mountain west ira

Cryptocurrency in a Self-Directed IRA

Cryptocurrency/Digital Assets in
a Self-Directed IRA

What are Digital Assets?

Digital assets include cryptocurrencies like Bitcoin and Ethereum, stablecoins, and non-fungible tokens (NFTs). They are recorded on blockchains — secure, cryptographically verified ledgers that track and validate transactions.

For IRS purposes, digital assets are classified as property, not currency. That means every purchase, sale, or exchange outside of a retirement account is a potential taxable event. Inside an IRA, gains and losses follow the same tax treatment as other IRA assets: tax-deferred in a Traditional IRA or potentially tax-free with a qualified Roth IRA distribution.

Why Hold Digital Assets in a Self-Directed IRA?

  1. Diversification: Add an emerging asset class alongside other self-directed options like real estate, private placements, or precious metals.
  2. Tax Treatment
  • Traditional IRA: Earnings grow tax-deferred; taxes apply when you take distributions.
  • Roth IRA: Qualified distributions are generally tax-free, provided you meet age and holding-period requirements.
  • Direct Control: You decide what to buy, sell, or hold — just as you do with other self-directed investments.
  • No Annual Capital Gains Tax: Trading crypto within your SDIRA doesn't trigger a taxable event the way it would in a standard brokerage account. Gains stay inside the account and continue compounding.

Note: Digital assets are volatile, and regulations are evolving. Review risks and IRS reporting requirements before proceeding, and consult a tax or legal professional.

Key Considerations

  • IRS Reporting: Digital asset transactions must be disclosed on your tax return using Forms 8949 and Schedule D.
  • Taxable Events: Every trade, sale, or exchange of digital assets outside an IRA is a potential taxable event. Inside the IRA, standard retirement account rules apply.
  • Prohibited Transactions: You cannot transfer cryptocurrency you already personally own into the IRA. Only cash contributions, transfers, or rollovers from existing retirement accounts are allowed. Self-dealing, margin trading, and lending crypto from the IRA are also prohibited.
  • Qualified Custodian Requirement: The IRS requires that your SDIRA assets be held by a qualified custodian. You cannot personally hold the private keys to crypto in your IRA wallet.
  • Volatility: Digital assets can fluctuate rapidly. Evaluate your risk tolerance carefully and consider how crypto fits within your broader retirement strategy.
  • Annual Valuations: You are responsible for ensuring the fair market value of digital assets is reported to the IRS annually.

How It Works at Mountain West IRA

Mountain West IRA provides administration only for your self-directed IRA. If you choose to invest in digital assets, the process is:

  • Open a Self-Directed IRA with Mountain West IRA
  • If you don't already have an account, start by establishing a self-directed IRA with MWIRA. You can open a Traditional IRA, Roth IRA, SEP IRA, or SIMPLE IRA, or a Solo 401(k), depending on your situation. Complete your IRA Starter Kit to get started.
2. Open a Trading Account with ETZ Soft, Inc.
  • Establish an account with ETZ Soft, Inc., an independent third-party digital asset platform. ETZ Soft, Inc. is currently the only platform available for MWIRA clients. Choose Mountain West IRA as your custodian and complete ETZ Soft Inc.’s registration process.
3. Authorize the Investment.
  • Complete MWIRA's Direction of Investment — Cryptocurrency form. This instructs MWIRA to send funds directly to your ETZ Soft, Inc. account. MWIRA's role is administration only. All investment decisions are yours.
    4. Begin Trading.
    • Once funded, you can buy and sell digital assets directly within the ETZ Soft, Inc. platform. All trades are initiated and directed solely by you. Your IRA with MWIRA remains the account owner throughout.
    • Questions about forms, timelines, or account requirements? Contact MWIRA's Transactions Department at transactions@mwira.com or call 208-510-0859.

    Have Questions?‍

    For assistance with forms, timelines, or account requirements, please contact MWIRA’s Transactions Department at Transactions@MWIRA.com or by phone at 208-510-0859.

    Is a Crypto IRA Right for You?

