Bitcoin IRA Review 2023—the Fine Print Details

Investing in Bitcoin through a tax-advantaged IRA is a smart move to capitalize on Bitcoin’s long-term potential.

Enter Bitcoin IRA, a leading self-directed platform that lets you trade cryptocurrencies within your retirement account; however, it certainly is not a one-size-fits-all solution to your retirement savings.

In this BitcoinIRA review, we’ll explore its features, fees, pros and cons, risks, and crucial factors to consider. We’ll also introduce alternative investment platforms like Swan Bitcoin and highlight why Bitcoin-only options have a competitive edge over broad crypto IRAs so you can invest confidently.

BitcoinIRA (bitocinira.com) is a crypto IRA platform that allows you to trade many different cryptocurrencies as well as Bitcoin, through an individual retirement account (IRA) and add them to your retirement savings.

BitcoinIRA offers a Crypto IRA, 401k, Roth IRA, a Saver IRA option, and various alternative assets. Over 150,000 users have joined the platform, making it one of the biggest crypto retirement platforms. The company manages +$2 billion of cryptocurrency assets with BitGo Inc. 

Unlike traditional IRAs, which primarily focus on stocks, bonds, and other conventional assets, BitcoinIRA enables investors to diversify their portfolios by investing a portion of their retirement funds into various digital currencies, cryptocurrencies, and altcoins as well as Bitcoin while saving on taxes.

• Self-directed IRA: Investors control their investment decisions. They can invest part of their IRA funds in cryptocurrencies, such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and more.

• Tax advantages: Enjoy tax benefits such as tax-deferred or tax-free growth, depending on the type of IRA (such as traditional IRA or Roth IRA) and your specific circumstances. Consult a tax professional to understand the tax implications.

• Custodian services: Bitcoin IRA works with qualified custodians who ensure compliance with IRS regulations and facilitate purchasing, storing, and safekeeping digital assets on your behalf.

• Security: Bitcoin IRA’s robust security measures, such as multi-factor authentication, cold storage, encrypted wallets, and insurance coverage, protect your assets.

Bitcoin IRA charges a one-time setup fee ranging from 0.99% to 4.99% of the funds invested (the initial deposit transaction fee). Additionally, there’s a 2% transaction and a custody fee. The Bitcoin IRA custody fee is effectively 1% annually, or 0.08% monthly.

What are some of Bitcoin IRA’s pros and cons?

Bitcoin IRA is for investors who want to put their money into various less-known digital currencies, altcoins, and cryptocurrencies.

At Swan, it is our core belief that you cannot trust any investment account or IRA which actively asks investors to invest in less-known digital currencies in addition to Bitcoin.

BitcoinIRA is one such type of IRA that promotes and asks investors to diversify their investments into all sorts of less-known cryptocurrencies.  

If you are considering using BitcoinIRA you should ensure that all of your assets are held in Bitcoin itself vs. some cryptocurrency you don’t know much about. Watch out for emails and promotions asking you to diversify your investments and move some into various cryptocurrencies.

If you’re a true believer in Bitcoin and it’s long-term potential you will be irritated with BitcoinIRA. However, if you want to diversify your investments into less-known cryptocurrencies and altcoins, BitcoinIRA might be your best choice.

It’s right for you if you have a higher risk tolerance, okay paying higher fees, and can navigate the complexities of self-managed retirement accounts.

BitcoinIRA is not ideal for Bitcoin-only investors with a low-time preference. This platform isn’t for you if you prefer a sound, low-risk investment. Additionally, individuals who don’t have a self-directed retirement account or 401(k) may face limitations or additional steps in setting up the required retirement Bitcoin IRA account.

Using a Bitcoin-only platform like Swan Bitcoin, as opposed to a broad crypto IRA platform like BitcoinIRA, offers an array of advantages. 

• Simplicity and focus: Bitcoin-only platforms offer a simplified user experience and focus all their resources on Bitcoin-related services. If you only want to invest in Bitcoin, a streamlined platform without the complexity of managing multiple cryptocurrencies is best for you.

