EP 16 – How to Invest in Bitcoin and Other Cryptocurrency with a Self-Directed IRA or 401k

Mat and Mark outline how you can invest in Bitcoin and other Cryptocurrency with an IRA or 401k. They go over the three strategies available which can all be accomplished at Directed IRA. 1. Having your IRA directly own a crypto trading account at Gemini through our special strategic relationship (no IRA/LLC required). 2. Using an IRA/LLC where the LLC bank checking account is linked to a wallet/exchange of your choice. 3. Buying Bitcoin Trusts or ETF (Grayscale/Osprey). They also discuss tax benefits of using a retirement account, cold storage options, and fees to expect in the process. Learn more at https://directedira.com/cryptocurrency/

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Mark Kohler: Welcome, everybody, to this week’s episode of the directed IRA podcast. My name is Mark Kohler, the less important one. Let’s just be clear about it today. This is a big deal. I’ve already been prepped by my amazing partner, Mat Sorensen to just. Yeah, hang on tight.

Mat Sorensen: Yeah, you are, though. You’re still a very important person. OK, but what Mark’s referring to here is I’m going to be doing more of the talking today. So don’t you know. End the podcast now, OK. Mark’s got some jokes I’m sure you know. Yeah. It’s just going to be the boring Mat Sorensen show. And but I, I mean I’ve been geeking out on this topic for a while and we have a lot of awesome strategies on how to buy crypto in an IRA. We’re going to go over how to do it without an IRA/LLC. How to just do it in an IRA in a trading account. How to do an IRA LLC if you want to do your keys or to keep your private keys or buy some alternative crypto, I’m even going to go over how you can buy some of these Bitcoin ETFs and why you might want to consider them or not consider them. So we’re going to walk through all these different options out there that are playing out for our clients that directed IRA who are wanting to buy crypto this asset that’s kind of like taking everyone, you know, everyone’s attention over the last few months.

 Mark Kohler: You know, and if you’re new to this podcast, welcome. Someone may have shared this with you. You’ve been able to find this, trying to get some straight answers on what your options are when you invest in crypto. Mat and I between gosh. Two or three variations of our podcast now have over five hundred episodes. Over the last ten years we’ve been helping small business owners around the country in our law firm for twenty years, our accounting firm for over 15 years. If you go out and start Googling our names, you’re going to find hopefully a lot of good stuff. If you do images, you might see Mat, you know, with this masculine upper body self me, I’m just an old guy no.

Mat Sorensen: Those images do not exist.

Mark Kohler: And they don’t really do they do not search for that. But we’re glad to have you here. We try to keep it light. We try to have fun. I’m a CPA and an attorney partner, both the law firm, accounting firm and CFO of directed IRA. Mat Sorensen, also a tax lawyer, an author of the book The Self-directed IRA Handbook, and its second edition, the most selling book in history on the Self-directed IRA topic. It’s gotten rave reviews. You get over on Amazon and check that out if you get to the website SDIRAHandbook.com. That’s SD as in Self-directed IRA handbook dot com. We always recommend everybody get a copy of that so that you can really dive deep into some of these topics because this is a tricky one today. And as Mat said, I’m just going to you know, I’m going to be allowed apparently I’m in the back seat. I’m just going to be allowed to make a comment once in a while, not just playing. Mat’s really nailed this down because as CEO of directed IRA Mat has really just driven the ship here on trying to get the most smooth and easy and effective way to invest with crypto. If you’re into crypto, you’re not it’s cool, but Mat the time is yours. How would you like to proceed? What is what is our outline for today?

Mat Sorensen: Ok, well, let’s go over the three options first. I mentioned at the beginning here, but I want to.

Mark Kohler: Ok, hold on. I want to interrupt you. I’m just joking. You knew that was it’s. I see. I’m just trying to keep you on your toes.

Mat Sorensen: That’s actually normal. That was I was prepared for that. I was ready.

Mark Kohler: OK, I’ll shut up now I’m just playing OK, three things.

Mat Sorensen: Ok, and hit the three options and we’ll dive into each one in detail. The first thing I want to say is if you’ve heard us before on this, we we’ve typically recommended an IRA LLC as a way to do this. There are other options now that’s still an option for certain people. I think it’s a good option, but it’s not the only option. And there’s a new one that’s better for most people. OK, so let me walk through these three options. We’re going to share my screen here. So for those of you listening on audio, if you want to jump over to the YouTube, you can check it out on the YouTube channel. And yes, Mark?

Mark Kohler: Can I raise my hand?

Mat Sorensen: Am I going to call on you like the teacher? Yes. Yeah.

