If your Crypto IRA is hacked and your account value goes to zero, it doesn’t matter how much you have made investing your retirement funds in cryptocurrency.
As such, it is important to consider the security advantages of a Crypto Solo 401k vs a Crypto IRA.
Current Options to Invest Retirement Funds in Crypto
- The blue chip IRA brokerages such as Fidelity, Schwab, TD Ameritrade don’t offer IRA account that allow for crypto trading.
- At the same time, the cryptocurrency exchanges don’t offer IRA accounts.
- To meet the demand Crypto IRA providers have opened up shop in the past year or so.
- My Solo 401k Financial has been helping its clients invest Solo 401k funds in cryptocurrency for many years.
Crypto IRA Requires Third Party Trustee
- IRS Rules require that all IRA accounts be administered by a third-party bank or trust company.
- For the Crypto IRA investor this effectively means that the Crypto IRA provider will have access to your account.
- If the Crypto IRA provider is hacked, this could put your crypto retirement holdings at risk.
Business Owner May Serve as Trustee of Crypto Solo 401k
- Per IRS, the trustee of of a 401k plan may include the business owner (i.e. you).
- For the Crypto Solo 401k investor this means that the Crypto Solo 401k provider will NOT have access to your account.
Additional Security Considerations
- While Crypto IRA providers typically offer only one designated platform or exchange, a Crypto Solo 401k can access many exchanges and even DeFi.
- While a Crypto IRA must be stored with a third-party custodian, a Crypto Solo 401k offers the option to store stored at the Exchange/Cold Storage/Cold Wallet