Why Professional Guidance Matters When Buying Crypto with a Self-Directed IRA

Why Professional Guidance Matters When Buying Crypto with a Self-Directed IRA‍

In this article:

• Why Self-Directed IRAs require careful compliance when investing in crypto
  
• The importance of working with an experienced custodian
  
• How your CPA or financial advisor can help you build a smart strategy
  
• A simple way to buy crypto in your IRA without an LLC

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Venturing into cryptocurrency can be exciting especially when you’re looking to hold digital assets in a tax-advantaged account like a Self-Directed IRA (SDIRA). However, this territory isn’t without its complexities. Between ever-evolving IRS regulations and the unique characteristics of digital currencies, adding crypto to your retirement portfolio requires more than casual research.

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Navigating Rules and Responsibilities

Unlike traditional retirement accounts, SDIRAs let you choose from a wide range of alternative assets, including real estate, private notes, precious metals, and yes, cryptocurrencies. But with that freedom comes greater responsibility. The IRS has specific rules about what you can and cannot do within your IRA. For instance, your IRA must purchase the crypto directly (not you personally), and you can’t benefit personally outside of the retirement account. Violating these rules can lead to severe tax penalties.

That’s why having the right team in your corner is essential. A self-directed IRA administrator experienced in handling digital assets within retirement accounts will help ensure your transactions are properly structured and reported. They can also guide you through important administrative steps like secure storage, reporting requirements, and recordkeeping.

In the past, buying cryptocurrencies with your IRA typically required setting up an LLC. But now, you can invest directly through your self-directed IRA; no LLC is needed! That’s right: you can seamlessly use your IRA funds to purchase cryptocurrencies.

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Lean on Your Tax and Financial Experts

It’s also wise to involve your CPA or financial advisor when considering crypto for your SDIRA. They can help you evaluate how this type of asset fits into your overall retirement strategy, assess your risk tolerance, and ensure you’re prepared for any potential tax implications down the line.

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Final Thoughts

Cryptocurrency may offer intriguing growth potential, but it’s not a one-size-fits-all solution. By partnering with professionals who understand both the digital asset landscape and the intricate rules of Self-Directed IRAs, you can make more informed decisions and better protect your long-term retirement goals.

If you’re curious about adding crypto or other alternative assets to your retirement account, give us a call or schedule a free consultation. We’re here to answer your questions.

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Ready to Explore Crypto for Your Retirement? 

Mountain West IRA makes it easy to diversify your Self-Directed IRA with cryptocurrency and other alternative assets directly in your IRA, all while staying IRS-compliant. 

Have questions? We’re here to help!
📞 Call us at 866-377-3311 
📅Schedule your free consultation