Mark Kohler: Now, for those of you also that are new to this, we are on Stitcher, Spotify, iTunes, every podcast format you could think of, but also on YouTube. So for those that want to see our faces, you’ll see me with a little more dramatic faces and looks here and there, too. But I just raised my hand because I want to say Mat you said that there’s people that may be listening to this that don’t even know what Self-directing is. Do you want to just do you want to hit that now? Is that in your first slide or two? I don’t know.

Mat Sorensen: Let’s hit that now that we’ll go over the three options. OK, so the first thing is, if you have an IRA or 401K, let’s say you’re at Fidelity or Merrill Lynch or wherever, and you’re like, all right, I want to buy crypto with IRA and I can’t do it, you can’t own crypto with an IRA. And it’s not because IRI’s cannot own cryptocurrency. It’s because IRAs at Merrill Lynch or Fidelity can’t own crypto. OK, they don’t sell that yet. All right. They they sell stocks, bonds and mutual funds. That’s what you can buy when you have a retirement account there. So you’ll need to move your account from, let’s say, Fidelity or Merrill Lynch or TD wherever over to a custodian of IRAs who lets you self-direct like our company Directed IRA Marks, wearing the directed IRA colors today and golf shirt. So I appreciate that. Always selling Marks such as these. You know, such a good, good co-founder. So that’s step one is just realize that if your IRA is somewhere else, you’re going to get to a Self-directed IRA custodian. Now, we’re really leading on many of the strategies on this, so why not just come to us and we have the best service and we’re the best, you know? Wow. It’s just that what is the best.

Mark Kohler: Bold, bold statement? And for those of you in, this would be our last comment in this, because I know many, many of you that already know Self-directing are here to learn about this crypto thing. So I’ll just say this. If you’re still a little hazy on the Self-directed IRA or 401K, Sep, HSA, all those Roths, if you’re a little hazy on the process or need a refresher course, go back to the beginning of our podcast. And we really tried to structure our first 10 episodes, just breaking down the basics. And if you just binge on those, you’ll be set. Ok, so Mat you got a PowerPoint. This is new. This is new for our show, a PowerPoint. So you have get to YouTube folks, you might find this helpful. Yeah.

Mat Sorensen: Yeah we’re going be doing a webinar on this. We’re going to be you know, we’re going to be turning over every stone to make sure they know. About what you can do, how you can buy crypto with an IRA, whether you should do it, I don’t know. I mean, like my last video on this when we kind of got big in this in 2017, Bitcoin was at $2,700 bucks. And that’s what I said on that video. I’m like, I don’t know whether you should buy this or not. Seems pretty speculative, but if you want to here’s how to do it. That’s still our message today. Of course Bitcoins at $50,000. So that’s a 20X return right there. All right. OK, let’s, let’s share my screen here, OK? And I’m going to show you this is option one, OK? This is where your IRA can own Gemini trading account. And you say you’re going to do two things, you’re going to set up a directed IRA Crypto IRA account. This is a specific IRA account. We’re doing at directed IRA. It’s separate from our other IRAs.

Mark Kohler: Could it be a Roth or traditional?

Mat Sorensen: Yeah, Roth, traditional, HSA, Solok, ESA, all those will work. All right. We have all the apps ready to go at directed IRA Dotcom, where you can start now. You can do this structure now. So I’m going get my crypto IRA account. And what we’re going to do then is we’re going to link and set up a Gemini trading account. So Gemini is a trust company. They’re one of the largest providers of crypto and they have an exchange. They have a wallet. And so your IRA is going to own this trading account and you’re going to be an authorized trader on the Gemini trading account. When you’re going to move money from your crypto IRA, let’s say you transfer it over from your Fidelity account and now it’s over here at directed IRA. We’re going to then invest the amount you want into this Gemini trading account, which will go in cash and now you have trading authority and can log in. You’ll have to get setup a login and stuff. There’s a process, but your IRA owns it directly.

Mark Kohler: I love it. I was just going to say in more baby step format for some of you, step one, I was actually on the directed IRA website last night setting up another IRA for myself because April 15th, right around the corner, I wanted to get my backdoor Roth funded for 2020, so I was there as well. And I was actually emailing Mat and some of the staff going, hey, can we change this button here are there. So I just love the website. It is very user-friendly, but I you set up your account step to move the amount of money you want into that crypto IRA account. Mat said that after, but I think that’s really a step two set up the account, move your money in there, which could be very, very quick. There’s no tax. There’s no penalty. It’s kind of a over. You just move that money to a different broker as some people might think about. Then step three, you’re opening up that Gemini account .

