Bitcoin IRA who has it? Would you get it?

[Thrif-t]

QuarterMillionMan Trade Station isn't an IRA right? What I liked about Bitcoin IRA was well it was an IRA. I'm not interested in paying taxes on my gains. Maybe that's short sided of me, but I do my own taxes and all my money is in Roth's so it makes it so easy come tax time and only dealing with a W2.

[Thrif-t]

QuarterMillionMan Trade Station isn't an IRA right? What I liked about Bitcoin IRA was well it was an IRA. I'm not interested in paying taxes on my gains. Maybe that's short sided of me, but I do my own taxes and all my money is in Roth's so it makes it so easy come tax time and only dealing with a W2.

[QuarterMillionMan]

Thrifty it is an IRA.

[QuarterMillionMan]

My 2022 Roth IRA is fully funded and invested in cryptos (1 ethereum and .081 bitcoin). But with lousy luck usually after executing a trade, the price will plummet but I'm in for the long haul.

[QuarterMillionMan]

I'm 56, so for this new bitcoin Roth IRA that I opened for 2022, I made a max contribution of $6800 and Trade Station would add $200 via a promotion to meet the max allowed by the IRS of $7000. However, the $200 was not added until today. Prior to today, Trade Station sent an email to me saying the promo changed to $50 (instead of $200), so I added $150 so as not to go over the $7000 max. So today now I'm over the $7000 max because Trade Station added $200, not $50. My question, as long as I leave the $200 in cash funds in my acct and not invest it and keep it for 2023, will I have satisfied the IRS requirement by not investing more than $7000 allowed for an over 50 person? Kind of a good problem to have with free $200 from Trade Station.

[disneysteve]

I'm 56, so for this new bitcoin Roth IRA that I opened for 2022, I made a max contribution of $6800 and Trade Station would add $200 via a promotion to meet the max allowed by the IRS of $7000. However, the $200 was not added until today. Prior to today, Trade Station sent an email to me saying the promo changed to $50 (instead of $200), so I added $150 so as not to go over the $7000 max. So today now I'm over the $7000 max because Trade Station added $200, not $50. My question, as long as I leave the $200 in cash funds in my acct and not invest it and keep it for 2023, will I have satisfied the IRS requirement by not investing more than $7000 allowed for an over 50 person?

NO!

If this is an IRA, you CAN NOT put in more than $7,000 in the year unless some of it was to fund a prior year's contribution. If you put in $7,150, you need to have them apply $150 of it to 2021 unless you already fully funded a Roth for 2021 elsewhere. If you don't have that option, you need to withdraw the over-contribution (and any earnings attributable to that $150). You can't just leave it in there to apply toward 2023.

[QuarterMillionMan]

Ok thanks. I interpreted the IRS rules wrong. I thought the penalty was only on investments and not funds.

[disneysteve]

Ok thanks. I interpreted the IRS rules wrong. I thought the penalty was only on investments and not funds.

Nope. It is on the amount you deposit into your IRA. It doesn't matter if it's sitting in their cash/settlement account or invested in stocks, bonds, crypto, etc. Once it's in the account, it counts as part of your contribution for the year.

[QuarterMillionMan]

What would you suggest? Should I just withdraw the $200?

[disneysteve]

What would you suggest? Should I just withdraw the $200?

Yes, you need to take out whatever amount that exceeds the annual contribution limit.

[QuarterMillionMan]

Ok thanks, good advice. I would hate to pay penalties on something so simple to avoid but got complicated with all the mix ups.

[QuarterMillionMan]

My safest investment would be to buy $7000 in USDC stable coin and get the 6%. But I'm not sure what the loan to Galaxy Digital entails in the fine print. If Galaxy defaults on the loan does that mean I lose my $7000, if that is the case I don't want the 6%, and I rather get bitcoin and no loans nor 1%.

Derailing this thread a little to point out the Terra debacle this week where Terra dropped 98%. Galaxy digital as mentioned in this thread is the main backer of Terra and I touched on this 6 months ago. Well low and behold it came true. Had I invested my funds in USDC (Terra), it would be worthless today and for what 6%, sigh.

[QuarterMillionMan]

On a side note as recommended by disneysteve, I did withdraw the extra $200 rebate so my total contribution as allowed by the IRS was $7000, and not the added $200 for a total of $7200.