Warning! This is going to be a LONG post, but hopefully also a helpful and informative one!
This post has been a long time in the making, but I’m happy to announce that I finally today have purchased STEEM with retirement funds in an IRA account! I am very excited to be able to invest in cryptocurrency with my tax-deferred retirement funds and I expect they will provide significantly greater returns than the traditional stocks and funds in which the money was invested previously.
Obviously I understand that there are risks, and things may not turn out the way I expect, however I am quite far away from retirement and I am comfortable investing these funds in cryptocurrency knowing that my day to day life will not change at all if I were to lose it.
Show Me The Money!
Some of my more curious (a.k.a. nosy) readers might notice that no STEEM has been transferred to my account recently! There is a good reason for this, and that is that my retirement funds are never allowed to be held in my name or co-mingled in any way with my personal funds.
Therefore I used the very helpful Anon Steem service created by @someguy123 to create a new Steem account that has no ties to my personal account in which I could deposit the funds. The account is @mjrcrypto if you’re curious.
I’ve only invested a portion of what I ultimately plan to invest so far because much to my chagrin the price of STEEM went up around 30% just a few days before my funds were finally available - ARGH! In the meantime I’m keeping the rest of the funds in BTC in the hopes that it continues to go up and that perhaps STEEM might fall back down in which case I will purchase a lot more.
Anyway, if you also have an interest in investing your retirement funds in cryptocurrencies, I’ll take you through the process that I used so that you can be prepared for what’s involved and learn from my mistakes!
PLEASE NOTE: I am not a financial advisor and I am not advising you to invest your money in any way! This is for informational purposes only.
How Retirement Accounts Work
I will start off with a little information about how retirement accounts work (in the US at least). As I mentioned above your retirement funds can never be held in your own name or co-mingled in any way with your personal funds. Any retirement funds that you have are owned by a custodian - typically a bank or financial services provider - and you are the beneficiary.
Also most IRA custodians will only allow you to invest in a specific list of things - usually mutual funds managed by the custodian itself. I originally used E*Trade as my IRA custodian because they at least let me invest in a larger array of options - but certainly not cryptocurrency!
As a side note - If you’re not interested or able to invest in cryptocurrencies and would like an exciting stock opportunity (in my opinion), please check out this post: A Stock Recommendation - AMS - The Future of Cancer Treatment
So I needed to find a custodian that would allow me to invest in cryptocurrencies. As you might expect there are a number of them popping up recently. Some of the more heavily promoted ones are Coin IRA and Bitcoin IRA - but these only allow you to invest in a relatively small list of the top cryptos by market cap and they hold the keys. They also charge enormous fees.
Broad Financial
But then I discovered Broad Financial and their Self Directed Bitcoin IRA You can read more about it using the previous link, but to summarize their service offers the following:
Total fees come to around $1,500 plus about $200 / year ongoing - this might sound like a lot but it is FAR cheaper than any other services I have seen
You can invest in any cryptocurrency you want (or even any other investments approved by the IRS for retirement accounts) with pretty much complete freedom
You hold the keys for your cryptocurrency investments and can store them any way you like - hardware wallet, paper wallet, whatever
The only downside is that the responsibility is on you to make sure you use the funds in an allowed way. As I mentioned you can’t co-mingle them with your personal funds and you can only use them to invest in things that are approved by the IRS for retirement accounts.
Luckily cryptocurrencies are an approved investment, in addition to things like real estate, precious metals etc. You can’t go out and use it to buy a new car or go on vacation! The good news is that Broad Financial has a support team specifically to help advise their clients on how to do things properly - I asked them a lot of questions, they are great!
The Process
What Broad Financial does is they create a special type of LLC which is owned by your IRA but you are the beneficiary and manager of. Then they provide all of the paperwork and instructions for you to rollover your retirement funds from your current custodian to the custodian they work with called Madison Trust Company.
You then go to any bank of your choice and set up an account in the name of the LLC and then Madison will “invest” your retirement funds in the LLC and transfer the money to the bank account you have set up.
This all takes a few weeks to get set up (since there’s government agencies involved to create the LLC) but it’s very easy since Broad Financial does most of the work and walks you through the whole process.
The Hard Part
The hard part (for me at least) came after the funds were sent to the bank account that I set up in the name of the LLC and it was finally time to invest it in cryptocurrencies. To do that you need to set up an account with a licensed cryptocurrency exchange in the name of the LLC. It’s very easy to set up an account in your personal name, but let me tell you it’s not easy to set up an institutional account for a business!
I tried Coinbase first since that’s who I use for my personal funds but you need to contact them and to this day they still have not responded to me. I tried Gemini next and they actually responded after a few days but the process was extremely lengthy and more work than I was prepared for.
I ended up being successful with itBit. They were relatively quick to respond and even had a support representative that I could talk to on the phone to help me! I sent them all the paperwork for the LLC and it took them about a week to process it and set up my account. Then I wired funds from the bank account I set up to itBit (they arrived surprisingly quickly!) and finally I was able to buy Bitcoin using my retirement funds!
We’re In!
Once you have one crypto then it’s very easy to convert it to others - so I just sent some BTC to blocktrades and converted it to STEEM and I was officially invested in STEEM through my IRA!
Again, I will note that I am not a financial advisor and I am not advising anyone to do this, but if you should decide that you want to set up a similar self-directed IRA then I would highly recommend going through Broad Financial.
If you do so, I would appreciate if you mention my name - Matt Rosen - as I will get a referral fee. I am NOT recommending them just to get the referral - I am recommending them because I used them myself and they were great and seem to be by far the best option available right now.
So there you have it - the whole month and a half long process I went through to be able to invest my retirement funds in STEEM, among other things. Thanks for reading! Feel free to ask me questions or tell me how stupid I am in the comments, or you can PM me on discord or steemit.chat!
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** EDIT **
It looks like I'm not the first Steemian to do this through Broad Financial: @papascrubs/bitcoin-ira-vs-broad-financial-solo-401k-save-some-money