Mat Sorensen: Oh, yeah, yeah, we’re going to open it for you. And it’s owned by your IRA. We’re the trustee of your IRA. We’re going to open up for you. But make you a trader on it. So that’s a cool thing because this has been one of the disconnects in crypto is. All right. Well, I want to have access to trade this now. Some custodian’s like, OK, give us an instruction and we’ll go buy it for you. Well crypto trades. 365 days. 24/7. Like is your IRA custodian. Some of our competitors, are they able to trade at midnight on a Saturday. No. And if crypto falls fast or it’s rising fast, you want to make, buy or sell purchases. How can you do that? You’re going to submit a form and have this manual process for them to then go make the trade. How quickly are they going to do that? Are going to try to expedite fees? It’s a mess. It was a terrible system. There’s no way in heck we’re going to do that. Not to mention their fees are ridiculous. So what we’re doing is we’re trying to say, all right, what would what would I want really, if I was going to trade crypto? Let me have the controls. It’s your IRA. We’re going to put the money in there. You get to decide when to buy and sell, how much you can do it 24/7 in your pajamas at your house.

Mark Kohler: Ok, no, Mat. Let me just say last of the steps. And then also is if I move ten grand into my Self-directed IRA Crypto account, do I have to move the whole ten grand to Gemini or do I tell you how much I want to put in Gemini or just by linking it by in effect your ten grand is in Gemini. Will it be there. So keep going. I know that’s next step.

Mat Sorensen: So yeah, most people are just going to have all invest and we have an option in the account app to just say send all my available cash. So if I’m rolling over money from Fidelity or I make a new contribution, let’s say I’m doing the backdoor Roth for six grand, or right now you can do 2020 and 2021 Bitcoin and twelve if you didn’t make any 2020 contributions. So we have an option. We said the account of just say just send all available cash to the Gemini trading account because otherwise it’s not doing anything. This is going to sit in cash in our account and we have no minimum balance on the crypto IRA, so you don’t need to leave cash over at Directed any all the cash you want can go over to Gemini and of course, you’ll have a credit card on file at directed IRA where we charge our account fees. All right. Now, here’s what’s cool at Gemini. So you have one of the largest exchanges, OK? There’s no fees to store your crypto there. Your  crypto is on the exchange. I’ll get into some storage options here in a moment, but it’s just on the exchange. But Gemini has all the major crypto. They have bitcoin, Etherium, Litecoin and twenty plus cryptocurrencies that you can trade essentially on the Gemini trading platform.

Mark Kohler: Ok, I love it so easy now, and I guess I would if I wanted to look at either account, if I’d logged into the directed IRA account, I would see that I have X dollars put into that IRA. But if I wanted to see what the specifics of the holdings and value were, I’d logged into my Gemini account and I could have two screens. OK, yeah.

Mat Sorensen: All right. Yeah, I’m really what you’re going to be doing is going to be most in the Gemini account. We’re going to have your IRA account. You’re going to get an annual statement and the tax forms that we got to send to the IRS. But you’re not doing anything there, right. And what you’re you’re over in the Gemini account, which is tracking your daily values, which you can trade on like that, you know, and or you can just look to see what of my holdings, you know. So now would you want to use what’s called the active trader settings in Gemini. Gemini has kind of like a classic view, an active trader. There’s fees that are decreased if you use active traders. So that’s a note for anyone working with us. We have special fees you can get using active trader sets interface when you’re there versus the regular interface or the mobile app. So more detail when you’re working with us. We have instructions on how you do that.

Mark Kohler: Can I make a tax comment or did you want to give a cite on taxes later that make a tax cut? Because, OK, here’s here’s what’s interesting. As I was just at a dinner party over the weekend and someone said, well, if I buy crypto, when do I pay tax on it? When I convert it to another cryptocurrency or when I convert it to cash. And what happens if I go to buy a dinner or a car with my Bitcoin? When do I pay taxes? And the IRS regs are the whole other conversation. So but what’s beautiful is I just got chills Mat. I know I sound like a geek. I literally just got chills when I thought this. The beauty of doing this in your IRA, it doesn’t matter there’s no tax. You can convert the bitcoin to etherium and the etherium to smart coin. You can put it back into Fiat cash would maybe be the U.S. currency or the yen or the peso or whatever you started with. So the beauty is your moving all this around in Gemini or your directed IRA account and there’s no tax. There’s no 1099. There’s no tax return. It’s just growing up. Boom.

