There are two ways to fund your Choice account: moving assets from an existing retirement account or making contributions to your IRA.
Moving Assets from an Existing Retirement Account
There are three ways retirement assets can be moved from one account to another without triggering a tax event or incurring a penalty; transfers, direct rollovers, or indirect rollovers.
- Transfers: Your current trustee or custodian directly transacts with your new trustee or custodian, moving assets from one like account to another. In addition to being tax free, transfers do not require any reporting to the IRS. (Ex. Moving funds from a Traditional IRA to another Traditional IRA.)
- Direct Rollovers: Your current trustee or custodian directly transacts with your new trustee or custodian in the movement of funds from one retirement account to another. You never actually have control of the funds, so there is no tax event, but your IRA provider will file a 1099-R to the IRS. (Ex. Moving funds from a 401(k) to an IRA, and the check is made payable to the IRA custodian.)
- Indirect Rollovers: Your current trustee or custodian distributes the assets to you, before you transfer them into a new plan. This is only tax-free if the assets are transferred to another plan within 60 days.You then have 60 days to deposit the distribution into a new retirement plan and can complete only one within a 12-month period. (Ex. Moving funds from a 401(k) to an IRA, and the check is made payable to you and then you direct the payment to your IRA custodian.)
Keep in mind that the IRA has clearly defined rules for each of these methods that differ based on account type account type. Understanding the differences is key to avoiding delays or errors with your account movement. We advise that you work with your custodian, advisor, or tax professional to determine whether a rollover or transfer is right for you.
IRA contributions, or money you deposit into a Traditional, Roth or other type of IRA in order to save for retirement must be made in USD. There are annual limits to how much individuals can contribute, and certain contributions may be tax-deductible, depending on the account owner’s income and employment situation.
One important thing to note is you can make 2020 IRA contributions until the tax filing deadline, which has been extended to May 17, 2021.
The remaining rules governing federal limits on annual maximum contribution amounts are based on your income, age, IRA type, filing status, and other factors.
Moving Bitcoin (or other assets) into an IRA
You can only transfer assets from a qualified retirement account and contributions must be made in USD. This means that Bitcoin can’t be transferred into an IRA from a non-qualified account nor can you make contributions in Bitcoin. Outside of special circumstances where you’re bitcoin has been held with a qualified custodian, to own bitcoin in your IRA you will likely have to:
- Contribute USD and buy BTC within your Choice IRA
- Move assets from your existing retirement account into a Choice IRA, convert them into USD, and then buy BTC
Retirement accounts can be tricky, but we’re here to make it easy for you to choose how to plan for your future. Bitcoin, stocks, ETFs, and 20,000 other assets are available within your Choice IRA.