How to save BIG on crypto taxes with iTrustCapital and a crypto IRA!
Thank you. So much for being here today were going to be talking about one of my absolute favorite strategies for saving on crypto taxes, something that really no one likes. So today, ive got jared feldman. The director of client experience at i trust capital, my go to place for retirement accounts related to crypto, to talk about that today. So jared thanks for being here thanks for having me happy to be here excellent excellent. So i ive ive talked about my itrust capital ira, where you basically youre in a tax advantage position when youre trading crypto right, youre, not accruing capital gains tax. When you you, you know youre day trading, youre moving into not a crypto. Can you give folks just a general idea of what the rules are around that why you might want to go with an ira to trade crypto if youre long in the market yeah? Absolutely i think, for anyone who is going along the digital asset, crypto journey they find themselves working in a coinbase, account a cracking account and then they also happen to have retirement assets, and it begs the question: well, can i put crypto inside of an ira, so They they go on, google, they search for it. They begin to see that its possible, but its almost surreal in a lot of ways. It comes completely out of left field being able to trade tax, deferred tax, sheltered in your ira with crypto. So i like to talk about the concept of an alternative asset ira.
The fact that this is something that wealthy folks with family offices have been doing for centuries or probably decades, the idea of taking an alternative asset private stock, whatever it may be, wrapping it into an ira, protecting it there and then being able to grow that asset Crypto digital assets, which makes it so unique, is that this is a asset thats available at a much earlier stage of the adoption curve. So regular retail folks, like you and me, are able to create an alternative asset ira and get access to an asset that normally only the uber wealthy and hedge funds and accredited investors would be able to get access to so thats, really the the whole meaning and And purpose behind it, weve created the ability for clients to be able to take their iras, whether it be a traditional or a roth, and to be able to onboard it onto our platform to be able to invest directly in digital assets through their ira. One thing that ill touch on as well is why someone wouldnt want to do this as opposed to just trading in their in their regular account and their brokerage account. Coinbase kraken et cetera, lets talk about a trade. If someone does a trade, because they think that theyre selling the top potentially in their regular account, their capital gains are exposed, whether it be long term short term capital gains. If you make that same trade with the same asset in your ira, youre tax, sheltered.
So you can defer on all taxes until you eventually take a withdrawal, so thats. The biggest difference is the deferral on the capital gains and being completely sheltered from capital gains. While you make those trades during the life of the individual retirement account yeah, so thats thats, one of the things that i think gets people in trouble. A lot when youre trading crypto is you your crypto to crypto trades are taxable events and oftentimes when youre, making swaps from one crypto to another and youre, not saving and putting some aside for taxes and what you ended up in goes down. You now maybe dont have enough money to even cover your taxes on the original event since thats how people get underwater really fast, um in when crypto trading. So here you know correct me if im wrong, but youre in this retirement account where those crypto crypto trades are not incurring you, your capital, you know these capital gains taxes, of course, capital gains or capital losses. I suppose also factor into play and youre really only going to get taxed when you start making disbursements when you, when you retire precisely so the the traditional and the roth are the main two types of iras: the similarities in that theyre, both tax, sheltered right. So, while the funds are in your ira, whether its a traditional or a roth youre, completely sheltered from not just capital gains taxes, but any sort of taxes. So when our clients are going to be able to get interest yield on their assets, theyre going to be able to stake their assets at some point as well.
Those taxes are going to be interest, bearing taxes that normally would be taxed at ordinary income, also going to be sheltered inside the ira. Its the reason why people own fixed income, like bonds inside of their ira, because you get to defer on all the taxes from the interest payments on those bonds, so its a very similar concept with crypto. You protect it inside the account the traditional ira, which is most of the time what people have when they have like a 401k with an old job, its a traditional account. So it comes out taxable its going to grow tax, sheltered its going to come out. Taxable people hate to hear that because they dont want taxes at any point. It is just an unfortunate reality, but something that we do in terms of paying taxes and and something thats, just a very natural thing, and we have to take it into account and, and that does get taxed in the traditional ira. The roth ira comes out tax. Free, so we also have clients who are interested in taking their traditional, converting it into a roth, which is more of a complicated financial planning strategy, but its something that we can execute for people as well awesome, so you can help there in making that decision, i Mean for me, i did sort of the traditional pre tax rollover to a pre tax, traditional ira, and so it was very clear, very easy to do.
