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Now that Tax Season is almost over in the States, U.S. citizens who are trading XRP, or simply looking for ways to invest for the long term, might be thinking of better ways to legitimately reduce long term tax burdens for 2018 and beyond. Since many of us can foresee very long term investments with XRP, I decided to share some personal experiences I’ve had over the past year regarding the creation of two Roth IRA’s, using two very different financial entities and custodians. I have tried to stick to factual reporting only, so anyone reading this can make their own decisions about which, if either, of these options might work for them. But I clearly see one of the two choices as vastly superior, and maybe my trials and errors will make some parts of this process easier for the next person. Of course, everyone must do their own research and consult with their own tax professionals, and this post is not meant to give anyone tax or investment advice, etc. For those of you who don’t know, in the U.S., there is a significant tax advantage to a Roth IRA, because, once you have met requirements for withdrawing funds (during your retirement), you have no tax obligation, regardless of how much profit your investment has made. Hard to imagine, but true. This is because you fund the Roth IRA with earned wages that have already been taxed. So, essentially, you are required to pay taxes on the funds that you have initially invested, but you do not have any tax burden for profits, regardless of how much profit you make. Also, if you are opening a Roth IRA with earned wages, there are limits to the annual amount you can deposit, but if you have an existing retirement account, you can transfer whatever amount you have in that account, in entirety or partially, as you wish. Below is a summary of my experience of the two very different IRA entities with which I have dealt over the past year. The first is Bitcoin IRA, which most everyone has heard about. The company is based in California, but their custodian, Kingdom Trust (recently purchased by BitGo), is based in Kentucky. Bitcoin IRA charges steep fees, IMO. At the time that I opened my IRA, there was a “one time set up fee,” based on the amount of initial deposit. Below is that fee structure: Investment <$49,999 $50,000 to $99,999 >$100,000 Fee $15% $12.5% 10% In addition, when I opened my IRA, Kingdom Trust charged an additional $100 fee and an annual $100 custodial fee. Although there was no fee to liquidate the account, investors were charged an additional 5% fee for “buyback,” that is, selling a coin for fiat and then using that fiat to buy another coin. Also, there was a minimum investment of $15,000 required to open the account. When I opened the Kingdom Trust IRA, the above fees were said to reflect all of the costs associated with this account, other than incidental fees like wire fees, document fees, mail fees, etc. However, four months later, I received a letter from Kingdom Trust informing me that “In order to continue to service accounts holding these assets, we must employ a new digital asset pricing structure.” So, starting in January, 2018, the account has now been assessed a monthly account fee of $20 as well as a monthly holding fee of 0.07% of the account value. Holy Shih Tzu!!! The new fee structure now also charges $150 for asset purchase or sale and $100 per asset to “transfer out,” or “for any asset exchange.” The wallets are secured by BitGo. There are three security keys, held by Kingdom Trust, BitGo, and a third entity, Keytern.al Recovery Services. The trading platform is executed by Genesis. The buy and sell prices are dictated by Genesis. Bitcoin IRA offers trades in a small number of coins. To my knowledge, these currently include: BTC, BCH, BTG, ETH, XRP, LTC, and RMG. As recently as January, it was not possible to execute a trade independently. To make a trade, you were required to do so by phone and you had to “schedule” a time to complete the trade, and only during business hours. Creating a limit order is also not an option. If you want to buy or sell an asset, you accept the price given to you by Genesis. In each trade I completed, I had no choice but to buy at a price above the market ask price, and sell at a price below the market bid price. While the limitations of trading during essentially “business hours” only sounds maddening, imagine having no option for making any trades over “Christmas Break,” which extended from about December 23 to January 3. Remember what was happening then? BTC (and other coins) were at ATH’s. If you wanted to sell, you were S.O.L. I find it hard to think of a relative advantage to using Bitcoin IRA, unless one is very, very inexperienced and/or reluctant to make trades independently. Predictably, I decided to look for a better alternative. The second company I have used is Broad Financial, based in New York. Their website is packed with a ton of useful information. They work with a custodian named Madison Trust. Broad Financial offers a much more diverse experience. You can create a completely self-directed IRA, through which you can invest in a number of assets, including real estate, tax liens, private loans, gold & silver, and, yes, cryptocurrency. In fact, you can invest in any cryptocurrency that is traded on any exchange. How? You open and fund an IRA, for which you form an LLC, create your own operating agreement, and obtain a Federal ID Number. Then, you open a business checking account for your LLC, and transfer funds from your IRA to this account, through which you fund an institutional account at the exchange of your choice. This sounds a little complicated, but Broad Financial completes all of the documentation, including the formation of your LLC. Your total cost for their service is $1,395, and is tax deductible. If you want, they will allow you to pay $495 upfront and pay the balance from your IRA once it is set-up. There are not many additional fees, but they are: a one-time $100 custodial account set-up fee, and annual custodial fees at $49/quarter regardless of your account size, or the number of transactions you place within your IRA LLC. Using this method, you can make as many trades as you want, when you want, and at the price you are willing to bid or ask. Finally, there is no minimum investment required to open the account. I am sure there are, and will be, many more alternatives for using legal entities to invest long term in the crypto asset class. For some investors, there probably will be better choices than the two I have outlined. Competition is a great thing, and I’m so appreciative of the free enterprise system we sometimes take for granted. Personally, I am completely satisfied with the Broad Financial/Madison Trust IRA, and do not plan to look elsewhere at this time. I hope this information is helpful to others, and would really love to hear anyone else’s experiences, or thoughts, comments, or questions. Cheers!