Crypto in an IRA: your options and what to watch

Holding crypto in an IRA lets gains grow without yearly capital gains tax: tax-deferred in a traditional IRA, or tax-free in a Roth IRA if you follow the withdrawal rules. That's appealing for an asset that can swing sharply. There are three main ways to do it.

1. Crypto ETFs in a regular IRA

Spot bitcoin and ether ETFs, and funds for some other coins, trade like stocks, so you can buy them in an IRA at most brokerages. This is usually the simplest and cheapest route: no special account, low trading costs, and a yearly fund expense ratio. You don't own the coins themselves. See ETF vs. real bitcoin.

2. A crypto IRA provider

Specialist companies set up a self-directed IRA that holds actual coins with a custodian, and let you trade a range of coins inside it. Fees vary widely: some charge a percentage per trade, some a monthly account fee, and some charge setup fees. Compare the total cost on the amount you plan to invest, and check who the custodian is and how assets are protected.

3. A self-directed IRA with "checkbook control"

Some self-directed IRA structures let an IRA-owned company hold crypto directly, even in a hardware wallet. This gives the most control but is complex, and mistakes, such as treating the assets as your own, can disqualify the IRA and trigger taxes and penalties. Get professional advice first.

Rules that still apply

• Annual IRA contribution limits are the same whatever you invest in. Check the IRS's current figures.
• Early withdrawals before age 59½ generally face income tax plus a 10% penalty, with some exceptions.
• Moving crypto you already own into an IRA isn't allowed; contributions must be in cash.
• Rollovers from a 401(k) or another IRA are possible, but follow the provider's process to avoid an accidental taxable distribution.

Should you?

An IRA can make sense for a small, long-term crypto allocation you're confident you won't need for decades. It isn't a good place for money you might need soon, or for active trading on high-fee platforms. Many advisers suggest keeping speculative assets to a small slice of retirement savings.