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RE: How to Setup a Self-Directed Traditional or Roth IRA For Cryptotoken Investments
If you put your assets into an IRA and they go up dramatically in value then you can't easily get them out without having to pay the taxes right? So the taxes are only deferred until you try to take it out unless you intend to take it out in your 60s but this world will be dramatically different if you're talking about 20 or 30 years from today.
There are two different types of IRAs: Traditional and Roth. With the traditional IRA, the taxes on income are deferred. With the Roth IRA, there are no taxes on income.
You are right in that you cannot withdraw funds from your IRA without paying a penalty tax, if you do so before your retirement age. In this way, the funds are not tangible.
However, if you assume that the current power structure is not going away anytime soon, or will at least still be around in 20 to 30 years, and you want to invest in cryptotokens and reap the rewards tax free without engaging in tax evasion, then this is a decent solution. In addition, if you expect a collapse of the USA, the complete devaluation of the dollar, etc., then having assets in cryptotokens in an IRA LLC allows you to have fungibility (in terms of having control of the private keys, approving transfers, etc.) is one way to protect yourself if / when this occurs.
There are other, more ingenius, ways to make the funds immediately tangible. This would require structuring an LLC that is not owned by more than 50% by prohibited persons. In this case, your IRA could own a portion of the LLC (say 49%), and you could legitimately be paid by the LLC for the services you render to it. Obviously, these payments would be taxable income at this point.
The other 51% could be owned by siblings, sibling-in-laws, nieces, nephews, aunts, uncles, friends, or any other entity.
Doesn't look like a good option: https://www.pensco.com/blog/dont-pay-yourself-a-salary-out-of-your-ira-llc-heres-why/
Yes. You don't pay yourself a salary from a company that is owned by prohibited persons if the total control / stock of the company of their combined stake is more than 50%.
Didn't I say that in my comment ;).
Also, you'll note that the article you linked to is an example where the IRA LLC owns more than 50% of the company in question when the IRS took them to court.
Your comment only gives an example of people not following the rules, being caught, and subsequently prosecuted.
I don't think what you're saying really applies here ...
There are caveats to legally pull funds out of a Roth IRA prior to age 59 1/ 2 and avoid the 10% penalty: here are some specific ones - medical, disability, being a first time homebuyer, taking distributions as an annuity, taking contributions after a 5 yr waiting period
Good info. I just assume not take it out before 59 1/2.