A crypto IRA can lose value when the asset price falls. Before moving retirement savings, look at what a loss would mean for your withdrawal plans, who controls the assets, and how quickly you could sell.
Start with the loss you could absorb
Suppose you have $100,000 in a crypto IRA. A 50% drop leaves $50,000. From there, the account needs a 100% gain to return to $100,000, before fees. If you withdraw $10,000 after the drop, the remaining $40,000 needs a 150% gain to get back to the original balance, assuming no additional deposits or withdrawals. These figures illustrate the math. They are not forecasts.
Get four answers in writing
Custody. Who is the IRA custodian, and who holds the crypto? Ask what happens if the trading platform or storage provider stops operating.
Access to cash. Ask how to sell, how long settlement and cash delivery typically take, and what happens if trading or withdrawals are suspended.
Total fees. Request an itemized fee schedule that covers account administration, custody, trade fees, spreads, and closing or transfer fees. Ask for the total dollar cost at the balance you are considering.
Independent verification. Check the custodian and promoter separately. The SEC, NASAA, and FINRA warn that self-directed IRA custodians generally do not verify the legitimacy of investments or the accuracy of information supplied by promoters.
Check the effect on your retirement plan
Look at the allocation as a share of all your retirement savings, then identify which assets would fund near-term withdrawals if crypto prices fell sharply. This checklist is for general education. A tax or investment professional can help assess how a move would affect your own accounts.
Sources Investor.gov alert on self-directed IRAs and Investor.gov overview of crypto asset-related investments.