As waves of baby boomers reach retirement and have the option of moving their 401ks to IRAs — along with job changers who may do the same — the diverse investment choices allowed by Individual Retirement Accounts come into play.

Many of these retiring and job changing investors are now including Bitcoin in their IRA portfolios, and obviously our investment experts at Crypto.IQ think that’s a good idea because of our strong belief in Bitcoin’s fundamentals. But we also think it’s important to talk about best practices the investor must adopt when dealing with the hordes of companies cropping up to tap this market.

A significant number are out to make a killing, collecting exorbitant fees — often between 10 and 25 percent — on investments that typically cost one or two percent to get into. Some of these firms have much darker, even criminal designs, owing to the fact that whoever has the private keys to Bitcoin owns the Bitcoin. 

As we’ve said many times and will continue to say, one of the most important lessons for newcomers to cryptocurrency is that they must hold the private keys to their own crypto.

Adam Bergman, a tax attorney, author of six books on self-directed retirement plans and a partner at IRA Financial Group, a company that helps investors with the administration of their IRAs, said Bitcoin IRAs are increasingly popular thanks to news stories and a growing awareness of Bitcoin. But he warns that investors must deeply scrutinize the companies that want their business.

Along with tracking the fees they charge, Bergman said even more important is knowing who will be the custodian of the investor’s private keys. Many brokers collect money from the investor to buy and sell their crypto, all while being custodian of the investor’s private keys.

“The concern is do you own the crypto?” Bergman said. “And what happens If the investor wants to buy or sell, and their broker is not available?”

Most brokers keep banker’s hours when crypto is a global, 24/7 marketplace. 

Bergman said his firm takes a much lighter approach, making sure for a small annual fee that the account is set up and maintained properly, that the investor’s Bitcoin wallet is functional, and that their accounts on relevant exchanges are up and running. They leave the actual investment decisions to the investors. 

“Clients who understand cryptocurrency want control,” Bergman said. “They control the wallet. They decide when to buy and sell. That seems to be the safest approach.”