• Specialized expertise: Bitcoin-only platforms like Swan deeply understand Bitcoin’s technology, market dynamics, and trends. These platforms offer more customized advice, research, and support specific to Bitcoin investing.

• Enhanced security: They also prioritize and optimize security measures explicitly designed for Bitcoin. This may include robust encryption, multi-signature wallets, cold storage solutions, and other security practices to protect Bitcoin holdings.

• Access to specific Bitcoin features: You get unique features or services exclusive to Bitcoin. For example, access to Bitcoin lending, staking, or other specialized investment options unavailable on broader platforms.

• Lower fees: Bitcoin-only platforms may incur lower fees than broader platforms supporting multiple cryptocurrencies. 

Reiterating the benefits above, here’s a brief comparison between Bitcoin IRA and its simple Bitcoin-only alternative, Swan Bitcoin. 

Notice the customer ratings on Trustpilot below, SwanBitcoin scoring 4/6 out of 5 stars while BitcoinIRA scoring 2.7 out of 5 stars.

Users trust Swan for its ease of use, excellent customer support, focused investment approach, and better security, earning it a rating of 4.6 from 952 reviews. In comparison, Bitcoin IRA sits at 2.7 from just seven reviews.

Swan IRA offers lower fees across the board, with no one-time or upfront fees, a 0.99% trading fee, and a 0.25% annual administration fee for balances over $100,000. On the other hand, Bitcoin IRA charges a 5.99% funding fee and a 2% trading fee (plus a hefty spread). There’s also a 1% custody fee charged annually.

While all Bitcoin IRA fees are very high compared to other providers, the funding fee is particularly egregious.

For example: If you transfer a $100k IRA balance to Bitcoin IRA, you’ll be charged $7,999 on Day 1. How? A 5.99% funding fee to transfer USD to their custody. Another 2% trading fee to convert the remaining USD balance into Bitcoin. 

Worse still, every time you transfer new money to Bitcoin IRA and purchase Bitcoin, they clip another 7.99%. Imagine this fee structure applying to your new contributions yearly until you retire.

With Swan Bitcoin IRA, there‘s no reason anyone should ever pay these exorbitant fees.

Consider a 35-year-old. We’ll call them Mike. 

Mike plans to retire at 67 and allocates $100,000 toward Bitcoin in their IRA. They also make additional annual contributions of $6,500 toward Bitcoin. 

Let’s assume a 15% annual appreciation of Bitcoin in USD. In this scenario, choosing Swan IRA over Bitcoin IRA could mean a massive difference of >$900,000 in your Swan IRA vs. your Bitcoin IRA ending balance!

Assumptions:

• 25-year-old, single

• Planning to retire at 65 (40-year time horizon)

• IRA starting balance of $0

• $6,500 annual contribution

• Projected annual returns (BTC) = 10%

• Projected annual returns (60/40 portfolio) = 7%

• Projected BTC price by the time of retirement (2063) = $1.3M

Despite implementing the same investment strategy—buying and holding Bitcoin and accumulating it in a retirement account over the years—the result will be massively different based on Mike’s IRA provider.

Running the numbers:

• With a 0% allocation to Bitcoin, Mike expects to have $824k by retirement

• With a 100% allocation to BTC, Mike expects to have $3.2M by retirement 

• $2.3M more in his retirement account (3.8x more money) should these projections become true

Jack Bogle, the founder of index investing, once said, “In investing, you get what you don’t pay for.” This holds for Bitcoin saved in retirement accounts. Your future retiree self will thank you for paying close attention to the costs of having Bitcoin in a retirement account.

This analysis was completed using tools from Swan Research, a new department at Swan focused on bringing deep research and analytics to Bitcoin. You can read our previous Swan Research piece explaining why Bitcoin is the ultimate asset for your IRA here. 

If you’d like to explore the model and modify the inputs, you can see the details using Swan Research’s portfolio modeling tool.

An IRA is a financial product you’ll use for many years, even decades. So, think about the features of the product beyond fees. 

Here’s where Swan shines over Bitcoin IRA when it comes to features:

• Simplicity: Swan IRA is best-practices driven, guided by an inherent principle: “Do what’s right for Bitcoin and Bitcoiners.” 

