Use a Rocket Dollar SDIRA or Self-Directed Solo 401(k) to buy Cryptocurrency (Bitcoin IRA, Ethereum, Litecoin), Blockchain-based Startups, and Digital Asset Funds, all in your tax-advantaged retirement portfolio.
How does the IRA/LLC structure work with cryptocurrency?
Cryptocurrency Options available in your self-directed retirement account
There are plenty of paths to investing in digital assets. The range of options can help offer a choice for various investor experience levels and risk tolerance.
- Cryptocurrency directly purchased through an Exchange, Market Maker, or private party - Your retirement account will own cryptocurrency coins on a centralized exchange or offloaded into a wallet named for your retirement account. If you use a private seller, be sure not to deal with a prohibited person, like your personal dollars or close family/business partners.
- Digital Assets Managed Fund - Investing through a Managed Fund product, which a 3rd party controls. Traditionally a hedge fund type structure for trading digital assets.
- Venture investments into Blockchain Startups that are funding projects & companies involved in the space (in Fiat US Dollars)
- Security Token Offering (STO) - Token issuance is a way to digitize private assets. The blockchain technology implemented by an issuance platform is used to administer investor assets through a digital ledger.
- Using your cryptocurrency or tokens your IRA holds to trade for other assets - You can trade your coins without capital gains taxes to different coins. Your IRA LLC can go out and use cryptocurrency to buy assets from platforms that accept cryptocurrency or tokens as valid payment. Simply report it the new investments on the Rocket Dollar investment tracker.
- Lending opportunities
How are you different than other Bitcoin IRAs/Cryptocurrency IRAs?
Fees in this area have been startlingly high, both from the IRA provider and their exchange and custody partners. Rocket Dollar’s offering starts with our $360 signup fee, monthly maintenance of $15 to maintain the accounts tax-advantaged status.
Bitcoin IRA products have often been sold with high built-in service and transaction fees, as well as with limited coin & token access... A Rocket Dollar retirement account provides the ability to invest in a variety of assets, not just cryptocurrency. With an "umbrella" LLC or trust in your Rocket Dollar account, you can participate in your friend's new startup, stocks, bonds, as well as buy and hold direct cryptocurrency
In a direct custody role, the IRA provider will control the custody choices, and any movement of assets, both fiat and digital. The Rocket Dollar model allows for greater flexibility around storage & custody for the IRA LLC assets.
What should I keep in mind when executing on investments?
All investments and storage must be titled in the name of your Rocket Dollar retirement account. The tax id and legal information for your retirement account should be listed on any and all account documents, not your personal name or SSN.
- If you're using an LLC inside of the Self-Directed IRA, you'll open an account at a crypto exchange in the name of the LLC. John Smith's defaults to JSmith RD LLC. Use the LLC's EIN to complete the sign-up.
- If your Self-Directed Solo 401(k) plan's name is BUSINESS 401k PSP, if you are a sole proprietorship, you would title your account as John Smith 401k PSP. Make sure to register your exchange account as a trust.
Who owns my coins then?
Your retirement account owns the coins. Rocket Dollar's partner holds custody of your IRA, which is 100% owner of your IRA LLC, and you are the manager of that LLC, making all investment and storage decisions. Using the proper ownership identifiers your retirement account can invest in any cryptocurrency such as Ethereum, Bitcoin, Litecoin, as well as a Security Token Offering (STO). If you use an exchange, but it must be able to properly handle your IRA LLC or Solo 401(k) Retirement Trust, and title your assets into retirement account name instead of your own.
With the exchange, you can set up a storage option that works for you and your retirement account as long as you avoid a prohibited transaction.
Do I have to own the coins directly in my IRA?
No, there are turnkey and managed solutions. You can consult storage options with our partners or consider digital assets managed funds. Whatever option you select, make sure to work with a provider that has a trusted storage option and account security to back up your investment.
What cryptocurrency exchange should I use?
You can visit our partner's page for instructions on using Gemini and other partners. Contact us at 1-855-762-5383 for more information if you would like to hear more. All Crypto Exchanges must be able to accept your IRA LLC as an entity.
Always make sure you create new accounts that are all titled in the name of your IRA LLC instead of your personal name.
For our Solo K product, the exchange must be willing to open an account in the name of your retirement trust.
Can I buy crypto personally and then put it into my retirement account as a pre-tax or post-tax contribution?
No. Sadly there is no infrastructure or compliance method to correctly account for your contributions this way.
All new retirement contributions must be made with Fiat cash, then you can buy crypto from an exchange or trusted private party. Be careful to not deal with your own personal crypto and retirement crypto, or a prohibited person, as that could be a prohibited transaction.
Can I invest in crypto in a Rocket Dollar IRA without an LLC? What if I am from California?
No, at this time, due to special needs for custody, Rocket Dollar IRAs with no LLC cannot offer access to Cryptocurrency. A customer would have to open a Self-Directed Solo 401(k) or an IRA with an LLC. If they are in California. they would have to pay the franchise board tax fee. Rocket Dollar continues to expand offerings to our customers to reduce friction.
If you would like to stay updated on progress, please email firstname.lastname@example.org and ask to be included in updates.
Want to read more?
- How are cryptocurrencies taxed?
- Why cryptocurrency could have a place in your portfolio. A look into the cryptocurrency options.
- Cryptocurrency with Mark Peck on the Rocket Your Dollar Podcast.
- The Basics of Self-Directed Investing in Cryptocurrency.