Can I move my 401k to bitcoin? If yes, how can I do so without getting into trouble with the IRS? Are there defined steps that I should follow, to ensure that the process is smooth and that I end up with Bitcoin in my IRA as planned? If you’ve been asking yourself such questions, then you are in the right place because in today’s article we shall cover all this and more. If this sounds interesting to you, then read on to discover what it will take to move the funds in your 401k 2 Bitcoin.
Is it possible to invest in Bitcoin with your 401k?
Even if you do not end up becoming a bitcoin millionaire, now might be a good time to consider buying cryptocurrencies. Figuring out which is the best cryptocurrency to invest in right now is a question for another day. Herein, we shall focus on establishing whether you can use the funds in your 401(k) to invest in Bitcoin.
For starters, it will be good to highlight that, different 401(k) accounts, offer different benefits and have different rules. This means that one employer may allow you to invest in Bitcoin using your 401(k) funds, all the others may be totally against it. You, therefore, have to check the terms and conditions outlining What is expected of you as the 401 k account contributor.
As you will come to learn, however, investing your 401 k savings into Bitcoin may involve you opening a self-directed IRA (SDIRA). An SDIRA is a relatively unknown type of IRA that grants you the opportunity to invest in non-traditional asset classes, that offer more potential. This means that you ought to understand everything there is to know about self-directed IRAs before deciding to invest in Bitcoin using your 401 k savings.
Also, you need to have some basic knowledge of cryptocurrencies, because there are more than 1,600 of these digital coins today. The good thing, however, is that if you choose a reliable Cryptocurrency IRA, they will help you with the necessary educational resources so that you can know what to expect by putting your 401 k savings into crypto investments.
Buying Bitcoin with your 401(k) savings
In a few days from today, you can successfully convert your 401 k savings to Bitcoin. Most 401k programs do not allow investors to directly purchase cryptocurrencies, hence the easiest way to gain exposure to Bitcoin is through opening a self-directed cryptocurrency IRA.
Self-directed means that you are in charge of making the investment decisions, provided that they all fall within the rules and regulations set by the IRS. The good thing, as we have already seen, is that the IRS allows investors to invest in an assortment of assets, including the non-traditional ones such as cryptocurrencies, and precious metals such as gold and silver.
Eligibility to move your 401k funds to Bitcoin
For starters, you need to have a 401(k) account from your current or former employer, and you need to be over 59.5 years old. There are other eligibility requirements that you must adhere to, but these depend on the retirement plan that you have ( that is if you want to use the funds in your Roth IRA, 403(b), 457, as well as Thrift Savings Plan (TSP) ).
Also note that the rules highlighting the 401(k) to self-directed IRA rollover eligibility are not always clear, and can vary from one person to the other. If you’re therefore confused about whether you’re eligible for such a rollover, you can contact any of the companies in the link below:
The above companies are all run by professional staff, who are well-versed with the rules surrounding 401(k) to Bitcoin rollovers. Making a Bitcoin investment should, as such be easy since they can help you with the whole transfer process, to ensure that it is quick and easy.
The 3 step process you can follow to convert your 401(k) savings into Bitcoin
Once you have verified that you are eligible for a 401(k) to Bitcoin rollover, you can follow the steps below, with the help of the service providers in this industry (self-directed IRAs), effectively move your 401(k) savings to a Bitcoin IRA.
Open your self-directed Bitcoin IRA
You should open your account with a qualified custodian so that you can commence the process of transferring your 401(k) funds to your new digital SDIRA. To set up your account, you will have to complete paperwork with your custodian of choice. Make sure you do sufficient research to establish whether the custodian you intend to work with is trustworthy and reliable, so that you don’t end up getting stuck, and without a crypto investment.
Fund your newly created SDIRA
Your custodian will help you to effectively fund your account, in readiness for the third step of the process. There are many rules that surround the SDIRA funding process, so you will need all the help you can get to ensure that you do not get into trouble with the IRS.
Purchasing and storing your Bitcoin
Upon funding your newly created account you can proceed to purchase your preferred cryptocurrencies. As we already saw, there are about 1600 cryptocurrencies, so Bitcoin does not have to be your only choice. Bitcoin is in most cases used to represent other cryptos in general conversations since it is the crypto with the largest market capitalization. Your Bitcoin needs to be stored in a secure cold storage wallet. Cold storage technology is the best storage in the entire industry, so you should ensure that your cryptos are not stored in any other type of storage.
Questions to ask yourself ( and your custodian) as you do a 401(k) to Bitcoin rollover
Asking the right questions will always get you started on the right foot, for any type of investment or asset. As you transfer the funds in your 401(k) to a Bitcoin SDIRA, you should seek the answers to the following questions:
- Is your custodian reliable and professional?
- Which cryptocurrencies will you purchase for your IRA?
- What are the fees charged? What do they cover?
- Will your cryptos be secure?
If you are confident that you would want to get started with Bitcoin investments today, below are some companies that can help you get started on the right foot.
OR maybe you are interested in another alternative asset:
That will be all for this article in which we have addressed the question “ Can I move my 401(k) to Bitcoin?”. I hope that you now have the answer to this question and that you know what you’ll do moving forward. Let me know if you have any questions with regards to today’s topic, or whether you’d need help with deciding which company is best suited to help you achieve the dream of becoming a bitcoin investor.
I wish you well,
Eric, Investor and Team Member at Gold Retired!