How To Buy Bitcoin Using a Self Directed IRA-LLC, QRP or Solo 401k

Is Bitcoin IRA or Bitcoin 401k legal? Does the IRS allow Crypto IRA and Crypto 401k?

Why use a Tax-Sheltered IRA, 401k, QRP, or other retirement account for Crypto investing?

How Can I Buy Bitcoin in My Self-Directed Solo 401k or IRA/LLC?

Buying Bitcoin requires a Bitcoin Wallet to hold Bitcoin and access to a Bitcoin Exchange or other point at which cryptocurrency can bought or sold. Ownership of the asset should vest in the name of your IRA-LLC or Solo 401(k) Trust, not in your personal name.

What is a Bitcoin Wallet?

A Bitcoin Wallet holds the private keys, or secret codes, that enable Bitcoin transactions. Bitcoin Wallets can be either Hardware Wallets (“Cold Storage”), Hot Wallets (“Web Wallets”), or Paper Wallets. Hardware Wallets are purchased for a fee, but are far more secure.

Note: As crypto investing is an emerging area, many compliance & legal questions do not yet have clear answers. At all times, it is imperative that retirement account assets be properly titled and held by the retirement account. From an SDIRA & QRP compliance perspective, it may be best not to move crypto assets to an offline hardware wallet.


Where and How Can You Buy Bitcoin For Your Checkbook QRP, Solo 401k or IRA-LLC?

  • Bitcoin can be purchased with cash, debit cards, at Bitcoin ATMs, or with bank transfers.
  • Due to the Prohibited Transaction Rules of IRC 4975 you should not have any credit cards for your IRA-LLC, Solo 401k, or Solo 401k LLC, so credit card Bitcoin purchases are not an option for your retirement account.

Checkbook Control Bitcoin Compliance

Bitcoin retirement account investing using checkbook control is a new and exciting way to leverage tax-advantaged retirement accounts. Determining title, ownership, and legal rights to Bitcoin is an evolving area of law.

Following are some best practices to avoid Prohibited Transactions in your Bitcoin retirement account:

  • Crypto exchange accounts should be titled in the name of your 401k-LLC, QRP, IRA-LLC or Solo 401k Trust.
  • All transactions you engage in on behalf of your retirement account are in your capacity as IRA-LLC Manager or Solo 401k Trustee, which  should be reflected on any documentation (e.g., John Doe as Manager of IRA-LLC, John Doe Trustee FBO Solo 401K Trust).
  • The EIN attached to any account should use the EIN of your IRA-LLC or Solo 401K Trust.
  • Use an “institutional account” for your, QRP, 401k-LLC, IRA/LLC or One-Particpant 401k Plan, such as those offered by GDAX (Coinbase Pro, as of may 23, 2018), Gemini, Kraken (Kraken instructions for corporate and institutional accounts), Bittrex, Uphold, and itBit.
  • You should have separate keys (public and private keys) and “addresses” for your retirement account Bitcoin investments and personal Bitcoin transactions. It is advisable to have separate Bitcoin wallets, as well.
  • Based on the McNulty case, moving crypto assets from a properly titled exchange account to a cold wallet presents increased compliance risk.

Use checkbook control retirement accounts to diversify your investment portfolio and invest in alternative and traditional assets, including cryptocurrency, real estate, stocks, tax liens, litigation finance, private lending, merchant cash advance, precious metals, crowdfunding, and mutual funds. Individual 401k plans and IRA-LLCs are the most efficient and cost-effective way to control your investments.