Mat Sorensen: Yeah, that is one of the reasons a lot of our successful clients who got into crypto early, like the early adopters of this, they realized when they started making money, you know, these are people that were buying, you know, Bitcoin when it was hundreds of dollars less, you know, but they start making a lot of money out there, like, what the hell? I don’t want to pay taxes on this. This is insane returns. So they started using their IRAs and many of the smart ones use their Roth IRA totally tax-free. So and but even if using a traditional IRA or an HSA or in these accounts, as you’re buying and selling, if you if you want to do that and a lot of people are just buying and holding, you know, I’m going to buy a Bitcoin or two and just hold or I’m going to throw ten grand at this and just see where it goes in the next ten years, whatever. Some people want to be more active and trade and get in and out or maybe once a year or you kind of adjust things. But don’t worry about all that tax reporting. And the cool thing about this is, see, your IRA owns this. So Geminis not going to send any tax reporting to the IRS. They know that we have an institutional relationship with them. They’re not going to send stuff to the IRS. When you’re using an IRA LLC, which is our other option, there are some downsides to that, one of which is a lot of these exchanges don’t understand that the LLC is owned by an IRA. So they send tax reporting to it like it’s just a regular LLC and anyone else would have and that would have to have some tax reporting and some of the trades. So this is a nice, streamlined process that your IRA owns it. It’s fast and easy for you to trade. You don’t need an LLC set up. We’re going to set the Gemini account for you. You got to log in and verify yourself to get access as a trader. And then there’s no tax reporting. It’s all linked to your IRA.

Mark Kohler: Now, what was I last night? It was last night. I was working late to about 1:30 in the morning. And of course, I’m flipping around trying to find a good movie. Of course, I ended up on the accountant with Ben Affleck because. 

Mat Sorensen: How many times have you seen that movie?

Mark Kohler: What is there a problem with that? Is there I mean, it’s only the best accountant movie in the history of mankind. I mean, all of us accountants dream of it

Mat Sorensen: It’s also the worst because it’s like the only movie about accountants.

Mark Kohler: Not tell my new movie comes out OK now. Anyway, I switched to it. I was on an infomercial for a minute and that’s how I feel right now. I’m the guy that’s like, that’s amazing. Mat now does that come in a 12 ounce or an eight ounce? Yeah. So I got to be careful here. OK, so what’s funny, everybody is this has been a whirlwind of a season. Every week the SBA is kicking out more regulations on PPP. The government just passed another bailout. We’ve got tax season upon us. I mean, it has been not so Mat and I have divided and conquered and so genuinely people I’m asking these questions to because I’m like, OK, what do I do not. I’m like, I’m doing the same thing. Oh, and my producer brought this over for those who are on YouTube. This was the promo for the accountant that got rejected before I got, you know, the result. So if you haven’t seen that, it’s the show on YouTube. Some of you got a maybe a kick out of that. My my family for Christmas took the movie part.

Mat Sorensen: That was Mark’s Kohler mug in there. If you couldn’t tell. It’s not Ben Affleck.

Mark Kohler: Yeah. Yeah. So my family got me the movie poster, the account and replaced my face with Ben Affleck’s and that was under the Christmas tree. So I was happy. OK, now so on this Mat, I guess you’re going to come to fees and some other things. So you’re just going to I’m going to shut up right now.

Mat Sorensen: Ok, let’s hit fees that’s what I want to do too. We’re just like, you know, just in rhythm, shake and bake, shake and bake. Now we’re like we’re like the dynamic duo, you know? Want to have someone tell us on our podcast that their mind is about dynamic duo. And they said, like Bert and Ernie, I was like, oh, that wasn’t the one I was thinking of when you said dynamic duo?

 Mark Kohler: Yeah, because when we get into this sweater’s maybe we weren’t Sweater’s more because I’m Batman and Mat’s Robin. That’s really cool.

 Mat Sorensen: Ok, let’s go to the screen here and let me show another image here, OK? All right. So here we got the screen here for those on YouTube I’m gonna explain it here. But here’s how the fees work with the crypto IRAs. OK, we have a $295 annual account fee at directed IRA. There’s no account establishment for you 50 bucks or anything that we have for other accounts is just $295 now where there’s a fifty dollar fee, when we send money from your directed IRA account, your crypto IRA over to your Gemini trading account. OK, now maybe you only do it once you have the 50 bucks, but if you’re sending contributions in every year and you want to send over that money, there’s a fifty dollar fee because we actually do have to wire it. So the funds are available over in your Gemini trading account. All right. So now your money’s over Gemini and you trade and there’s two trade fees you got to know about. One, our trade fee of 1%. OK, so if you buy ten thousand in crypto, we’re going to charge you one hundred bucks. Okay, that’s we’re going to charge your credit card on file at directed IRA. Now, Gemini has a trade fee of 0.25% to 0.35%. So if you bought again ten thousand in Crypto Gemini is going to charge you twenty five bucks or thirty five bucks. It’s a range, depending on whether you’re called, what, an taker or a maker in the market, whether you get the twenty five or thirty five. So now that’s you have to use the active trader interface to get that fee schedule when you’re at Gemini and when you’re with us, we give you the details on how to make sure you’re doing that. You’re getting the best fee at Gemini and that’s it. If you want to store your crypto on the Gemini exchange, there’s no fee. You’re cryptos there at Gemini. You know, they have insurance and everything which is your wallet. Yeah. Which is your wallet. You’ll have it your own wallet there. But you can’t send money off. You can trade, but you don’t have authority to go send that money over to Tesla to go buy a new Tesla with your Bitcoin. OK, this is your IRA. We’ve locked it down so you can only trade. So, so but if you want to start taking money, what you would do is you would convert your crypto back to fiat currency, let’s say, U.S. dollars, and then you send the money from Gemini. There’s no fee for this. Back to your directed IRA account. We have a process for that. And then we’d send you a distribution. Obviously, if you’re fifty nine and a half, that’s when you’ll start doing this. These retirement accounts are for the long term, right? We’re building this wealth for the long haul.