You know, but someone who might like what are the decision criteria for someone like if they wanted to go. That roth route pay taxes now and then get the money out tax free, later yeah im more than happy to kind of dive into it. I can give the pros and the cons cant give like financial advice. Unfortunately, and we normally dont, we dont walk our clients through it from like um from our idea opportunity standpoint, its more of something people come to us and theyre like hey. Why would i want to do this? Someone mentioned that i should do a conversion. What are my options along that? So, if you have a traditional, its going to continue to grow tax, sheltered it comes out taxable for people who are digital asset investors. They take a look at that scenario and theyre very bullish, sometimes too bullish for their own good. But what they want to do is they feel well. Crypto is going to go up and i know its going to go up so why wouldnt? I want to pay the taxes now to avoid paying the taxes in the future, so thats the strategy and rationale behind a conversion from a traditional into a roth, its for people who want to be able to pay the taxes now because they think that their accounts Going to grow and ultimately itll be tax free later, but theres a flip side to that. What a lot of people dont realize when they do a conversion from a traditional to a roth is because youre paying taxes.
Now you deprive yourself of potentially investing those assets. So if you take a look at something like solana, which, for better or for worse, has gone up over the last five to six weeks, if someone did a conversion and ended up paying for part of that conversion out of their pocket, they might deprive themselves from Being able to invest in something like that which might grow over the next 10 years and surpass the taxes what they would have had to pay in the first place, so theres. So many considerations that people want to take into account which is important, that they talk with their financial advisor when theyre doing that sort of consequential move makes sense. So could someone could someone that maybe has? Maybe you have two 401ks from an old job, and can you create one traditional one, roth ira and sort of split the difference to sort of hedge against both of those scenarios? Yeah i mean were getting into real kind of deep financial planning concepts here when i used to be in the financial planning space and we used to run monte carlo analyses for people, meaning we would run their retirement plan through hundreds of different projections and come back With whats the percentage of them being successful, oftentimes will run hey. Are you going to be more successful or have a higher chance of success with a roth or a traditional? The answer is always both, and the reason is is because you want to be able to draw in retirement from your traditional in years when youre in a lower income tax bracket, but lets say youre investing in things like crypto, outside your ira or, if youre investing In real estate and youre 65, you end up selling some real estate because you waited for 20 years now.
Youre gon na have all these taxes, but you still need money for other working capital needs. You can take from your roth because thats tax free so years where youre in a higher income tax bracket you take from your roth years, youre in a lower income tax bracket. You pull from the traditional so having multiple buckets is always the best option for retirement. Amazing, amazing, i mean – and this is good learning for me right – because this is something that ive been thinking about, and i havent executed on is is maybe also having a roth set up, that i can contribute to you know in the short term and and grow That over time as well, so you know for someone whos listening to this and might want to get involved if youre in the us definitely check out the link in the description below in the pinned comment: um theres, an affiliate link, i really love, i trust capital. I use them putting my money where my mouth is: ive been using them for a while. So if youre interested – and you want to give it a try, feel free. You have folks like jared who are there to help you and to get up to speed but jared. My last question, for you is in terms of i guess in terms of the path forward, for i trust you mentioned this earlier. You know right now. You can trade and invest in a wide variety of cryptocurrencies, and and since i started with the platform theres like dozens of assets that have been added now, you know like im, always impressed to how fast youre adding new assets faster than many exchanges.
To be honest, whats whats next, its its like staking and yield opportunities – maybe even you know, trickling into like nfts and defy like. Can you give me some information there? Yeah? Absolutely i mean those are all those are all really exciting things ill touch on nfts. First, just because its so low hanging fruit, everyone uh loves nfts right now. My profile picture is of a lobby lobster. We have a bunch of lobby lobster enthusiasts here, so its definitely something that that were into. But what i can tell you is that i trust capital is just not going to be involved with with nfts in your retirement account, purely because the irs stipulates that collectibles just dont go into an ira like you, cant own, a painting or or any sort of Artwork or collectible in the ira um, the the irs has a mandate around gold uh physical assets like real estate um now now crypto is, is kind of that that new um hot product in in in the ira space but nfts, unfortunately, are just um are just Not going to be a thing because of that art collectible nature were going to be launching an app which is really exciting. Weve been working really hard on that thats going to be coming, hopefully potentially within 30 to 60 days, well, be launching it as a beta to some some clients. Probably early october now were going to be doing, stop loss orders, which is going to be something thatll.
