Buying bitcoin in RETIREMENT ACCOUNTS (How to)

How do you buy Bitcoin in a retirement account? Well, I’m going to tell you exactly how to do that. The best way is with a Fidelity Crypto IRA. Now, a Fidelity CryptoIRA actually covers a lot more than it sounds like. Uh, with a Fidelity Crypto IRA, you can invest in a traditional IRA, you can invest in a Roth IRA, or you can invest in a rollover IRA. And a rollover IRA is what happens if you leave your current employer or if you have a past employer and you roll that f those funds over into an account you control that 401k of your former employer becomes a rollover IRA. So, normally if you want to take control of a 401k from a prior employer, you will do that by creating a rollover IRA. And Fidelity lets you do that with their Fidelity Crypto rollover IRA, which is again part of the suite of offerings from the Fidelity Crypto IRA suite of products. Okay. So, how do you do that? Well, first of all, you go on Fidelity, either the mobile app or the website, and you create the account of account you want, whether it’s a rollover IRA, a traditional IRA, a Roth IRA, or um you could even create uh a rollover or sorry, a Roth IRA for a child, for example, and I’ll walk through some of the stipulations on that. But anyway, um you go in there and it’s super simple on Fidelity. You tell it you want, for example, a rollover IRA. It’s going to ask you for the information about your uh current plan, whether your current plan is with Fidelity or Charles Schwab or whoever the custodian is. You’re going to enter some of the information about the plan. You’re going to upload a financial statement from the plan, and you’re going to tell it which assets you want to move over from your former plan to the current plan. And you’re going to tell it, you know, does it want you to liquidate those assets to US dollar cash before it moves over? So, it’s going to guide you through the process. And at the end of that process, however much you have, $20,000, $40,000, whatever it is, uh you will have that in your Fidelity Crypto IRA, and then you can turn around and use that to buy Bitcoin. It is a two-step process, meaning the step one is to move the assets into that account, and you can move them into that account from a bank account or you can move them into that account uh from a former employer in the case of a rollover IRA. If it’s a Roth IRA or a traditional IRA, you can also just move funds into that account from a bank account. Now, you can also do that for kids, although the funds have to be uh from your child’s income. You cannot do that with your basically you cannot fund your kids Roth IRA with your money. It has to be from their income. I think the the requirements are that the amount contributed on an annual basis cannot exceed the child’s income in that year. Um, meaning you can’t just like subsidize them. It’s got to, you know, the limit is 7,500 a year. And if you want to put 1,000 or two 2,000 or 7,500 in that uh Roth IRA for a minor, you can do that, but the child’s own income from their own efforts has to exceed the amount of money you are funding in that account. Uh, in short, you can’t just subsidize it for a kid. So anyway, but Fidelity will let you do that as well. Now, if you’re doing that for a kid, a crypto uh IRA only applies to adults, which means you have to open a traditional IRA for a minor, and you can buy Bitcoin within that, uh either traditional IRA or Roth IRA. In the case of a kid, you’re probably going to want a Roth IRA so that it grows taxree. Um, so assuming you set that up, uh that is funded and then it grows taxree. And in that case, you would buy a Bitcoin exchange traded fund, an ETF. An ETF is a traditional financial instrument that holds Bitcoin rather than direct Bitcoin ownership. For whatever reason, uh, Fidelity does not allow miners to own cryptocurrency directly in their own name. So, you can own a security that represents Bitcoin, which is a Bitcoin exchange traded fund, an ETF, but you cannot own the Bitcoin uh itself uh on Fidelity. Same with Cash App. Cash App will allow you, I guess Cash App will allow you to own Bitcoin, but they won’t allow you to transfer it on or off their platform if you are a minor, but at least you can buy it directly. Well, Fidelity for miners with a Roth IRA, for example, does not allow you to buy Bitcoin directly. Uh, so you have to buy a Bitcoin uh exchange traded fund. So, a Bitcoin ETF, exchange traded fund, my preferred one is the Fidelity FBTC. Fidelity, BTC as in Bitcoin. FBTC. The reason I like it more so than Black Rockck, which is the largest, or Morgan Stanley, which is the cheapest, uh, is because Fidelity custodies the Bitcoin themselves, meaning there’s only one throat to choke. If something goes wrong, it’s 100% Fidelity’s fault. Uh, the other options, to the best of my knowledge, use Coinbase. But the problem is if there’s some sort of snafu or somebody somehow loses Bitcoin, I don’t want any sort of a you know fingerpointing going on where you know Black Rockck blames Coinbase and Coinbase blames Black Rockck and you’re not sure who’s responsible. In the case of Fidelity it’s very clear it’s 100% up to Fidelity. In the case of Black Rockck there could potentially be some fingerpointing. Now Fidelity and Black Rockck both charge I believe 0.25% per year. So, one quarter of 1% of assets per year for their exchange traded funds. Uh, Fidelity does not charge that if you own Bitcoin directly. If you own Bitcoin directly, there’s just a 1% fee to sell uh the Bitcoin or to buy the Bitcoin. Um, but you can hold it for an unlimited period of time. So, it’s