Crypto for Qualified Accounts

Understanding the benefits of incorporating digital assets into your client's retirement strategy.

Onramp Invest September 21, 2022

When it comes to retirement accounts, investors need to be looking forward. Cryptocurrencies spurred a new digital direction in the market that’s evolving and expanding by the day. Leveraging crypto with qualified accounts like IRAs and Roth IRAs provides an opportunity to invest a percentage of your client’s future in the robust potential of digital asset growth. 

Crypto x IRAs: where they intersect

Including digital assets in retirement accounts is fairly new, and initial discussions surrounding crypto allocations are sure to come with a lot of questions. The first question investors may ask about crypto IRAs is whether they can actually deposit crypto in their accounts. The short answer is no, because IRAs and Roth IRAs can only be funded by cash, which crypto is not. Cryptocurrencies are identified as properties as of 2014 and therefore cannot be deposited into an IRA account (an exception being rollovers, which can be done in kind). 

However, when it comes to investing an IRA into cryptocurrencies, investors are in the clear. Cryptocurrencies fall outside of the existing asset vehicles prohibited from IRAs, which include things like life insurance contracts, personal use real estate, and antiques or collectibles. This allows investors to place an allocation of their retirement savings into digital assets like Bitcoin, Ethereum, and more.

The benefits of adding crypto to IRAs and Roth IRAs

Less short-term capital pains

Due to the nature of traditional IRAs, investors have a potential option of deferring taxes on assets until the time of withdrawal. This allows them to take a long-term approach to investing in major cryptocurrencies like Bitcoin while avoiding capital gains taxes, either short or long-term, from rebalancing or trading. This enables long-term compounding on the gains that would otherwise be paid out in the form of taxes. Investors that have Roth IRAs pay taxes on the contributions upfront, allowing them to achieve gains without being taxed later.

True portfolio diversification

Although the traditional and digital markets are recently known to mirror each other in trading patterns, investing in cryptocurrencies can help diversify IRAs and provide an alternative to the stock market in the event of a downturn.

Future-forward

The financial space is inherently leaning towards a more digital future, with crypto being a small piece of a much larger picture. Qualified accounts provide a safe and regulated outlet for investing in the evolving digital landscape.

Getting started

If your clients are asking about adding digital assets to their retirement funds, we’ve got you covered. Join the waitlist to access qualified accounts through Onramp. 

 

 

Disclaimer:  This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely that of Brett Munster and do not express the views or opinions of Blockforce Capital or Onramp Invest.

 

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