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How to Open aCoinbaseAccount foryourSelf-directedIRA LLC
“A to Z” Guide – Open Self-directed IRA LLC account at Coinbase What is Cryptocurrency Taxation Considerations How to Invest/Buy with Funds in an IRA LLC Establishing & Funding IRA LLC How to Open IRA LLC Account at Coinbase Purchase Storage Practical Tips Get more info
What is Cryptocurrency? Per IRS Revenue Ruling 2019-24:oo Virtual currency is a digital representation of value that functions asa medium of exchange, a unit of account, and/or a store of value.Cryptocurrency is a type of virtual currency that uses cryptographyto secure transactions that are digitally recorded on a distributedledger, such as a blockchain.Popular cryptocurrencies: Bitcoin Ethereum Litecoin
IRS View on Taxation ofCryptocurrency The IRS has issued guidance that cryptocurrency will be treated as propertyfor federal tax purposes (see e.g. IRS Notice 2014-21). Outside of a retirement account: the income or gains from the sale ofcryptocurrency will be subject to capital gains tax rates (short-term or longterm as applicable). Inside a retirement account: the gains/income derived from acryptocurrency investment are tax-deferred (or potentially tax-free in thecase of a Roth IRA LLC account). Possible exception: If you invest your IRA LLC funds in miningcryptocurrency, the income generated may be subject to unrelatedbusiness income tax (UBIT) if the mining is considered an active trade orbusiness.
Steps to Invest Self-directed IRA LLCin Cryptocurrency
6 Steps
The Steps Broken Down
The Steps Continued
Tidbits
The IRA LLC Explained & Setup ProcessWhat is it?uStems from Famous Court CaseWhen an LLC is 100% owned by an IRA or u The tax court ruled in favor of a taxpayer incombination of IRAs, it is commonlySwanson versus the Commissioner, 106 Taxreferred to as a Self-Directed IRA LLC.Court 76, 1996, essentially ruling that the initialfull investment in an entity by an IRA was 7571
Why an IRA LLC?Alternative InvestmentsCheckbook ControlFees & Timely InvestmentsOnce funded, investments are madethought IRA LLC. Alternative investmentsinclude real estate, tax liens, preciousmetals, trust deeds, private companyshares and Cryptocurrency , to name afew.IRA LLC investments are made bywire or by writing a check fromthe LLC bank account. As thenamed LLC manager, you are infull control over placing the IRALLC investmentsMore IRA investors are opting for theSelf-Directed IRA owned LLC togreatly reduce processing fees,holding fees and to process timesensitive investment such as realestate and tax liens.
The IRA LLC Setup Process123File article oforganization withthe state.Obtain employeridentificationnumber (EIN) forthe LLC.Draft the LLCOperatingAgreement thatcontains therequired IRA andIRS language.4Open the selfdirected IRA5Fund the selfdirected IRA bytransferringformer employerand or IRA funds.6Open the LLCbank accountand fund it withself-directed IRAfunds.
Sample Cryptocurrency Account Setup –Coinbase Getting Started: Sign up for a Coinbase Institutional Account here: nterest/s/
Enter name ofLLCSelect “UnitedStates”Select the state oforganization of theLLCSKIP
Select “UnitedStates”Select “PersonalInvestment Company”SKIPSelect the state oforganization of theLLCSelect “1-10”Enter “This is an IRA LLCinvestment account forinvesting in my ownretirement funds indifferent assets includingcryptocurrencies.”Select “ 0- 5M” unlessyou intend to invest morethan 5mmThen click “Next”
Most choose “CoinbasePro”Then click “Next”
Select “ExchangeTrading”Select exceptedmonthly trading volume(e.g. 0-100k or asapplicable)Enter “The sole purposeof opening thisaccount is to invest myown IRA funds incryptocurrencies.”Then click “Next”
Enter your Name,email addressand phonenumberEnter LinkedIn profile URLand other contact info(Optional)Enter “LLC Manager”Then click “Submit” & Youshould receive an emailfrom Coinbase within a fewbusiness days, giving you alink to onboardingregistration including “InviteCode”.
Enter LLC Nameand Invite CodeClick “Register” to thenaccess the BusinessAccount ApplicationCenter and access theOnboarding Application
Enter LLC NameSKIPEnter your address
Enter Date thatthe LLC wasformedSelect“UnitedStates”Select the State wherethe LLC was formedSelect “Limited LiabilityCompany”Select “PersonalInvestment Company(PIC)”Select “FinancialServices (non-crypto)”
Select “Trading Pro”Select “ProprietaryTrading/Investing”Select “PrivateInvestors”
SKIPEnter “This is an IRA LLCinvestment account forinvesting in my ownretirement funds indifferent assets includingcryptocurrencies.”Select “ 0- 5M” unlessyou intend to investmore than 5mm
Select exceptedmonthly tradingvolume (e.g. 0-100kor as applicable)Enter your emailaddress
Enter the EIN ofthe LLCComplete W-9(see separateinstructions) & thenUploadUpload the Articlesof Organization forthe IRA LLC
Most clients enter“No”Most clients enter“No” You will then be prompted tosubmit information regardingthe Officer/Director (i.e. you) &upload your Government ID. Coinbase will email you whenyour application has beenprocessed.
How to Open IRA LLCAccount at CoinbaseAdditionalDocumentationNeeded: Signed W-9 Form
Funding Cryptocurreny Account atCoinbase & Processing Times Funding the account with Fiat Dollar? Yes – the account can be funded with US dollars The name on the funding account must match the name of the LLC Processing Time? Approximately 2 weeks
Practical Tips:Investing IRA LLC funds in cryptocurrency Opening an Account at a Cryptocurrency Exchange Name and EIN of the LLC owned by your IRA (consider tax reporting by the exchange) Funding an Account at Cryptocurrency Exchange Confirm that the account can be funded with Fiat money Wire/ACH funds from a bank account in the name of the LLC owned by your IRA Do not fund from personal account per IRA LLC funding rules Store Separate Physical Wallet in Safety Box associated with LLC Bank Account Private Transactions Confirm that the seller or buyer is not a disqualified person to ensure that you don’t commit aprohibited transaction Do not combine or “tie” the transaction with non-retirement transactions
Solo 401K:Learn More! business@mysolo401k.net (800) 489-7571
The IRA LLC Setup Process. 1. File article of organization with the state. 2. Obtain employer identification number (EIN) for the LLC. 3. Draft the LLC Operating Agreement that contains the required IRA and IRS language. 4. Open the self-directed IRA. 5. Fun