 Mark Kohler: Ok, so on the fees, I want to ask that $295 set up fee and the fifty dollar fee to transfer account annual count fee. I can pay that with my personal or business credit card.

 Mat Sorensen: Right. That’s what we want. So we’re going to in fact we require you to use a credit card for these account fees because we don’t want to go into your crypto and suck out your crypto, you know, which we will do if these aren’t paid. I mean, we will we’ll have to go access your crypto, but we’re just going to charge your credit card on file. You can pay your account fees personally, there’s an exception for that in the rules. You could personally pay your retirement account fees and all these transaction fees that that we will have. Now, the Gemini fee, though, is going to come out of your account at Gemini. It is going to take that out of the time you make the trade.

 Mark Kohler: But the 1% so the three fees that would come out of your credit card would be the setup fee of $295 to move my chunk of money to my Gemini trade account. And then if every time I made a buy or sell, I would have a one percent fee charged to my debit card on file. So that way I’m not depleting my crypto. I really like that point that I can just snowball that,  just build it, build it build.

 Mat Sorensen: Yeah, yeah. We don’t want to get into that. Those retirement plan dollars we want to keep those as like sacred funds. Let us hit the credit card. And one other thing to keep in mind are that one percent fee is very competitive. I just saw we just we’ve talked so many clients that are paying 10%, 8% equity trustees, 5%, one of the main players, the only ones we’ve seen even close to us are one and a half percent. And good luck talking to anyone on the phone over at those places, OK? All right. These are like like help desks and stuff. And it’s like you do it all online. We don’t talk to you.

 Mark Kohler: You mean like Facebook? Like, yeah. Yeah. Like where’s the Facebook hotline? I’m still waiting for that.

 Mat Sorensen: Yeah. It’s like trying to get a hold of someone at the App Store on Apple. So so but that’s the fee schedule and again, this is option one. This is I think this is the most common option people should use, whether you want to buy. Let’s say you just want to throw on five or ten grand at this. You want to do a hundred or even more possibly. This is a very competitive structure, easy way to keep it streamlined. Make sure it’s clear with the IRS that your IRA owns this trading account so you don’t get any tax reporting mistakes with the IRA LLC and it puts you in control. Like I said, there’s other competitors out there you’ll see that may let you buy crypto with an IRA, but you can’t do it 24/7 365. Right. Because you’re making the instructions to them on their websites and stuff. Are they trading immediately or wouldn’t you rather be on Gemini pushing the button to trade it yourself and seeing the trades happen. I don’t know so that’s why this model.

 Mark Kohler: Ok, so before we go to option two let me clarify something to you, because if you’re some of you may be thinking big picture is this is not to buy and sell Tesla stock or GameStop stock or AMC. That’s a different type of trading account, which we have for IRAs here at directed IRA. But it would not be the crypto IRA, am I correct? Mat you’d set up the crypto IRA just for crypto, then you’d have your other IRA can have a trading aspect, but that’s a separate topic.

 Mat Sorensen: Yeah. So we have our regular Self-directed IRA accounts, which is actually this is a great pity. You know, if you’re like, you know what, I don’t want to just do this. I maybe want to do some real estate. I want to do some notes and I want to do some crypto, OK? Do an IRA/LLC. All right, we got that structure to this, just our regular Self-directed IRA, which is $50 set up the $295 and you can have to set up an LLC. And if you look at this diagram here, let’s just share the screen here. You know, the area let’s see there is going to cost eight hundred bucks plus the state filing fee to set up. But you can do multiple things in this example here we show a Wallet exchange. It could be with Coinbase or you can do it with Gemini or or Kraken or itbit or any other places. And so that’s the second alternative structure that if you want to do multiple things with the IRA, with the same account, you may want to use an IRA LLC.

