ForumsCryptocurrencyHow to stay compliant with offline crypto wallets?

Forums Cryptocurrency How to stay compliant with offline crypto wallets?

  • How to stay compliant with offline crypto wallets?

    4 Replies
  • Top SubjectCryptocurrency
    Top ForumsCryptocurrency

    Nicholas Stivachtis
    Top SubjectCryptocurrency

    January 23, 2022 at 9:16 am

    I have a few questions about offline wallets. I understand they need to be in a holding facility paid by the s401k trust and that the hw wallet has to be paid for by the s401k trust.

    As far as paying for the safe deposit box and the hw wallet: I assume I can use the checking account associated with my s401k that is tied to the investment account?

    As far as buying the wallet goes, the manufacturer of the one i am looking at doesn’t accept checks as payment. Due to the nature of the product I’d like to buy it direct from them vs a 3rd party to reduce risk of purchasing a compromised hw wallet. Can i purchase the wallet with my own funds, then immediately reimburse myself from the s401k amount? If not what are my other options if they don’t accept a check?

    As far as backing up the seed words goes: how does one stay compliant with keeping a copy? The seed words can recreate the wallet and access all funds without the hw wallet. Technically someone could plug those seed words into a wallet at any time and trade crypto, even with the hw wallet being in a safe deposit box.

    Backing up the seed words in whole in any 1 location is dangerous, even if it is a safety deposit box. Deposit boxes do occasionally get mistakenly drilled by the bank. For example: My personal wallet seed words are currently backed up by having 2/3 of them in 3 different locations, such that you only need any 2 copies to recreate the wallet. Ex: 1:(ab_), 2:(a_c), 3:(_bc). so if i have any of those 2 pages i have all my seed words. Maybe 1 is kept at home in a safe, another at a trusted friend or relative’s, and a 3rd in a safe deposit box. Would this be compliant for a s401k? If not how can one stay compliant while keeping a backup copy?

    Nicholas Stivachtis
  • George Blower

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    George Blower

    George Blower

    Top SubjectSolo 401k,Solo 401k Contributions

    January 25, 2022 at 5:14 am

    1) This confirms that it is acceptable to store cryptocurrency owned by your solo 401k in a hardware wallet stored in a safety deposit box associated with your Solo 401k checking account.

    2) It would be acceptable to pay for the expense of such hardware wallet with a debit card associated with your solo 401k bank account.

    3) Physical storage of the seed words need to be in a safety deposit box associated with the solo 401k (note: it is acceptable to ope multiple safety deposit boxes for your solo 401k to address the issue that you describe below).

  • Top SubjectCryptocurrency
    Top ForumsCryptocurrency

    Nicholas Stivachtis
    Top SubjectCryptocurrency

    January 26, 2022 at 1:07 pm

    Thank you. In regards to a debit card. The only account associated with my solo4-1k is with fidelity and i do have a check book for the account. However I contacted them and non-prototype accounts are not eligible for debit cards. How would i go about getting a debit card? Would I have to open an account with a different financial institution?

    Nicholas Stivachtis
  • James D.

    Top SubjectCryptocurrency,Solo 401k Bank Account
    Top ForumsCryptocurrency, Solo 401k Bank Account

    James D.

    James D.

    Top SubjectCryptocurrency,Solo 401k Bank Account

    March 23, 2022 at 7:00 am

    Here is the problem with all of this. In order to make a transaction you have to take the hardware or other wallet to a location where you can have privacy such as your home or business. Also when you put something in a safe deposit box there is no way for you to prove that you always stored it in the box. You could just make a visit to the box without putting it in.

    So the IRS can always say you did not prove you always had it in the safety deposit box.

    Just like they always do, they have created rules that they can always say you did not follow, and so they can tax you if they want no matter what hoops you jump thru.

    James D.

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