Bitcoin IRA who has it? Would you get it?

[Thrif-t]

QuarterMillionMan Trade Station isn't an IRA right? What I liked about Bitcoin IRA was well it was an IRA. I'm not interested in paying taxes on my gains. Maybe that's short sided of me, but I do my own taxes and all my money is in Roth's so it makes it so easy come tax time and only dealing with a W2.

[Thrif-t]

QuarterMillionMan Trade Station isn't an IRA right? What I liked about Bitcoin IRA was well it was an IRA. I'm not interested in paying taxes on my gains. Maybe that's short sided of me, but I do my own taxes and all my money is in Roth's so it makes it so easy come tax time and only dealing with a W2.

[QuarterMillionMan]

Thrifty it is an IRA.

[QuarterMillionMan]

My 2022 Roth IRA is fully funded and invested in cryptos (1 ethereum and .081 bitcoin). But with lousy luck usually after executing a trade, the price will plummet but I'm in for the long haul.

[QuarterMillionMan]

I'm 56, so for this new bitcoin Roth IRA that I opened for 2022, I made a max contribution of $6800 and Trade Station would add $200 via a promotion to meet the max allowed by the IRS of $7000. However, the $200 was not added until today. Prior to today, Trade Station sent an email to me saying the promo changed to $50 (instead of $200), so I added $150 so as not to go over the $7000 max. So today now I'm over the $7000 max because Trade Station added $200, not $50. My question, as long as I leave the $200 in cash funds in my acct and not invest it and keep it for 2023, will I have satisfied the IRS requirement by not investing more than $7000 allowed for an over 50 person? Kind of a good problem to have with free $200 from Trade Station.

[disneysteve]

I'm 56, so for this new bitcoin Roth IRA that I opened for 2022, I made a max contribution of $6800 and Trade Station would add $200 via a promotion to meet the max allowed by the IRS of $7000. However, the $200 was not added until today. Prior to today, Trade Station sent an email to me saying the promo changed to $50 (instead of $200), so I added $150 so as not to go over the $7000 max. So today now I'm over the $7000 max because Trade Station added $200, not $50. My question, as long as I leave the $200 in cash funds in my acct and not invest it and keep it for 2023, will I have satisfied the IRS requirement by not investing more than $7000 allowed for an over 50 person?

NO!

If this is an IRA, you CAN NOT put in more than $7,000 in the year unless some of it was to fund a prior year's contribution. If you put in $7,150, you need to have them apply $150 of it to 2021 unless you already fully funded a Roth for 2021 elsewhere. If you don't have that option, you need to withdraw the over-contribution (and any earnings attributable to that $150). You can't just leave it in there to apply toward 2023.

[QuarterMillionMan]

Ok thanks. I interpreted the IRS rules wrong. I thought the penalty was only on investments and not funds.

[disneysteve]

Ok thanks. I interpreted the IRS rules wrong. I thought the penalty was only on investments and not funds.

Nope. It is on the amount you deposit into your IRA. It doesn't matter if it's sitting in their cash/settlement account or invested in stocks, bonds, crypto, etc. Once it's in the account, it counts as part of your contribution for the year.

[QuarterMillionMan]

What would you suggest? Should I just withdraw the $200?

[disneysteve]

What would you suggest? Should I just withdraw the $200?

Yes, you need to take out whatever amount that exceeds the annual contribution limit.

[QuarterMillionMan]

Ok thanks, good advice. I would hate to pay penalties on something so simple to avoid but got complicated with all the mix ups.

[QuarterMillionMan]

My safest investment would be to buy $7000 in USDC stable coin and get the 6%. But I'm not sure what the loan to Galaxy Digital entails in the fine print. If Galaxy defaults on the loan does that mean I lose my $7000, if that is the case I don't want the 6%, and I rather get bitcoin and no loans nor 1%.

Derailing this thread a little to point out the Terra debacle this week where Terra dropped 98%. Galaxy digital as mentioned in this thread is the main backer of Terra and I touched on this 6 months ago. Well low and behold it came true. Had I invested my funds in USDC (Terra), it would be worthless today and for what 6%, sigh.

[QuarterMillionMan]

On a side note as recommended by disneysteve, I did withdraw the extra $200 rebate so my total contribution as allowed by the IRS was $7000, and not the added $200 for a total of $7200.

[btctony]

I know this is over a year old, but I wanted to chime in. I have had an account with iTrustCapital since March of 2023. My account is a self directed IRA account that you can buy Bitcoin with, if you so desire. They claim that the USD in your account is FDIC insured, but obviously if you buy Bitcoin with it, and hold it inside of that account your Bitcoin is not FDIC insured. Self custody of the Bitcoin is not an option (sadly, because I self custody other Bitcoin that I own without issue). They have third party custodians, which I did research and place some trust in. I am not in the business of providing financial advice and I am not recommending them, nor am I advising anyone to buy Bitcoin, but I wanted to share my experience. I have had a large sum of money in cash inside of this account for around 9 months now. Customer service via telephone seems ok. I have yet to buy Bitcoin with the cash in that account but I do plan do so at some point over the next year. I have zero withdrawal experience with them. Older reviews of iTrustCapital lead me to believe that some have had issues moving money similar to slow traditional banking methods. To date, I have never heard of anyone who has been outright scammed by iTrustCapital, but I believe it is important to share all of the good with the bad.

[QuarterMillionMan]

I have a self directed Roth IRA with Trade Station where I have $7500 in BTC. I’m not sure I know if “self custody” but I’ll need to look in to it but I think it is.