    A cryptocurrency self-directed IRA makes the most sense if:

    • You already have retirement savings you want to diversify into digital assets without triggering a taxable event. 
    • You believe in the long-term appreciation of Bitcoin, Ethereum, or other digital assets and want tax-advantaged exposure. 
    • You're comfortable with volatility and don't need this portion of your retirement savings to be stable in the short term.

    It's probably not the right fit if you're looking for guaranteed income, need liquidity in the near term, or are close to retirement age without a large enough overall portfolio to absorb crypto's swings.

    Not sure if this fits your situation? Schedule a free consultation, and we'll walk through it with you.

    Important Disclosures:

    Cryptocurrency Purchase Forms

    Cryptocurrency - Disclaimer & Indemnity Agreement

    Review and sign this agreement to acknowledge the risks and responsibilities associated with cryptocurrency investments.

    PDF Downloade-Sign

    Direction of Investment | Cryptocurrency

    Submit this form to direct MWIRA to allocate funds toward a specific cryptocurrency investment.

    PDF Downloade-Sign

    Purchase Kit | Cryptocurrency

    Complete this form to authorize the purchase of cryptocurrency through your MWIRA account.

    PDF Downloade-Sign

    Cryptocurrency Maintenance Forms

    Funds Request Form

    Complete this form to request cash funds held at ETZ Soft, Inc. be transferred back to your MWIRA account.

    PDF Downloade-Sign
    Mountain West IRA does not offer investment, tax, financial, or legal advice to clients. Individuals who believe they need advice should consult with the appropriate professional(s) licensed in that area.

    Cryptocurrency Forms

    Access required forms for investing IRA funds into cryptocurrency, including purchase authorization, direction of investment, required disclosures, and maintenance forms for requesting funds and managing ongoing cryptocurrency transactions.

    Click Here to Access Purchase Forms
    Click Here to Access Maintenance Forms

    Frequently Asked Questions:
    Crypto Self-Directed IRAs

    Can you hold cryptocurrency in a self-directed IRA?

    Yes. A self-directed IRA can hold digital assets including Bitcoin, Ethereum, and other cryptocurrencies. The IRA — not you personally — owns the assets, and a qualified custodian like Mountain West IRA administers the account. Learn more about how SDIRAs work.

    What cryptocurrencies can you hold in a self-directed IRA? 

    The IRS doesn't specify which cryptocurrencies are allowed, but your custodian and the trading platform they work with determine what's available. MWIRA clients use ETZ Soft, Inc. for crypto trading. Contact us for current availability.

    What are the tax benefits of a crypto IRA?

    In a Traditional IRA, gains grow tax-deferred and you pay taxes on distributions in retirement. In a Roth IRA, qualified distributions are tax-free entirely. Either way, you don't pay capital gains tax each time you trade inside the account, which is a significant advantage compared to holding crypto in a standard brokerage account.

    Can I transfer crypto I already own into a self-directed IRA?

    No. IRS prohibited transaction rules prevent you from contributing assets you already personally own into an IRA. You can only fund the account with cash contributions, direct transfers from an existing IRA, or rollovers from a former employer's 401(k).

    What are the risks of holding crypto in an IRA?

    Cryptocurrencies are highly volatile and not insured by the FDIC or any government body. Regulatory rules around digital assets are still evolving. MWIRA provides administration only and does not assess investment risk or provide investment advice. All due diligence is the account holder's responsibility.

    How do I get started with a crypto self-directed IRA at Mountain West IRA?

    Open an SDIRA with MWIRA, set up a trading account with ETZ Soft, Inc., complete the Direction of Investment form, and fund the account. Full step-by-step instructions are above. You can also schedule a consultation or email transactions@mwira.com with questions.

    Can I hold other alternative assets alongside crypto in the same SDIRA?

    Yes. A self-directed IRA can hold multiple asset types in the same account. Real estate, promissory notes, private placements, precious metals, and digital assets can all exist within a single SDIRA. This is one of the main advantages of self-direction over a standard brokerage IRA.

    Mountain West IRA does not offer investment, tax, financial, or legal advice to clients. Individuals who believe they need advice should consult with the appropriate professional(s) licensed in that area.