Crypto Storage3 Replies
August 12, 2022 at 9:35 am
When purchasing a cold storage device, like a Trezor, to store BTC or ETH, does the storage device need to be purchased with your Solo 401k funds? Also, can you store the crypto in your own safe or does it need to be stored in a safe deposit box opened up in the name of the solo 401k?
Thanks for your help.
Top ForumsSolo 401k, Solo 401k ContributionsAugust 16, 2022 at 2:46 am
Thanks for posting your good questions!
1) This confirms that a physical crypto wallet that will be used to store crypto held in a Solo 401k must be purchased with Solo 401k funds.
2) With regards to your storage question:
First, what is clear from the McNulty decision (and which was already widely understood) is that one cannot store gold coins owned by one’s retirement account at one’s home.
While the Tax Court did not address cryptocurrency, there is no reason to think that the IRS would take a different view with respect to the storage of cryptocurrency held in one’s self-directed solo 401k or IRA.
Therefore, options for storing cryptocurrency held in one’s retirement account do not include such person’s home or personal residence such as storing the private keys on a cold wallet held in a safety deposit box at home.
It would be acceptable, however, to store the private keys on a cold wallet held in a safety deposit box associated with an account at a bank in the name of one’s Solo 401k (or LLC owned by your IRA).
For more storage options, please see the webinar and slides on the following page: https://www.mysolo401k.net/checkbook-control-ira-llc-recent-u-s-tax-court-case-mcnulty-v-commissioner-157-t-c-no-10-nov-18-2021/
August 16, 2022 at 6:49 am@george
Thank you so much for the details.
Well shoot….I currently have the crypto stored in a Trezor that I personally purchased. What are the best next steps for me? Obviously I need to purchase a Cold Storage device and transfer funds to it but if the IRS were to audit and see that I initially stored my crypto in a device I personally purchased, will they still deem this a problem?
In other words, can I fix this and what steps do I need to take to fix it?
Top ForumsSolo 401k, Solo 401k ContributionsAugust 16, 2022 at 7:10 am
While it is of course difficult to predict the response of the regulator (especially given that investing in crypto is a new area with relatively small amount of specific formal guidance), storing the crypto in accordance with the above is a prudent course of action.
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