Adding Bitcoin to Your Retirement Funds

Bitcoin is a decentralized digital currency that was invented in 2009. It is a cryptocurrency with balances that exist on a public ledger, meaning that it does not have physical currency notes.

Adding bitcoin to your retirement funds could result in potentially high returns and add variety to your retirement portfolio. However, cryptocurrencies are notorious for being quite volatile. If you are interested in investing in bitcoins for retirement, here is all the information you need to get started.

What is a Bitcoin IRA?

An individual retirement account (IRA) is a retirement plan offered by different financial institutions in the United States. There is no particular Internal Revenue Service (IRS) account for cryptocurrencies. So when investors talk about a Bitcoin IRA, they are pointing out an IRA that comprises of bitcoin or other cryptocurrencies in its portfolio.

IRS treats bitcoin and other digital currencies in retirement accounts as a form of property ever since 2014. This implies that the taxes are levied on them in a manner similar to those on stocks and bonds. If you are an IRA holder seeking to include digital currency in your account, you must take a custodian on board.

One of the major issues in this regard is searching for a custodian who accepts bitcoin in an IRA. Nevertheless, custodians and other companies who are willing to help investors include bitcoin in their retirement funds are becoming increasingly popular.

How Does Bitcoin IRA Function?

A Bitcoin IRA works similar to a standard IRA, except that you invest in cryptocurrencies rather than mutual funds. You can pick between traditional and Roth self-directed IRAs and reap the tax benefits associated with them.

Self-directed IRAs are quite similar to regular IRAs with a couple of notable differences. Here are 3 important factors you need to keep in mind:


A custodian is responsible for safeguarding your IRA while ensuring that your account is in line with regulations formed by both the IRS and the government.


A crypto exchange works like the stock market and is used to handle your digital currency trades. This is where cryptocurrencies are actively purchased and sold.


A secure storage solution keeps your bitcoins safe. Many bitcoin IRA providers have proprietary secure storage methods to protect your digital currencies against theft.

Advantages of Bitcoin IRAs

There are several benefits of investing in bitcoins for retirement, including:

  • Bitcoins can make your retirement portfolio diverse. In case of a significant stock market downturn, having a bitcoin reserve can protect your investments.
  • Although volatile, cryptocurrencies can offer potentially high returns.
  • Retirement funds are tax-advantaged accounts. You do not have to worry about taxes on the money and securities in your accounts.

Final Thoughts

Investing in bitcoins for retirement is a viable option, but make sure you are well aware of all the pros and cons before starting off. While bitcoins can result in high gains, there are fees, exchange limitations, volatility, and capital losses associated with it that you need to know about.

If you are looking for a cryptocurrency access company to help you out, explore