Mark Kohler: Ok, I like this distinction. If I may say it this way. Some of you are very familiar with smart coin or Kraken and you’re like, I want to use the the platform I’m used to. That’s where my wallet is. Yeah, I want to use that. I’m in no big hurry and I’d like the flexibility to put money in some other places as I convert my crypto back to dollars. Then I would just say set up a regular IRA account over here, like a typical Roth, a typical tradition do not choose the cryptocurrency IRA. You’re just a regular IRA. Then they’re going to send you over to the law firm. You’ll get a real consultation with a real lawyer via Zoom and they’re going to build a diagram for you to look at your big picture of everything. Our lawyers do not operate in a tunnel they want to look at. OK, why are you doing this? What’s the big picture? Do you have your family trust? Who’s the beneficiary of your IRA? Are you fully organized? And we might see things where we see some problem and give us some items to do this year as well. Then you form your IRA LLC. On that consultation, the law firm sends the LLC back to directed IRA funded it. You fund it then from that IRA, now you open a Coinbase account in the name of the LLC.

Mat Sorensen: You’ll have one step in the middle there. You’ll use the LLC will have a business checking account. Right. You’ll open up a checking account in the LLC and your manager of the LLC have authority on that account. And that checking account is what you’ll link to a wallet or an exchange is marked mention here that could be like like Kraken or Coinbase or now because some people might like Mat. I want to trade. You know, Polkadot or I want to trade Dogecoin. These are some popular ones you might hear out there, they’re not on Gemini, OK, do the IRA LLC then? And you could then go to an exchange and use a wallet that where you can buy and hold that type of crypto. Another reason people may want to use the IRA L.L.C.. So let’s say you may want to use if you want to do multiple types of assets like you want to do real estate and notes on the same IRA or you want to buy crypto, that’s not on the exchange. That’s not a Gemini or you’re like Mat I want to hold the private keys. See with crypto what you actually have that that you use to exchange the crypto or what I called the private keys and the private keys. Some people want to hold those. They’re worried, like back here on this example here with Gemini, we share my screen. Now, you know, when you’re in this structure, Gemini has the private keys on their exchange and you can go into what’s called cold storage at Gemini, where they take it off their exchange and they put it on servers and have a more secure system where it’s totally not online. But you’re paying one percent annually to have that cold storage. And that’s an option when you’re in this structure, something like Mat. I just want to put it on like a thumb drive, like a Traser, some of these other options out there. I don’t want it anywhere. I want it totally in my control. You’re going to need to do an LLC. And that way you can get more control of your private keys because some people out there and they’re like, you know, no keys, no crypto, you know, they’re really freaked out of like a you know, some of these exchanges being hacked and such. But but I’ll say with Gemini is the reason we use them is there are license trust company. They have insurance. They’re really on the front lines in terms of technology and stuff. And so but there’s, of course, risks and you’re choosing to use them when you go into the structure. So if you’re worried about the private keys, you’re not satisfied with how Gemini does it. They’re exchange storage or their cold storage. You may want to use the IRA/LLC.

Mark Kohler: I boy, you open up a lot of different divergent roads we could go down what I think is a nice moment to just sit back and look big picture here, too, is what is your long term goal with this whole cryptocurrency topic? And you make sure that you try to choose the right method from the beginning for your investment portal. And I know that sounds like some you’re like I want to buy right now. You know what crypto will be here next week. It’s OK. And I know some of you there’s some announcements or you need to move quickly. You could open two IRA accounts. You could have one through Gemini where you’re making a trade within 24 or 48 hours as soon as the money gets here, boom, you’re in business. Or you may say, you know what, I do want a little longer term LLC. And this is where I have fun with it and say, why don’t we pool some of our IRA money together? So I might say I’m going to take my kids, Roth IRA, my spouse’s Roth IRA, my kid’s college savings IRA and my old 401k from a job Ten years ago you could form an LLC with multiple retirement accounts and then go open a coinbase account and that that in order to pool your money, you’ve got to use the LLC concept. But it’s a great opportunity to get your family members on a phone call with an attorney and go, hey, explain how we build wealth as a family. Why are we doing this? And I’m a parent of teenagers and young adults. They’re not always listening to dad, you know. And so when you get home on a phone call with a real attorney, this could be their first experience talking to a lawyer in an engaged process. And so I think it’s a great time for many of you to share this. Strategy, maybe you don’t give them this whole podcast because they are not going to listen, but I was just sitting down Sunday night with a family down my street and their son, who’s 16 years old, was like, oh, I’m going to buy Crypto. And mom and dad were like, well, I own a little. And and the the kids looked at the parents. You do like my parents. Cool. You know? And so I think this is a great chance to really make it a family affair, too. So, yeah, look, big picture.

Mat Sorensen: I like that. And you can do counts for your kids. One of the things we love talking about doing a Roth IRA for your kids. If you have a small business, you pay them in the business or maybe your kids have jobs in college or in high school, that they have income. They spend every check because that’s what they work for. And that’s great. But you can use that income to throw it into a Roth IRA. Maybe it’s five grand a year that they’re making in your business or on their own that you could throw into a Roth IRA for them to do some crypto in any of these options. Just and they could do their own trading account. Or you could pool, like Mark said, in the Multimember LLC, too. So love that. And I think that’s the thing with these accounts is it’s a $295 annual fee on just the regular crypto low maintenance. You don’t pay the one percent anymore, you just buy it and sit on it. And if this thing, you know, if you pick the right crypto or who knows, you know, this could be a great little thing to just throw a little bit of money at it, be measured, don’t throw all your money into this, obviously. Of course. And get financial advice if you need it. But we’re just saying we got options here on how to do it.

