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storing a crypto hardware wallet in a safety deposit box
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Top ForumsSolo 401k Bank Account, Cryptocurrency I have seen some comments on how to do this properly, and it seems to have evolved from last year when I asked the question. I am going to get a safety deposit box locally. I need to open a checking there to do so since my local business bank does not offer boxes any longer and my solo 401K bank is across the country.
Questions:
Do I have to put the safety deposit box in the name of the Solo 401K Trust?
Do I have buy another Hardware wallet paid for with my 401K trust account? Since I did not know this earlier, can I sell myself the existing hardware wallet to my trust account using a check or debit card made out to my LLC?
Do I have to store the key to the wallet in the same box, or get another one for safety sake?
The first time I asked about this all I was told is I needed to put the wallet in a safety deposit box, but nothing else.
I also saw a comment that it would be impossible to prove that you actually kept the wallet in the box.
This is difficult to follow and makes keeping ready access to my own investments problematic, especially if there were to be a national bank failure.
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Top ForumsSolo 401k, Solo 401k Contributions
Thank you for your post!
1) First, please see this post that contains charts that provide a good summary of the crypto IRA and crypto solo 401k storage options. Please note that our view has been consistent and only confirmed by the McNulty decision discussed in that same post.
2) If one chooses to store their Crypto Solo 401k investments in a safe deposit box, it would need to be a safety deposit box associated with a bank account in the name of the Solo 401k.
3) If one chooses to store their Crypto Solo 401k investments in a physical wallet, it would need to be a separate physical hardware wallet (i.e. no commingling with personal crypto investments) and which wallet is purchased with Solo 401k funds. No – one may not sell (or otherwise transfer) a hardware wallet that is owned personally (or through an entity that one owns personally) to one’s Solo 401k.
4) This confirms that it would be acceptable to store Crypto Solo 401k investments across multiple safety deposit boxes as alluded to in your post.
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Top ForumsSolo 401k Contributions, Transfers/Rollovers
Just looking for additional insight on this topic. In the McNulty decision, the coins were actually being stored in the home. Cryptocurrency coin is always held and live on the blockchain. A physical wallet/ledger is simply your private key that allows access to it. So its almost like the recommendation is to keep the key to access your safety deposit box in a safety deposit box.
I guess the specific rules for this are still unclear, but as an abundance of caution the current advice is to store the cold wallet in a safety deposit box with the name of your trust for the uncertainty of regulation?
My bank account associated with my trust is not close to me, I had issues trying to open a local bank account associated with my trust. Do you have any recommendations in this case?
Also, if you wanted to change your investment/position quickly, this requirement makes it a bit challenging.
Thank you in advance for any other help on this topic.
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Top ForumsSolo 401k, Solo 401k Contributions
Thank you for your post
1) First, it is important to recognize that cryptocurrency is a relatively new investment class and the the regulators always trail the market. As such, one is left to make reasoned conclusions based on principles applied in other contexts (e.g. such as precious metals which is the issue considered in the McNulty case).
2) While there may be a lack of specific regulatory guidance on the question of storage of the crypto private keys for one’s Solo 401k crypto investments, there is no reason to anticipate that the regulaors will allow one will be able to store the private keys on a private wallet stored in one’s private residence (and the McNulty decision only confirms the same).
3) As far as alternative storage options, an acceptable option would be to store the private keys on a custodial wallet associated with an account in the name of the Solo 401k. See 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/
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