Are you tired of the same old retirement plans? Want to try something new and potentially more lucrative? Could a Bitcoin-based 401(k) be a viable alternative? Despite skepticism in the past, it’s worth considering cryptocurrency as a serious option for long-term financial planning. With its potential for high returns and low fees, could Bitcoin very well replace traditional retirement plans?
This was one of the subjects of discussion at the Consensus 2023 event that David Ramirez, CEO of ForUsAll, John Haar, Managing Director, Swan Bitcoin; and George Kaloudis, Senior Research Analyst, CoinDesk were in attendance.
For the CEO, using Bitcoin for an IRA or 401K is a better option than what is available today. ForUsAll is a US-based organization that provides modern 401(k) services that include access to crypto, financial wellness, low fees, and more.
A 401(k) plan is a retirement savings account that allows earners to save money from their paychecks before or after taxes are taken out. There are two main types of 401(k) plans: traditional and Roth. With a traditional 401(k), the owner contributes pre-tax money, which means that they don’t have to pay taxes on it until they withdraw it in retirement. With a Roth 401(k), the owner contributes after-tax money, but they don’t have to pay taxes on it when they withdraw it in retirement.
An individual retirement account (IRA) is a tax-advantaged retirement savings account that allows individuals to save money for retirement. There are two main types of IRAs: traditional IRAs and Roth IRAs.
Traditional IRAs allow you to deduct contributions from your taxable income in the year that you make them, while Roth IRAs do not allow you to deduct contributions from your taxable income. The difference between an IRA and a 401(k) is that the former is done by the individual, while the latter is initiated by an employer.
Tax-free crypto investment
David said that the first reason to encourage this new kind of retirement plan is because of the “tax-free crypto investing forever with Roth dollars.”
This means that account owners can invest with crypto in their retirement accounts without the need for paying tax.
Another reason he mentioned was that crypto-based retirement plans can help lower portfolio risk in the event of volatility in the market. He also added that the assurance in the current social security system to provide retirement capital is very low, therefore, each person should take responsibility for looking elsewhere for a better option.
“It’s our responsibility to save for our retirement. We ought to have the freedom of choice to invest how we see fit to get there,” he added.