Mark Kohler: So on the on the security topic, let’s go back to that again, because I’m a Mr. Robot fan. Yeah. So if some you’ve been hacked. I’ve actually told Mat we’ve got a really we’ve got a pretty good cybersecurity plan here in our different firms. And personally, since you’re out there on a podcast, you want to make sure you’re not a target for those sorts of things, but you can always improve in different areas of life. And and I recommend to all of you to take this chance to to look at your security process. If you say I’m a prepper, I’ve got my bomb shelter in the basement. I want to have my keys in a safe and Mat. One of these days, my bucket list is I want to safe where I put my handprint on it. I just go, yeah, it goes and it opens up. Yeah. But anyway, if some of you were in that ball game where you’re really heavy in security, which is cool, you’re not going to use the Gemini Crypto IRA, go get the LLC done where you can have control of the keys, really control how you’re holding your retirement account crypto. But for and I’d say that’s a minority. Not everybody’s wanting to do that. Yeah, I think I like what Mat said, that the far, far majority of everybody’s like, hey, I want to start trading right away. I’m not throwing my life savings in that which I would recommend you not. And and set up the Gemini Crypto IRA. I just think it’s awesome what Mat the team has done over there. They’ve worked so hard to make this easy.

 Mat Sorensen: Yep. Yeah. And we’ll keep improving and making it better. But. All right. Well, I want to add one other thing. Option that people have to on how to get by at least Bitcoin with an IRA.

 Mark Kohler: Ok, so I’m sure no one was Gemini option two is IRA/LLC.

 Mat Sorensen: Let’s see what option the IRA with crypto IRA account with the Gemini trading account linked to it, option to the the Self-direct at IRA with an IRA L.L.C.. Option three is these ETFs. People talk about these ETFs. All right. Did you was that rock star?

 Mark Kohler: Yeah, we’re doing some photo shoots over here. So if you’re on YouTube watching this, I’m posing with my rock star and just the right manner for our camera guy because rock star, we’re this close, dude. We’re going to have free rock stars for the rest of our life. It’s like Kramer on Seinfeld. You traded what.

 Mat Sorensen: Rock star spokespersons are like actual rock stars, like motocross racers, NASCAR racers and the tax lawyer accountant Mark Kohler.

 Mark Kohler: I carry a 50 cal in the trunk and the case of Rock Stars.

 Mat Sorensen: That could be an untapped demographic for them, actually. Yeah, OK. All right. So these ETFs are out there and you can buy these with an IRA. In fact, you use Directed IRA with us with the brokerage option added to it. And you can buy some of these ETFs. Now, I want to give a couple of cautionary points on why you may not want to buy this. First of all, it’s only Bitcoin so far that is available in these ETFs, the one that’s been around for the longest now. It’s only been a year or so is is greyscale. Here’s a problem with Greyscale. When you buy into their ETF, what they’re doing is they’re just going and buying Bitcoin, which is great. That’s what you want right there. That stock just owns bitcoin, but they have fees and an operating costs and they have a two percent management fee. So if you put one hundred grand and you’re really only getting ninety eight thousand and that’s a two percent management fee every year. So if you look at well, I have a one percent fee to buy, but then there’s only a $295 account fee. What am I better off doing? If you’re going to buy anything significant? You know, you’re probably not going to want to buy into the greyscale Bitcoin trust because it’s higher to just own in that fashion rather than to do it through your own Gemini trading account. OK, so that’s that’s one option is that ETF and again, you could do it here at Directed IRA. We don’t care to pick whatever option works for you. It doesn’t. You know, we’re frankly, we have all options covered. The other one out there that some people like. Well, what about Osprey now? Motley Fool did a pretty good article on this. If you go look up Grayscale versus Osprey, comparing these and some of the things people need to be aware of on these ETFs is Osprey will advertise. We have a 0.49%, you know, half a percent management fee essentially, and that’s way better than greyscale at two percent. But what is Osprey not? What do they have to disclose to you? If you read the fine print and this is what Motley Fool outlines, their net asset value is only like 70 percent of the value of, if you like, broke it down and sold all the shares of Osprey, you’d only get a 70 percent. And they sold all their Bitcoin and everyone has bought it. You get like seven, 70 cents on the dollar back and in dollars from what the Bitcoin is that they’re not buying one hundred percent Bitcoin with what goes in. And so there’s this net asset value inconsistency it Osprey that they’ve disclosed as part of how they’re going to operate it. And that’s really a downside in the world. Am I really buying into a fund that’s just buying bitcoin? Yes, but it’s not buying all Bitcoin. There’s something else going on there or the net asset value is off. And so just just look into that. And I think the Motley Fool article, if you just search for that Greyscale versus Osprey Motley Fool, there’s a good article that kind of gets into a little more detail on that. So now these are these assets are not on the Nasdaq or the New York Stock Exchange. These are OTC over the counter market shares that are a little more tricky to get. Not every broker dealer with IRA’s allows them for them, but we do at directed IRA. If you just use a regular Self-directed IRA with the brokerage option, you could get these ETFs. So there it is. That’s the three options, the Bitcoin ETFs that are out there. And I’m sure they’ll be more and more added over the years. The IRA/LLC if you want to hold the private keys or you want to buy crypto not on the Gemini exchange. You just otherwise want more control or flexibility to do other assets out of the LLC. And then, of course, the crypto IRA, which I think is probably the best fit for most people where we have an IRA that’s a specific crypto IRA here. It’s linked to and funds are Gemini trading account. Your IRA owns it. You’re in control as the trader on the Gemini trading account to do whatever you want. 365 24/7 to buy and sell crypto.

