Bitcoin IRA: A Brief Overview

Looking to diversify your retirement portfolio and maximize your financial gains? If the answer is yes, then you might want to consider investing in a Bitcoin IRA.

Whether you are familiar with Bitcoin or this is the first you’ve heard about it, this quick guide will give you the 411. Read on to find out what Bitcoin IRAs are and whether one right for you.

What is a Bitcoin IRA?

A bitcoin IRA is also known as a self-directed IRA. It is a personal retirement account in which you can invest in alternative currencies or assets that are often excluded from traditional IRAs. This includes gold, property, and cryptocurrencies like bitcoin.

How Does a Bitcoin IRA Work?

Bitcoin IRAs function in much the same way as a standard IRA account.

Annual contribution limits remain dependent on your age and employment status. You can rollover funds from other IRAs and accounts. Bitcoin IRAs also give you the freedom to choose between a traditional and a Roth IRA.

The main difference is that Bitcoin involves the purchase and investment in cryptocurrencies vs mutual funds, stocks, and bonds. Bitcoin IRAs must also be set up under the stewardship of a managing bank or financial institution. This is to ensure the safety of the funds by minimizing the risk of losses and theft.

Pros of Bitcoin IRAs

There are three key advantages when it comes to opening a Bitcoin IRA.


Although digital currencies tend to be volatile, they can also provide a certain amount of stability. Since they are not directly connected to the stock market, they can provide retirement accounts with some protection during a dip. Click here if you’re interested in adding Bitcoin to your IRA portfolio.

High Returns:

Due to its fluctuating nature, there is a large potential for high returns. When bought and sold at the right times, you could be looking at a huge increase in value.

Tax Breaks:

There is a small opportunity to avoid certain capital gain taxes by including cryptocurrencies in retirement accounts. Bitcoin IRAs have the potential for tax-deferred growth, so long as all applicable guidelines have been adhered to.

Cons of Bitcoin IRAs

If you are near the age of retirement, a Bitcoin IRA might be a bit of a risky investment. Its volatility runs the chance of heavy financial losses. If you do decide to open a Bitcoin IRA, you should consider maintaining a conventional IRA as a safety net.

Although you might be able to get a small tax deferment, there are lots of other fees to consider. Some of these include set up fees, trading fees, maintenance fees, and custody fees.

Depending on the Bitcoin IRA company, you might only be allowed to trade on a limited number of currency exchanges. You should also consider the complexity involved in managing and maintaining your Bitcoin IRA. You’ll need a thorough understanding of custodians, exchanges, and storage security.

Is a Bitcoin IRA Right for You?

There is a large potential for gain with a Bitcoin IRA. Depending on your age and financial situation, now is as good a time as any to diversify your portfolio and earn a bit of extra retirement money.

If you enjoyed this article, we encourage you to check out our other content on personal finance.