On Nov 1, the IRS announced, “The limit on annual contributions to an IRA increased to $7,000, up from $6,500,” for the 2024 tax year. The 401(k) limit also went up by $500 to $23,000.

That means Bitcoin investors who are saving for retirement with a self-directed Bitcoin IRA can now contribute $500 more next year.

Bitcoin IRA Contributions Are Tax Deductible

Saver investors looking to hedge inflation, diversify their portfolio, or add a risk-reward, high-growth tech play to their strategy also get a tax benefit with a Bitcoin IRA or 401(k) account.

According to Forbes Advisor:

“A Bitcoin IRA can provide you with the tax advantages of traditional and Roth IRAs.”

The main advantage of an IRA is taxpayers can deduct their contribution from the amount of their taxable income.

Jay Blaskey, head of sales at BitIRA, says:

“Under the umbrella of self-directed IRAs, Americans have the option to purchase a wide variety of alternative assets.”

That includes gold, real estate, and cryptocurrencies like Bitcoin.

Some Employers Offer Bitcoin 401(k) Accounts

Some 401(k) savers may also have the option to contribute Bitcoin to their 401(k) and get a tax benefit. That is if their employer allows it and works with a pension fund that provides digital asset services. Otherwise, they have to use a self-directed Bitcoin IRA to get a tax deduction.

Fidelity Investments, for example, works with 23,000 employers to maintain Bitcoin 401(k) retirement accounts. Its Digital Assets arm provides digital custody services, allowing 401(k) contributors to save for retirement using Bitcoin.

Investors do have an obligation to report capital gains from any cryptocurrency holdings to the IRS. The Internal Revenue Service is ramping up enforcement this year on unreported income from digital assets.

The post Bitcoin IRA Savers Have New IRS Contribution Limits in 2024 appeared first on CryptoPotato.

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Filed under: Bitcoin - @ November 25, 2023 4:47 pm