Thatll be coming because our clients really really want to be able to access trading when theyre sleeping right, if theyre, if theyre going out to get lunch or if theyre, if theyre doing something, and then the price happens to go down at that point, they want a Better chance of being able to execute that trade and getting that price, even if its, not the perfect price right. Ultimately, they just want to be able to execute a market order when theyre not at their computer thats, going to be something that um were going to be delivering people ask about that. All the time yield and staking is another one. You know when it comes to getting yield on your crypto assets. I think a lot of people thought it would be straightforward when it comes to a regulatory standpoint. Now we see this week with the sec and coinbase things are getting a little bit spicy, and it makes us feel vindicated to the extent that this is why we dont rush into anything as a firm were an ira provider. We have to be more methodical. We have to take things a little bit slower when it comes to implementing these things were an active talks for both right. So from a technological implementation side. We we have our our eye on the ball when it comes to yield and staking its just, not an overnight thing when it comes to working out the tech implementation side, as well as the compliance side.
So these are things that we take very seriously, but we also have a culture of kind of under promising over delivering um. So we want to do those things were going to be aiming for next quarter, if not early 2022, particularly for staking and those are the those are. The latest updates that i have im trying to think off the top of my head. If theres, anything else that we have coming as well were going to be continuing to add digital assets um and were going to be continuing to responding to client requests like adding on features like putting your basis on the dashboard, giving you more metrics to be able To look at as well excellent yeah i can you know i can attest personally that from you know from the time that i started using itrest capital for myself, theres been so many different features and things um theres, definitely voice of the customer there, where its, like People are asking for a feature you guys start working on it, so definitely really appreciate that, from the perspective of you know, staking and yield its definitely the wild west right now, in terms of what the you know, the regulatory posture is there isnt, really any clarity. You know so for something like this, which is just by nature very long term like an ira, its a retirement account. You need that to be there down the line, and – and so i definitely appreciate too the you know the the care thats going into to doing that and doing it right, making sure that theres.
No, you know unforeseen trap doors that that uh, i trust and subsequently their customers might fall into on that front. Yeah absolutely, and we also, whenever we launch something we want for people to be able to look under the hood and be able to see hey. This is actually is what they say: it is im actually extracting efficient capital and creating tax efficiency through this product, not necessarily oh, taking a look at that that thats just for for them to make more money right right. That makes sense so for someone who wants to get involved, someone who wants to get started. Of course you can use the link in the description we already mentioned that um whats the process like in the very beginning. How can folks get some help? That sort of thing yeah for sure so theres really three types of people who open an account with us, someone that has a 401k with an old job that they want to roll over into an ira, someone that has an ira that theyve been funding for years. Whether it be traditional or roth, and then people who want to put new cash as a contribution into an ira, we even do sep iras for self employed individuals, sep simplified employer pensions, so we can help out for folks that need that you go on our website. You fill out an application takes about 10 minutes. You give us all your info, like your beneficiaries and any other data for the transit action.
We end up sending you a docusign its like just digital paperwork. You do a few clicks, you establish the account and then we send you funding instructions. So if its a 401k or an ira or a cash contribution, depending on that well kind of um, well push out the appropriate funding instructions from there. Nice roll it out easy. As can be, mine was really easy. Can i can say that for sure it took really didnt take all that long. The longest part is just waiting for funds to land and uh, relying on the the traditional systems to do their thing. Uh, you know for for checks to clear and things like that uh, but jared thanks so much for taking the time to come and join. I think this is a really good place. You know its helpful for me even and ive been doing this for a little while um, but definitely helpful for someone whos coming into this space, trying to explore ways to save on taxes and just plan for their future. If theyre theyre long on this new asset class, so thank you so much yeah thanks for having me, it was great to be here absolutely thank you so much to everyone whos watching.