particular accounts so special?
Personally, I know you’re going to love these specific accounts because the contribution limits are much higher than they are for traditional and Roth self-directed IRA accounts.
How much higher are the limits? Well, as an example, with a SEP IRA account, you are allowed to contribute 25% of your income, or $58,000, whichever one makes the most sense, for the tax year 2021.
Now compare that with a self-directed IRA contribution limit. You can either contribute $6000 or $7000, depending on your age. That’s a $52,000 or $53,000 difference! Do you see why this account is so valuable?
With a SEP IRA or Simple IRA, you’ll be able to grow your retirement investment by leaps and bounds. This is one of the fastest ways to accumulate serious wealth.
The Biggest Reasons to Open a Bitcoin IRA
As the heading says, there are definitely some major reasons to consider investing in Bitcoin to beef up your retirement account. I know it may seem scary because so many people will warn you about how volatile Bitcoin is, but the wild swings that this investment takes mean many buying opportunities to take advantage of. Or
On the other hand, there are so many benefits to purchasing cryptocurrency in your IRA that it’s hard to keep track of them all. But I’d like to share three major reasons with you below, so stick around because Bitcoin provides:
- Tax advantages – more than anything else, you need to open a Bitcoin IRA because the tax benefits are so awesome and they are unavailable in just about every other type of account. I want you to know that when you open a cryptocurrency IRA, you can open a tax-free or tax-deferred account, depending on how you set up the account. This means you’ll either take tax-free distributions in retirement or you’ll have tax-deferred distributions that you’ll pay based on the current going rate at the time. These self-directed IRA accounts quickly add up to big money after investing for many years.
- The potential returns are off the charts – it doesn’t get any better than buying Bitcoin low and selling high. Many investors bought Bitcoin for $5200 in March 2020, and right now those investments are worth more than $32,000! That is a humongous return that’s more than 400% but less than 500%, so it’s somewhere in the middle. And, it’s big money to make in just a year and a half.
- Portfolio diversification – finally, you want to add Bitcoin to your IRA because it will diversify your portfolio even greater than T-bills, mutual funds, stocks, and bonds. This will protect your retirement future from an overall market crash.
The Final Word
Clearly, opening a self-directed Bitcoin IRA is a bright idea for smart investors. How so? Well, there are tax advantages to think about. There is portfolio diversification to consider. And the potential returns on Bitcoin are amazing. Open a self-directed IRA today and get started with this lucrative investment and grow your retirement account exponentially in the process.