Bitcoin in a Roth IRA (US); a way to catch up or actually retire later in life

This is just a PSA, advice on finances, not professional help, for anyone who doesn't understand how powerful a Roth IRA is with Bitcoin.

Let me briefly explain how this financial tool is top tier for anyone who doesn't understand any type of 101 on Roth IRAs. You can make a lot of money through a Roth IRA and therefore the government has put a lot of restrictions on this tool.

A Roth IRA is a financial account you can contribute to over the course of a year up to a specific limit, which is $7000 for anyone under 50, and up to $8000 for people over 50 as of 2024.

There is also a limit on your income. If you make over $161,000 as a single filer, or over $228,000 if you file jointly with a spouse. If you are over these income amounts then you cannot contribute directly to a Roth IRA.

Lastly, your contributions to a Roth IRA cannot be more than your earned income. Meaning having some sort of income at some point during the year is necessary.

What are the time limits on a Roth IRA? 5 years after initial contribution or 59 1/2. Any withdrawals before that have penalties, AKA essentially taxes.

So why put $7000 into a Roth IRA to only withdraw much later in life? Because you, generally, are paying taxes on the money put into the account and DO NOT pay taxes on the profits when you withdraw past the time limits.

Example: you contribute $5k a year, for 10 years, to a Roth IRA, bringing the total to $50k contributions. You leave it there growing until you turn 59 1/2 and during that time it 10x to $500k. You can withdraw those gains without paying taxes on those gains, legally. No worrying about the IRS hunting you down years and years later, or being audited and having to do a bunch of maneuvers to avoids fines or jail time.

Why you would do this comes down to a simple question: do you believe you'll be paying more taxes now, or more taxes later in life? I foresee most governments taxing their citizens more and more over the decades, USA included. So pay the taxes now, not later. Make those gains tax-free.

Currently you can open Roth IRAs with actual Bitcoin and crypto, or with Bitcoin ETFs, or with Bitcoin adjacent companies like Cleanspark, Riot, or Microstrategy. Bitcoin is averaging, over time, gains of roughly 140% per year, and is likely to continue massive gains for years and years to come. In 10-40 years it is possible Bitcoin could be worth magnitudes higher than now and if you had gains in a Roth IRA you would legally be able to obtain those gains with no tax penalty.

Could things change years from now? Possibly, unfortunately. But the government is not likely to change the Roth IRA too drastically any time soon, or be able to change it completely all at once.

If I made any mistakes or mistyped something please correct me. For those who see this and think "that does sound good" ... yes, yes it is. This is a long-term financial tool, not a 'make money quick' tool. Use it as intended and maybe 10, 20 years from now you'll be able to appreciate how much is sitting in your Roth IRA and be thankful you have a nest egg for later in life/when you retire.

Lastly, there are a few small details that you should always explore when investing, for example, you can buy the ETFs on Fidelity but not Vanguard, or you would want to setup a Roth IRA where you DO have control of the investments which is the bulk of them but some financial institutions take control, etc....