[promoted] Equity Trust Builds New Frontier of Crypto-Based Retirement Accounts

2018-9-11 16:58

Index funds have more than proven their worth as a preferred option for those with an eye on retirement. But now there is conversation about the value of adding bitcoin and other cryptocurrencies to this investment mix.

Given crypto’s volatile nature to date, risk tolerance is obviously a factor to consider for any financial portfolio. Juxtapose that with those investors who are in position to risk a potential loss, and Bitcoin’s value proposition as a key of any retirement portfolio looks a more bit promising.

Much of this talk comes as individual retirement accounts (IRAs), which allow participants to tuck away funds for retirement in a tax-advantage vehicle, are garnering increased attention.

With increasing numbers of sophisticated IRA investors seeking to diversify their retirement account holdings into nontraditional assets, it should be no surprise that cryptocurrencies are now part of the conversation.

With an eye on these emerging trends, the Westlake, Ohio-based Equity Trust Company, a financial services firm with $25 billion in assets under its custody (as of December 2017), recently launched a digital asset platform which allows the firm’s retail and institutional clients to invest in cryptocurrencies.

Charting the Advantages

Equity Trust clients have shown a long commitment to retirement portfolio diversification through the use of alternative assets, including real estate, tax liens, private equity and precious metals. Through the use of self-directed retirement options, investors are afforded even greater freedom over their financial future.

The Equity Trust Digital Asset Platform is the most recent in a series of tech advancements made by the company, allowing individual investors to add cryptocurrencies to their investment mix. Replete with a user-friendly interface for both individual investors as well as advisors representing clients, users are able to initiate orders for cryptocurrency utilizing tax-advantaged IRA funds.

The platform allows investors to sell and purchase bitcoin, ether, bitcoin cash, ether classic, XRP and litecoin in a way that allows next-day cash availability for sale transactions. All cryptocurrency sale/buy orders are facilitated by a cryptocurrency exchange. Long-term storage of cryptocurrency takes place by way of “cold storage” facilities, known as an effective mechanism for mitigating consumer risk associated with holding their own digital keys.

A key value proposition for considering adding crypto to an IRA is that if Internal Revenue Service (IRS) guidelines are adhered to, taxes are deferred. In other words, there are no immediate tax implications.

By way of example, bitcoin set aside into an IRA account during the 2017 financial boom would have experienced no taxes on those holdings. Rather, those taxes would have been deferred until retirement — when a client is presumably in a lower income bracket.

Dave Allen, Equity Trust’s chief operating officer, explained the main factors leading to the company’s pursuit of the intersection between IRAs and cryptocurrency.

“It was tied to the demand from our existing clients, institutional partners and prospective clients who were investing in cryptocurrency,” Allen said. “Equity Trust wanted to simplify access to this emerging asset for investors interested in using their IRAs.”

Many investors do not realize that it’s possible to use a retirement account to invest in cryptocurrency assets. The same potential tax advantages that IRAs provide for stocks/mutual funds apply to any asset held in the IRA as long as an account holder follows IRS guidelines.

Allen said that Equity Trust hopes to bring greater awareness to cryptocurrency investors around the possibilities of using IRA/retirement funds to invest in cryptocurrencies.

“We’re investing in technologies that align with our broader strategy of delivering innovations and industry-leading capabilities to speed up and simplify the process of investing in a wide range of assets with retirement accounts,” he said. “Our goal is to continue to be leaders in the alternative asset custody space — whether the asset is cryptocurrency, real property or private equity.”

Equity Trust Company is a passive custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only and should not be construed as tax, legal or investment advice.

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

This promoted article originally appeared on Bitcoin Magazine.

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