Digital Assets and Cryptocurrency

How do I use my Rocket Dollar Self-Directed IRA or Solo 401(k) to invest in bitcoin and other cryptocurrencies?

Use a Rocket Dollar SD IRA LLC 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.

 

 

UPDATE: As of March 15th, 2021, Crypto exchanges are seeing significant delays in opening institutional accounts for IRA LLCs and Solo 401(k)s.

Gemini and Coinbase retirement account applicants are seeing up to 6-8 weeks to finish, accept an application, and begin investing in crypto. The Rocket Dollar team has been working to add instructions for two more exchanges that can handle Rocket Dollar accounts and can process applications within a few business days. Expect an announcement no later than Monday the 22nd.

We have now added instructions for River Financial, a bitcoin-only exchange.

How does the IRA/LLC structure work with cryptocurrency?

Crypto Exchange Basic IRA Flow-1

  • Open the Exchange account in the name of IRA LLC
  • Always use separate exchange accounts or wallets for your retirement dollars. Never co-mingle with an account in your name. 

Can I do this with my Self-Directed Solo 401k?

Crypto Solo 401(k)

  • Open the Exchange account in the name of your Solo 401(k). If the provider is not familiar with a Solo 401(k) they should open your account as a retirement trust. 
  • Always use separate exchange accounts or wallets for retirement dollars vs your dollars. If you make investments with both Traditional and Roth accounts, those must be segregated into different wallets or sub-accounts as not to commingle different tax statuses. 
  • Control your exchange and storage options.

How long will it take to open an account?

UPDATE: As of March 15th, 2021, Crypto exchanges are seeing significant delays in opening institutional accounts for IRA LLCs and Solo 401(k)s. Gemini and Coinbase retirement account applicants are seeing up to 6-8 weeks to finish, accept an application, and begin investing in crypto. The Rocket Dollar team has been working to add instructions for two more exchanges that can handle Rocket Dollar accounts and can process applications within a few business days. Expect an announcement no later than Monday the 22nd.

Opening a Gold Account will take at least two weeks.

Opening a Core Account will take at least three weeks, sometimes four. 

Opening your crypto exchange account, either in the name of the IRA or Solo 401(k) Trust, can take much longer than standard customer signup. As of 3/17/2021, exchanges that normally took 1-2 weeks are taking as long as 6-8 weeks due to historically high customer applications and interest. 

Opening an IRA, LLC, and bank account have the benefit of quite a few freedoms, but we need time to get every bit of your account open. 

To speed up funding your exchange account, as soon as your IRA LLC or Solo 401(k) is created, you can take the creation documents and apply them to the exchange as quickly as possible. While we are working on your retirement rollover and getting your account funded, you can be completing this independently. Opening an entity/Solo 401(k) retirement trust account WILL take longer than the average basic, individual, consumer crypto trading account. 

During crypto all-time highs, we always receive tremendous interest in IRA LLCs to invest in cryptocurrencies. This can slow our fulfillment team down because of the sheer volume of accounts we need to open for customers. Even if you are eager to enter the crypto markets, remember to dollar cost average or purchase carefully with price alerts and price limit orders to protect your retirement savings. 

Cryptocurrency Options available in your self-directed retirement account

There are plenty of paths to invest 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 the new investments on the Rocket Dollar investment tracker.
  • Lending opportunities 

Please give us a call or visit our Partners Page to discuss the working relationships we have across the crypto space: 1-855-762-5383

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 account's 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 investments?

Can I use another exchange?

You can, but Rocket Dollar cannot provide guidance on the application process. It is important to have the EIN in the name of your custodian, and if that is not accepted, the EIN of your IRA LLC. Some exchanges might still do a personal identity check, but it is important that final documentation is clear that your crypto belongs to your IRA. 


Who owns my coins then?

Your retirement account owns the coins. Whatever exchange you use is the final direct crypto security. Rocket Dollar's partner holds custody of your IRA, which is the single-member (100% owner) of your 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.

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 info@rocketdollar.com and ask to be included in updates. 

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