Can You Hold Crypto in Your Roth IRA?

A Roth Individual Retirement Account (IRA) has long been known as a tax-efficient way to save for your retirement. Some Roth IRA providers have started to offer cryptocurrency as an eligible asset under these accounts. This opens up opportunities for crypto investors to leverage the tax advantages associated with Roth IRAs. Crypto Roth IRAs are still a relatively new development, with many of their specifics shrouded in mystery. In this article, we take an in-depth look at this new breed of Roth IRAs.

What Is a Roth IRA?

A Roth IRA is a specific variety of retirement account approved by the U.S. Internal Revenue Service (IRS) that comes with significant tax benefits. You may open a Roth IRA account at an eligible provider and contribute your after-tax dollars to it to save for retirement. Your Roth IRA contributions and earnings grow tax-free under the account. All contributions to a Roth IRA must be made in the form of cash.

While your contributions are not tax-deductible, you can withdraw funds from your Roth IRA completely tax-free after the age of 59½ as long as you’ve held the account for at least five years. You may also withdraw your contributions tax-free at any time without meeting the age and account tenure requirements, but in this case, your earnings will be taxed.

Key points for Roth IRAs and taxation