• Affordability:

• Helpful support: Swan’s team of Bitcoin experts is responsive, answers all your questions, and they love talking about Bitcoin! 

• Compliant and risk-focused: Swan minimizes the potential risks of investing in Bitcoins and keeping them in custody, handling adverse regulatory or compliance developments concerning your IRA. 

• Made for Bitcoin: With Swan IRA, you stick to a Bitcoin-only strategy rather than exposing your retirement holdings to volatile altcoin securities with Bitcoin IRA. Many of these altcoin securities carry significant regulatory and counterparty risk, as evidenced by recent SEC actions. No promoting altcoins: Cryptocurrency IRA providers often promote multiple coins to encourage more trading activity by investors. Bitcoin IRA charges you 2% (plus a hefty spread) every time you trade one altcoin for another. In other words, they’re incentivized to maximize their trading behavior to increase their profits. While you can trade altcoins tax-free in your IRA, the only entity likely to benefit from this trading in the long run is the IRA provider.

Bitcoin IRA has over 60 altcoins in its arsenal. It’s exciting to look at first but when you really dive deep, you’ll know how risky it is to invest in so many crypto assets simultaneously. Nevertheless, Bitcoin IRA regularly markets these to its customers. Your retirement should preserve and increase your wealth long term. You may not want to use your retirement portfolio like a day trader. The key is to stop following around in crypto.

Unlike Bitcoin IRA and other similar crypto IRA companies, Swan delivers what it markets. Customers are never tricked into buying altcoins. Swan doesn’t make fancy price predictions or send you marketing promotions pitching alternative investments.

Investing in too many altcoins that Bitcoin IRA offers is a poor investment from a financial return perspective. It also comes with huge regulatory risks. If you hold your retirement funds in a crypto IRA, those funds could be at risk of action from regulators and prosecutors over the next few years.

Another risk to consider is the viability of platforms selling Bitcoin securities. The U.S. Securities and Exchange Commission (SEC) or other regulatory agencies may crack down on trading in unregistered altcoin products. This adversely affects the platforms that offer altcoins and may result in the forced liquidation of assets the investor holds.

Swan is transparent about Bitcoin’s risks, compliance, and regulations. No false promises are made, but you receive the right support to navigate IRA complexities and compliantly secure your future with crypto. The security measures designed specifically for Bitcoin help keep the focus on growing an asset class while reducing the burden of managing multiple cryptos simultaneously.

Bitcoin isn’t a typical investment. Given its many benefits and lucrative growth, more companies will sooner or later start offering a Bitcoin IRA or crypto IRA product.

Before investing, research and ensure you protect your savings while exposing yourself to a long-term price appreciation in a secure asset like Bitcoin. Mixing your Bitcoin portfolio with unregistered securities and altcoins is extremely risky. Consider going “Bitcoin Only” when choosing an IRA provider. Also, understand the fees involved and how the costs will affect your long-term retirement goals.

Learn more about Swan IRA and how it can help you reach your retirement goals while maximizing your savings. Contact the team at ira@swanbitcoin.com for more info.

Founded in March 2015, Bitcoin IRA is owned by entrepreneurs Chris Kline, Johannes Haze, and Camilo Concha.

Bitcoin IRA is a well-known trading platform that specializes in crypto-based IRA services. Investing in cryptocurrencies has inherent risks and you need to be aware of them before investing.

The platform offers a self-directed IRA, enabling investors to integrate digital assets into their retirement portfolios. 

Yes, you can open a new account with Bitcoin IRA or rollover funds from an existing IRA or existing retirement accounts such as 401(k) and allocate those funds toward cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash (BCH), or Litecoin. 

Swan Bitcoin, iTrustCapital, Alto IRA, Choice, and Broad Financial.

There’s no maximum investment limit but a minimum initial investment of $3,000.

As long as the money and assets stay within your account, you are exempt from taxation.

The primary risks include market volatility, regulatory and legal challenges, security and fraud risks, as well as tax implications. Before investing in Bitcoin IRAs, speak to your financial advisor and carefully review the terms and conditions of any financial institution you wish to work with.