Safe IRA investments are achievable by making wise decisions and practicing good investment strategy. There are several good options when it comes to investing for retirement. One area investors are looking into these days is the cryptocurrency that’s currently ruling the market, Bitcoin. Read more about this news from Forbes below.
Can IRA Investments Include Bitcoin?
Bitcoin — the current king of cryptocurrencies – continues to make waves in the press because of its meteoric rise from a price of under $1 per Bitcoin in 2011 to over $4,000 today, with astounding volatility at every turn.
With that new fame has come a booming interest in a fabled financial tool known as the “Bitcoin IRA.”
With the high volatility Bitcoin, this may appear to be an unstable investment. Investing in a turbulent asset, of any kind, can lead to large losses. Although it is important to consider this potential when making investment decisions, the rising value of bitcoin can also translate into higher returns.
Today, there is some confusion in the market as to whether the IRS has approved Bitcoin’s use as an investment within an IRA. This involves legalities such as defining what a Bitcoin IRA is, as well as understanding its scope and limitations within the IRA.
Legal Takes on Bitcoin Inside Your IRA
The IRS settled some confusion and common questions among the public by releasing this notice which informed investors and taxpayers to be cautious when choosing where and how to invest funds. The notice speaks to some entities who claim that their assets are “IRS Approved” or “IRA Approved”, stating that this is not possible as the IRS never explicitly approves assets for inclusion within an IRA. Instead, tax code merely carves out certain activities and assets as being prohibited investments within an IRA.
As for Bitcoin, however, tax code does NOT prohibit its use within an IRA. This is because, similar to stock shares, Bitcoin does not fall under the prohibited asset classes, such as life insurance or collectibles. Instead, thanks to a 2014 notice from the IRS, it falls under the category of personal property. Therefore, while the IRS has not explicitly approved Bitcoin for use within an Individual Retirement Account, a simple interpretation of tax code will show that it is allowed.
Clearing Misconceptions About Bitcoin IRA
While a “Bitcoin IRA” is not literally its own type of retirement account, it can be included within a Self-Directed IRA alongside any number of other assets, including mutual funds, stocks and cash. Self-Directed IRA’s provide other alternatives for assets outside of conventional norms. Unconventional assets include precious metals, real estate, and Bitcoin. So, by opening a Self-Directed IRA, individuals can gain access to placing Bitcoin in their retirement account.
Bitcoin enthusiasts and investors alike must practice caution when considering the inclusion of Bitcoin in their IRA. Seeking out investors who have experience with Bitcoin as well as researching this currency in-depth will prove valuable. It is also wise to study how Bitcoins fare within other investment platforms such as real estate. This market-ruling currency may be your best option as you begin investing for retirement.
What are your thoughts on Bitcoins as safe IRA investments? Do share your insights in the comments section below.