Individual retirement accounts, or IRAs, are a powerful way to prepare for retirement. They are also quite popular with around 22% of all assets held in mutual funds represented by IRAs. This equates to an amount of $4.9 trillion.
But mutual funds are not the only investment option for IRAs—far from it. Gold, silver, and even cryptocurrencies can all play a critical role in strong retirement plans. Alternative investment options like these can be incredibly valuable because they diversify your portfolio and decrease your dependency on fiat currency.
One excellent platform offering IRAs with cryptocurrency is Coin IRA.
As one of several new financial firms supporting crypto IRAs, Coin IRA allows you to make cryptocurrency investments with your retirement account.
An account from Coin IRA will come with the same tax advantages and features that you would expect from a traditional IRA. Still, choosing an IRA account that’s right for you can be a challenge.
In this review, we’ll help you understand how a crypto IRA fits into an overall retirement plan. Then we’ll give you the details you need to decide if Coin IRA is the right investment platform for you. Keep reading to find out more.
How Coin IRA Works
A crypto IRA works just like any other IRA, particularly those that support precious metal investments. You can buy cryptocurrency to fund your account by paying in fiat currency or rolling over funds from a separate IRA.
Once you purchase crypto to fund your account, Coin IRA offers three separate ways you can store your digital assets:
- In a secure offline vault owned and managed by Coin IRA
- In a separate hard wallet, such as ones hosted by Ledger or KeepKey
- In your own self-hosted digital wallet
While there are other crypto IRAs that provide offline asset storage with excellent security, few other IRAs give you the option to store your assets in your own wallet at home. While this would not be the right decision for everybody, it’s good to have the option.
When you buy crypto in cash accounts, there’s a minimum investment requirement of $30,000. This is a lot for inexperienced investors. However, this purchase minimum is waived for Bitcoin IRA account purchases.
Pros & Cons of Coin IRA
- A secure platform that puts you in control of your IRA funds
- Backed by Goldco, an industry-leading gold IRA company
- Digital assets can be stored in secure offline cold wallets
- Takes a low-pressure, education-first approach to investing with clients
- Compliant with all U.S. laws that regulate IRAs
- Reasonable fees
- Insurance up to $100 million
- Rather high minimum investment of $30,000
- Only six cryptocurrencies to choose from, although this will be sufficient for most investors
- Very little specific information about their service is provided on their website
- Lack of transparency when it comes to pricing and fees
- Regulatory factors can make opening an account take a long time
- Crypto trades must be confirmed over the phone, which can be inconvenient for investors used to online-only exchange platforms
Frequently Asked Questions About Coin IRA
You may still have questions after reading the rest of this review. We’ll do our best to answer the most common questions people have about Coin IRA below.
What Are the Tax Advantages for Investing in a Crypto IRA?
The tax benefits of using a self-directed IRA to invest in cryptocurrency are the same as the benefits applied to any standard IRA. As with other retirement account providers, Coin IRA allows you to create different types of accounts, including Traditional and Roth IRAs.
With a Traditional IRA, you get to invest in cryptocurrencies using pretax income. You’ll only need to pay taxes once you begin taking money out of your account, once you reach retirement age.
With a Roth IRA, you have to pay taxes first on the money you invest, but you won’t have to pay any taxes on your assets when you retire.
Choosing between different types of IRAs is always a gamble. If you choose a Traditional IRA, you must hope that income taxes today are higher than they will be when you retire, making the investment worthwhile. With a Roth IRA, you’re assuming that you’ll be better off paying taxes now, so you won’t have to deal with them after retirement.
Are Funds Managed by Coin IRA Insured?
Coin IRA accounts are insured for up to $100 million, but they make no mention of who their insurance partner is. However, since Coin IRA is a sister company to Goldco, it’s safe to assume they protect their clients’ assets reasonably well.
What Fees Does Coin IRA Charge?
Coin IRA provides little to no information on their website regarding their fees and costs. However, third-party reviews have described Coin IRA’s fee structure to be the following:
- $50 one-time fee to open your account
- $80 annual fee to keep your account open
- $100 fee to have your digital assets stored in an offline wallet, as opposed to Coin IRA’s online wallet system
Fees are waived for the first year for accounts that maintain balances of at least $50,000. You can also get 5% of your investment back on any qualifying order of $50,000 or more.
What Cryptocurrencies Does Coin IRA Support?
Coin IRA supports six of the most popular cryptocurrencies. The supported coins include:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
- XRP (XRP)
While this is a fairly standard offering for crypto IRAs, when you consider that there are thousands of cryptos out there, it may be disappointing to more experimental or adventurous investors.
How Long Does it Take to Fund My IRA Account?
Coin IRA doesn’t give a specific time frame for setting up and funding an account. For most crypto IRAs, you can usually expect account set up to take 1-3 business days. Rolling over funds from a separate IRA can take between 1-3 weeks.
It’s worth noting that, although Coin IRA has an online platform for managing your account and placing trades, you must confirm trades over the phone to complete them. This is a precaution Coin IRA takes to avoid fraud, but it can be cumbersome.
Can I Transfer Existing Funds or Rollover Another IRA Into My Coin IRA Account?
In most cases, yes. If you already have a self-directed Traditional IRA, Roth IRA, SEP IRA, or SIMPLE IRA, you should be able to transfer your investments into crypto holdings with Coin IRA.
If your retirement account is currently managed by your employer, things may not be as simple. You should speak to the administrator of your retirement plan to find out if your IRA is eligible for rolling over.
Although you can use savings in fiat currency to invest in crypto with Coin IRA, you cannot simply transfer existing crypto holdings into a crypto IRA. The IRS views cryptocurrency as a form of property, not money, so simply transferring your crypto from a non-IRA account into an IRA is not possible. However, if you already have a crypto IRA from a different provider, you should be able to roll over your account to a Coin IRA plan.
When Can I Withdraw Funds From My Crypto IRA?
When it comes to withdrawing funds from your account, the same rules apply to crypto IRAs as to traditional IRAs. As such, if you take money out of your crypto IRA before you reach the retirement age of 59 1/2, you may trigger tax penalties. To make the most of your retirement investment, you should avoid making any withdrawals from an IRA before you reach retirement age.
Using Crypto in Your Retirement Strategy
Having an IRA is essential to preparing for retirement. Too many people go half their lives without thinking about their retirement plans.
By getting started right now, you can avoid reaching retirement age unprepared. And by using a platform like Coin IRA to add crypto to your portfolio, you’ll be more prepared than most for unpredictable market changes.
If you want to make the most of your cryptocurrency investments, BitCompare.net has you covered. From crypto calculators to platform reviews, we have all the information you need to make confident investments. Keep reading our blog for more valuable ideas.