Mark Kohler: Ok, now I want if I can make I love at Mat. You’ve done a great job and so much hard work done over directed IRA. Many of you don’t realize the nights and hours and weekends that the team spent over there really being at the forefront of Custodian’s around the country with the lowest prices, the most user-friendly website. And you can always call and talk to someone, which is crazy. So I hope some people look at that now. I want to just give one big picture here, too, because I was just searching here while we were finishing up the show just to confirm again, RobinHood. Let’s talk about Robin Hood. It’s it is probably the 800 pound gorilla out there for young people and those that are just starting to begin trading. TD Ameritrade said. What happened? I thought we were the online source to trade and Robin Hood just, you know, just went past them. But here’s the thing. Robin Hood’s great. It’s simple. But you cannot have an IRA or Roth IRA at Robin Hood, so if you’re going to buy crypto again in your personal name, you might find that you’re Robinhood account is great little place to do it. They don’t have all the cryptocurrency, but they have three or four of the biggies. That’s great. And then you can switch over buy GameStop one week and buy the Etherium the next week, if that’s what you want to do. But this is a bigger bucket we’re talking about for the long term. We want all of our clients buy real estate in their own name and add their retirement account. We want them. Doing investing in their own name and their retirement account, we’re not saying it’s one or the other, it’s it’s both. And so be thinking about a Roth account if some you don’t know what a Roths about and how quickly they can grow and there tax free. Just YouTube, Kohler Roth, Kohler Roth IRA. I’ve got several videos that have almost a billion a million views on how to build a million dollar Roth IRA in this Bitcoin plays right into it, or I should say Bitcoin cryptocurrency plays right into it. So do a little research on that if you’re new to this Roth IRA IRA concept as well and how powerful they really are. But just realize that some of these big institutions like Robin Hood have a lot of money to spend on marketing. And you think it’s a one stop shop? It’s really not. You’ve got to dig a little deeper.

 Mat Sorensen: So, yeah, awesome. Well, you can go to DirectedIRA.com. Hate to be cels here. This is today’s podcast is brought to you by Directed IRA. This is the Directed IRA podcast. It’s OK, I guess that we have a page on cryptocurrency and if you go to the open account apps you’ll see the crypto apps there on the page. Just look for the ones called Crypto IRA or Crypto Roth IRA or Crypto HSA, Crypto Solok, whatever you want to do in terms of cryptocurrency for your account types. And again, as Mark said too, can set up appointments. You can talk to actual people here at the office on getting these accounts going. And the last thing I’ll say, which is just the reminder on the disclaimers, you know, we’re all about Self-directing and you charting your own course and finding your way. I think for me, it’s just as I invest my own retirement account and self-direct like I’m doing crypto, I’m doing real estate, I’m doing private lending, I’m doing a lot of these things is I like having that control them being the captain of my own ship and also having the satisfaction when it works right. And being active and involved in my retirement. You know, we like to say take control of your retirement. So that’s what we want you to do here. We don’t give investment advice or tell you what to do. We’re just like, here’s how to do it if you want to do it. And these types of assets, real estate, crypto, private companies, private lending, precious metals, you know, back to the old school, you know, the actual gold, you know, those are things you can do with an IRA. And we’re here to help if you want to use and get those assets in your retirement account.

Mark Kohler: I love it. Well, thanks again, Mat, and thank you, everybody. Please can subscribe. Give us a five-star rating if you feel so inclined and please share this podcast with others, you know, that would just benefit from this information. And we’ll see you next week on another episode of the directed IRA podcast.


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