certainly preferable to directly own Bitcoin because it’s better to take a 1% hit now. Uh presumably, I have not run all the math on this, but I presume it’s better to take a 1% hit now instead of a quarter of a percent hit every single year from now to when they retire. Now, the fees will probably come down over time. We don’t know. Uh Morgan Stanley instead of a 0.25% fee has a one a.14% fee. So, again, if you want the cheapest, the Morgan Stanley Bitcoin ETF, uh I think it’s MSBT. I don’t know what the ticker symbol is. I should know that off the top of my head, but it’s it’s relatively new. They just rolled it out in the last couple months. Uh so Morgan Stanley has the cheapest fee at uh 14100. So 0.14, you know, one and a whatever.14%. Which is obviously less than 0.25%. It’s almost half uh a little more than half but um so Morgan Stanley’s is the cheapest but again Black Rockck is the biggest and Fidelity is the what I would consider the safest from a custody perspective because they custody the Bitcoin themselves. Uh but if you want the cheapest Morgan Stanley it’s probably just as good as the other two and Morgan Stanley’s is absolutely cheaper than the other two. Uh although I think Black Rockck and Fidelity will probably lower their fees over time to compete with Morgan Stanley but I don’t know. We’ll see. They’re all they’re all so cheap it kind of doesn’t matter. But anyway, if you have a minor, someone under the age of 18, and they are setting up an a Roth IRA, for example, then uh you do need to buy a Bitcoin ETF because they cannot do a crypto uh Roth IRA. They have to do a traditional Roth IRA for miners on Fidelity. And then you have to buy a Bitcoin uh ETF in it, which is a pain because you can only, you know, transact during business hours when the stock market is open. But other than that, legally, it’s basically the same thing. thing. I mean, you you still have the same legal rights to that Bitcoin. It’s just in the the wrapper in the form of a stock, but inside that share of stock is Bitcoin, just like if you owned it directly. Um, but again, not quite the same power to be able to send the Bitcoin anywhere and all that, but it’s still it’s still legally yours. Okay, so um with that being said, uh again, the best way is the Fidelity app. I will go add a link to the Fidelity app or at least to the Fidelity crypto IRA product uh on this post. And it’s super simple. In my case, I’ve got uh two kids that have Roth IRA set up. Uh one had already turned 18, so uh they set up a uh a Fidelity Bitcoin uh or Fidelity crypto IRA, Roth IRA specifically, and funded it with their own money. The other is under the age of 18, so it’s a custodial account. That’s a sub account under my uh one of my uh Fidelity accounts. Uh but in both cases, it owns Bitcoin. In the case of the minor, it’s the FBTC Bitcoin ETF. In the case of my non-miner child, it is uh it is owned in their own name as an actual crypto uh IRA uh Roth IRA to be exact. So anyway, that’s how you do it. Fidelity is the best platform for retirement accounts to buy Bitcoin. It can be a traditional IRA, a rollover IRA, or a Roth IRA. Um, and the one place that is hard to buy Bitcoin is your current employer. Your current employer probably does not allow you to buy Bitcoin on their platform because current employers tend to be riskaverse and they don’t want to let their employees invest in stuff that is new because then the employee will be upset with the HR department if something goes wrong. So, current employers tend to not let their employees invest in Bitcoin, even though by default, Fidelity will allow up to 25% uh for any plans that they are a custodian of, that still requires the plan administrator, which is the employer to agree to that, and the vast majority of them do not. Uh so, if you have a current employer and you want to buy Bitcoin with your retirement of funds, there’s not a good way to do that other than potentially to borrow against your uh 401k to buy Bitcoin. But the problem with that is if you lose your job, uh I think you have to repay that 401k loan within like 60 days. So obviously unless you have basically guaranteed employment wherever you’re working or it’s basically a zero possibility that you will lose that job, then uh borrowing against a 401k can be dangerous. Um now again, you know, if if you can’t pay it back, in some ways you just owe yourself. So, there is a 10% penalty and you do owe taxes on the amount you would, you know, you took out in addition to the 10% penalty. It’s not the end of the world, but certainly not a position you want to be in. Uh, you could still obviously have invested the majority of that funds in Bitcoin regardless, but you just don’t want to be in that position where you owe your 401k back to yourself, but you know, that gets triggered because you lost your job and then obviously hard to pay back a 401k when you just lost your job. So, uh, but so there’s not a great way with an existing employer 401k to buy Bitcoin. But if if you if it’s a former employer, meaning someone somewhere you’re not currently employed, then a rollover IRA over to a Fidelity crypto IRA is a fantastic option, whether in the form of a rollover IRA or if you set up a new Roth IRA or traditional IRA. In both ca in all of those cases, you can use a Fidelity crypto IRA and buy Bitcoin directly 247 day and night uh on the Fidelity platform and it works great and it’s certainly what I recommend on that front even though obviously this is not financial, legal, accounting, tax, investment or any sort of professional advice. Uh but anyway, that’s how you do it. Hope that helps. Next soon.