What is a Bitcoin 401(k)?
This offering from Bitwage, Leading Retirement Solutions, and Kingdom Trust allows customers to acquire Bitcoin in a tax deferred retirement account. Savers will be able to add Bitcoin in with traditional retirement assets to their liking, or just stack sats.
Does Bitcoin qualify as an asset class that can be held in a 401(k)?
-In 2014, the IRS classified Bitcoin and other cryptocurrencies as property and is thus taxed on a capital gains basis in a similar fashion to real estate or gold. This has created the basis for IRA and 401(k) companies to hold cryptocurrency in tax-incentivized retirement accounts as a permissible investment similarly to precious metals. Companies have been storing cryptocurrency in tax-incentivized retirement accounts since 2015.
How do I set up a Bitcoin 401(k)?
-Please reach out to support@bitwage.com directly to get started.
-After your employer has created an account with the 401(k) administrator, Leading Retirement Solution, Bitwage helps you create a custodian account on Kingdom Trust, a US regulated qualified custodian. Once a 401(k) administration and custody account is created, the Bitcoin 401(k) is set up.
-Employees must set up their 401(k) Kingdom Trust custody accounts account through Bitwage. It is not possible for employees set up 401(k) accounts directly through Kingdom Trust.
What are the fees?
Bitwage charges 1.5% fee per trade, 1% loading fee and 5bps per month. The loading fee & 5bps are waived until 2022 for customers who start before 2021. Additional fees from the bitcoin custodian and 401k administrator will be based on the type of 401k plan being administered and the amount of assets under management.
Who is the 401(k) administrator?
-The 401(k) administrator is Leading Retirement Solutions (“LRS”). LRS specializes in offering alternative investments in 401(k) offerings. The team is made up of lawyers, certified administrators and consultants who provide retirement plan services, including custom plan design, administration, department of labor and IRS compliance, government reporting and recordkeeping. They enable companies to access over 24,000 traditional and alternative investment options for retirement plans. LRS has supported over 1000 clients in all 50 states.
Who is the Bitcoin custodian?
-The Bitcoin custodian is Kingdom Trust (“KT”). KT is an independent qualified custodian regulated by the South Dakota Division of Banking. They specialize in unique and innovative custody solutions for individual investors, investment sponsors, family offices, advisory firms, broker-dealers and various other investment platforms. They currently serve over 100,000 clients and have over $12BN in assets under custody. Bitcoin in your 401(k) cannot be held on a personal wallet.
Who is the Bitcoin Exchange?
-The Bitcoin exchange is Gemini. Gemini is a licensed digital asset exchange and custodian built for both individuals and institutions. The company is a New York trust company regulated by the New York Department of Financial Services (NYSDFS). Gemini has completed SOC 2 type 1 & type 2 examinations.
What are the different types of Bitcoin 401(k) contributions available?
-Employees can contribute into their 401(k) on a traditional, Roth or after-tax basis.
-A traditional contribution uses pre-tax dollars and defers taxes on the gains until withdrawal. A Roth contribution uses post-tax dollars, but can be withdrawn with no taxes on capital gains with a qualified distribution. An after-tax contribution uses post-tax dollars and defers taxes on the gains until withdrawal.
-Employers can provide employer matching and profit-sharing contributions.
-Employer matching contributions are contributions based on how much the employee contributes. A profit-sharing contribution is paid out regardless of the amount the employee contributes.
Can I invest in non-crypto assets with the 401(k)?
-Yes, you can. Our Bitcoin custodian, Kingdom Trust, can custody Bitcoin and USD directly. Our 401(k) administrative partner, Leading Retirement Solutions, offers 24,000 different investment options, such as traditional Vanguard mutual funds. You will have all of the options made available to you through your employer.
Can I deposit Bitcoin directly into the 401(k)?
-To comply with regulations, your employer must deposit USD into the 401(k). However, Bitwage can provide services that allow your employer to fund a deposit with Bitcoin, which will be converted into USD before deposited into the 401(k).
Can I withdraw Bitcoin directly from the 401(k)?
-To comply with regulations, you must withdraw USD from the 401(k). All 401(k) withdrawals will be mailed by check to employees. However, employees are free to buy and sell Bitcoin as well as purchase traditional assets inside of the 401(k).
Can I use employer contributions to buy Bitcoin in the 401(k)?
-Employers can provide employer matching and profit-sharing contributions. Those funds will then be converted into the assets of your choosing based on your typical investment allocation for contributions, including Bitcoin.
How can an employee buy or sell Bitcoin in the 401(k)?
-Based on the allocation preferences when an employee sets up their 401(k) distributions, the 401(k) administrator Leading Retirement Solutions will send the total amount of USD that will be converted into Bitcoin during that pay period. All of those funds will be automatically converted into Bitcoin at the Gemini exchange rate (which is the Gemini spot price + Gemini fee). You are able to change those allocations at any time by reaching out to Leading Retirement Solutions.
-If you want to sell or buy Bitcoin at a later point, email support@bitwage.com or log into your Kingdom Trust account and call the phone number they provide. All of the funds will be converted between Bitcoin and USD at the Gemini exchange rate (which is the Gemini spot price + Gemini fee).
How long does it take for me to receive Bitcoin into my 401(k) after payday?
-It typically takes 2-4 business days after payday for the USD to be deposited into Kingdom Trust. It typically takes another 2-4 business days for the USD to be converted into BTC.
How long does it take for a buy or sell order inside of the 401(k)?
-It typically takes 2-4 business days to process a buy or sell order inside of the 401(k).
Where can I find details regarding assets in the account?
-For details regarding the complete assets inside your 401(k), go to the online portal of the 401(k) administrator, Leading Retirement Solutions, at https://www.leadingretirement.com/
-For details regarding your cryptocurrency assets, please email support@bitwage.com or login at https://www.kingdomtrust.com/.
How do I move funds out of the Bitcoin 401(k) to invest in traditional assets?
-You can initiate a movement of funds from the Bitcoin 401(k) into traditional assets either from Bitwage by emailing support@bitwage.com or by contacting Leading Retirement Solution, the 401(k) administrator.
-Funds must first be converted into USD before a withdrawal can be processed.
How do I withdraw funds from the Bitcoin 401(k)?
-You can initiate a withdrawal of funds either from Bitwage by emailing support@bitwage.com or by contacting Leading Retirement Solution, the 401(k) administrator.
-Funds must first be converted into USD before a withdrawal can be processed.
Where can I learn more about 401(k)s?
-Email us at support@bitwage.com for a free 401(K) guide for employees.