Purchasing cryptocurrency with retirement funds is a great way to capture your growth tax-deferred.
There are two paths to buying crypto with your Solo 401k:
Crypto custodial Account
DIY purchase and storage
The simplest way to hold bitcoin and other cryptoassets in the Solo 401k is with a crypto custody account. Our team of crypto veterans will expertly help you get this done. The steps are:
Open Custodial Account: Our expert team will prepare the custodial agreements for your Solo 401k. All you need to do is confirm the information and sign.
Transfer funds: The Nabers Group team will help you successfully fund your crypto custody account.
Buy Crypto: Nabers Group team members are crypto veterans. We’ll help you put together an order allocation that’s in line with your goals. Our trade desk will take care of the purchase order and secure storage of your crypto assets in a multi-signature offline “cold storage” wallet for the highest security of your assets.
Kingdom Trust provides asset custodian services and is highly regarded in the retirement account and qualified custodian industry. Kingdom Trust was the first IRA custodian to support digital currencies in a retirement account and currently has over $12 billion in assets under custody.
Your crypto holdings are stored in secure offline “cold storage” wallets. The cold storage vault is offline and not connected to the Internet, to prevent hacking attempts. BitGo will keep your account holdings secure and are renowned as a world leader in security, compliance, and custodial solutions for blockchain-based currencies.
The crypto custody account makes a lot of sense if you plan to buy and hold crypto for a longer investment time horizon. We do not recommend this account for trading. The crypto custody account is also great if you don't want to deal with the challenges of opening an institutional exchange account and managing custody and security of your crypto assets personally.
Please reach out to a Nabers Group team member for more information on fees and whether this solution may be right for you.
The second path to holding crypto in the Solo 401k is for the 401k trust to open a crypto exchange account and buy, hold, or trade the assets directly.
Please note this path requires your Solo 401k trust to competently open an institutional exchange account. Coinbase may not be used for the Solo 401k trust. Additionally, you are responsible for the safety and security of your crypto assets. Generally, cold storage offline using a hardware wallet is recommended.
The steps to having your Solo 401k trust buy crypto directly through an exchange are as follows:
Open an institutional account at an exchange: This may also be called a business or corporate account. Coinbase Prime can support trust account (don't use your personal Coinbase account). Bittrex, Kraken and Gemini are also favorable for institutional accounts. The account must be titled in the name of the 401k trust, using the 401k trust tax ID number.
Buy Crypto: Once the institutional exchange account is opened in the name of the 401k trust, you are ready to buy crypto. Wire funds from the 401k bank account to the crypto account and start purchasing.
Store Crypto: We do not recommend you leave crypto on the exchanges as they can be subject to theft or hacking. An offline cold storage hardware wallet, such as the Trezor or Ledger, is generally recommended.
This is an appropriate account to use if you plan to trade your crypto holdings. Please note the security concerns are far greater with this type of account as you will be using self-custody for the assets.
Which path is right for you?
The truth is, it depends! If you plan to trade crypto in short time windows and feel comfortable dealing with opening an institutional level exchange account, as well as overcoming the tech hurdles of a hardware wallet, the self-custody path may be right for you.
If you plan to buy and hold crypto for a longer period of time, and don't want to worry about losing your assets to the threat of hacking or theft, the custodial account may be right for you.
Contact a Nabers Group team member if you have any questions and we'll be happy to discuss your options with you!