Retirement is something that every worker longs for. It is a phase of their life when they expect their struggles to come to an end.
How Bitcoin IRA Works
However, you should understand that it is not just the way it appears above. We have even gathered that there are at least 5 phases of this period and how some things need to be considered and done to make it a memorable period.
One of such is funding. As you well know, this is a period when you are not actively making money. So, you need something that will foot the bills and take care of the lifestyle that you desire.
A lot of financial resources are required to achieve this. This is why you need to have a good retirement plan. For more on the importance of doing this, you can visit: https://www.aarp.org/content/dam/aarp/about_aarp/nrta/2017/08/ImportanceofPensionsNonSS.pdf
The fact is there are many ways to plan for this time. One of the known and trusted options is running an IRA account.
However, you should know that the concept of IRA is becoming more ambiguous by the day. This is because many investment opportunities fall under this concept. For instance, the advent of digital currency and transactions – cryptocurrencies; has created a new kind of IRA investment.
Here, we will discuss what you should know about this sort of retirement plan. At the end of this write-up, the aim is to equip you with sufficient information to make informed decisions financially. So, we advise that you keep reading.
What Is IRA?
IRA is the acronym for Individual Retirement Account. It is a kind of account specifically designed to help employees (and workers at large) save up for retirement. This is just as the name suggests.
The tax-advantaged feature of this kind of account is one of the positive highlights of running it. There are even certain kinds of these accounts that will not have tax deductions that come with inflation over time.
There are various options for people that want to run such an account. They include Roth, SIMPLE, SEP, and Traditional IRAs. You need to understand what each of these offers before you decide to run them. This is so that you can make informed financial decisions.
What Is Bitcoin IRA?
This is a new IRA investment opportunity that is possible because of the existence of digital currencies and Blockchain transactions at large. It allows people that run or want to run an IRA account(s) to harness the growth of the Cryptocurrency market.
For those asking the question ‘how does bitcoin IRA work?, here’s a brief explanation; Bitcoin and other kinds of cryptocurrencies can be used to run an individual retirement account. In other words, your retirement plan can be funded using options such as Bitcoin.
There is equally no cause for alarm considering that the current financial worth of your digital currency investment can be converted and used to purchase assets.
Assets such as real estate properties fall into the category of things you can purchase using the dividends from such investment.
Contribution Limits for Bitcoin IRA
The subject of contribution limits is one of those areas these accounts are similar to the regular kinds of IRAs that you know. Generally speaking, funds of any amount can be used to set up such an account.
However, there are terms and conditions attached. For the most part, the IRS is responsible for setting contribution limits on an annual basis. This is if a contribution limit is attached.
We have also gathered that people beyond the age of 50 are allowed to do a lot more. This is because they are considered to be close to retirement and need to invest as much as possible.
For instance, the IRS set a limit of 6000 dollars for the 2020 to 2021 period. However, this did not apply to people over the age of 50. Rather, they were allowed to contribute as much as 7000 dollars.
Ways a Bitcoin IRA can be Set-Up
There are 2 major ways this kind of account can be set up. This could either be a Roth or a traditional account.
Roth Option
For us, this is the more preferable option and is why we advise that you make the most of it. This is if you must run a Bitcoin IRA.
The edge it has over the traditional option (that is explained in the point below) centers on tax policy. For this option, tax breaks take effect on your contributions. However, there are no taxes on your distributions or returns on investment. This is regardless of the margin of profit you may have incurred.
Traditional Option
This option is equally good but does not come close in benefits to the Roth option. Here, taxation takes effect both on withdrawals and contributions. It is more like what you have with the regular traditional IRA option.
Should You Run a Bitcoin IRA?
We strongly recommend that you run this kind of retirement investment plan. This is because of the prospects attached to the Cryptocurrency market and options like Bitcoin in particular.
There are many reports from credible financial analysts indicating that the value of Bitcoin and many other digital currencies will improve. If this happens, it is a piece of very good news considering how it will help retirees sail through hard economic conditions caused by inflation and other reasons.
You should know that this is what has happened in current times. For instance, the outbreak of the covid-19 pandemic caused a lot of economic hardship. As a result, unemployment rates reached an all-time high, prices of commodities went up, and several other negative economic realities.
However, people that invested in the Cryptocurrency market (especially with options like Bitcoin) had good news all the way. The value of this Blockchain commodity kept on increasing. Although there is a decline at the moment, it is forecasted to be temporary.
But despite all of the positives, investors must understand that running such an account comes with some risk. This is considering the possibility of experiencing a decline in digital currency value (however little). For more on this, you can read this.
Conclusion
Bitcoin and some other digital currencies are known to experience price swings and this can sometimes be volatile. However, there is a lot of prospect for workers willing to take the risk by running a Bitcoin IRA. For those interested, we have discussed certain things you should know about this kind of retirement plan and hope that you make informed decisions going forward.
__________________________________________________________________________
Understand how you can maximize your time to grow your business:
Time Is Money And Your Most Valuable Resource. Use it Wisely to Build Your Business
https://www.thekickassentrepreneur.com/time-is-money/
Looking for effective ways to drive and increase traffic to your startup website?
SEO Traffic Guide To Boost Your Blog Rankings
https://www.thekickassentrepreneur.com/guide-to-boost-your-blog-rankings/
Looking for effective ways to drive and increase traffic to your startup website?
3 Top Reasons Why Startups Fail and How Not to Become a Victim
