Choice IRA by Kingdom Trust has burst onto the crypto scene with a zero-fee, self-directed IRA. In this Choice IRA review, we’ll go over the basics of the account, explain the details of how it works, outline why Choice is able to offer such a low-cost option and much more.
Choice IRA by Kingdom Trust stands out for its low fees for digital assets in the self-directed IRA space. The company has a limited track record, but has grown fast thanks to partnerships with top crypto influencers. Their free plan has no setup or monthly fees, and the maximum trading fee for digital assets over $100 is 1.49%. Any interest earned on your digital assets, which Choice keeps, offsets the cost of custody on their free plan. You can also invest in traditional assets like stocks and ETFs.
- A low-fee, self-directed IRA.
- Invest in traditional assets and cryptocurrencies with a single account.
- Offers a wide range of cryptos (not just Bitcoin).
- The company has a limited track record.
- On the free plan, Choice earns interest on your holdings, which it keeps to offset its costs. Your funds, however, are not insured, which opens them up to the various risks within the crypto lending space.
- The free plan does not have insurance.
7 Things to Know About Choice IRA Before Signing Up
- You can roll over an existing IRA or fund an IRA from scratch, keeping in mind that there are both income and contribution limits for IRA accounts. You cannot roll over existing crypto holdings without liquidating them to cash.
- You can invest in both traditional and alternative asset classes with Choice IRA. For traditional assets, like stocks and ETFs, you’ll place trades through Interactive Brokers. Cryptocurrencies are traded through Kraken.
- Not every coin on Kraken is available. Kraken offers nearly 200 coins, but only 25 of those are currently offered through Choice.
- You cannot earn interest on your crypto. This is a feature that’s anticipated, but which has not yet been released.
- The no-annual-fee “In Motion” plan is not covered by Kingdom Trust insurance. This is a reason to go with one of the higher-priced plans, which incur a 1% annual fee for enhanced security.
- If you’re on the free plan, Choice makes money by lending out your digital assets. CoinShares manages the funds for Choice. If you’re not comfortable with the risks associated with that practice, you have the option of holding your private keys.
Choice IRA: Company Overview
Normal IRAs — such as those issued by major financial institutions like Vanguard — generally exclude alternative asset classes and limit you to investing in traditional assets like stocks, bonds, cash and mutual funds. With a self-directed IRA from Choice, you can branch into alternative investments like cryptocurrencies.
Since their inception a little more than a decade ago, cryptocurrencies have proven to be a volatile asset class. So at first, it seems like they would be a poor choice for a retirement account. However, that volatility can also run to the upside and generate huge returns over time.
As long as the rest of your retirement portfolio is properly allocated, mixing in a limited amount of cryptocurrency may offer an opportunity to capitalize on significant price movements without risking the rest of your retirement savings.
Note: My personal rule is that no more than 10% of my investable assets can be in risky assets, including individual stocks.
You get the same tax benefits with an SDIRA as with a traditional IRA: contributions are tax-deductible and withdrawals during retirement are taxed as ordinary income. You can also open a Roth SDIRA, where you contribute after-tax dollars. However, with this type of account, qualified withdrawals in retirement are tax-free.
IRAs have income limits (which vary depending on your tax filing status, but start at $144,000 for single tax filers) and contribution limits ($6,000 if you’re under 50). You can learn more about the benefits and drawbacks of different account types in my guide to the difference between Roth and traditional IRAs.
Note: When investing in risky assets within my retirement plan, my preference is a Roth account, because it will allow me to avoid a huge tax bill should those assets surge in value.
History of Choice IRA and Kingdom Trust
Kingdom Trust is a financial asset custodian specializing in self-directed IRAs. Some of the asset types Kingdom Trust works with include private real estate holdings, precious metals and private companies. The firm has been around since 2009 and holds over 10 billion client assets.
This means they hold on to these alternative assets for safekeeping on behalf of investors. They are a “qualified custodian” as defined by the SEC.
In 2020, Kingdom Trust launched the Choice brand, to provide individuals an easier way to own cryptocurrencies inside a self-directed IRA. In 2021, Kingdom Trust decided to rebrand its entire business to the Choice brand. As of August 2022, that rebrand is still in progress. Legally, Choice is still Kingdom Trust Company, and all assets are titled under this name.
At the time of publication, Kingdom Trust’s CEO is Ryan Radloff. Radloff also co-founded and led CoinShares, a digital asset investment strategy firm. CoinShares is the firm that manages the crypto lending side for Choice.
How Choice IRAs Work
Choice IRAs can include a mix of traditional assets and alternative investments, such as mutual fund and ETF shares, cryptocurrencies, precious metals and stocks.
Cryptocurrency trading occurs through Kraken. Currently, Kraken has nearly 200 cryptocurrencies available to buy and trade. However, just because the coin is available on Kraken doesn’t mean it’s available to trade on Choice.
Here’s the official list of cryptocurrencies available:
|BAT||Basic Attention Token|
Setting Up a Choice IRA Account
It took me 15 minutes from start to finish to open an account with Choice (without making a deposit).
Once you enter your email address and create a password, you’ll be asked to enable two-factor authentication. Then, you’ll need to enter basic contact information, your Social Security number and your driver’s license number, and upload a picture of your license.
Once you’re finished setting up your account, you’ll get access to your investment dashboard.
There are two options for getting funds into your account: you can make a direct cash contribution or roll over an existing IRA or 401(k).
Choice IRAs Fees
Every Choice IRA plan charges a tiered fee schedule on digital asset trades.
|Trade Size||Fee (Per Trade)|
|$50 – $99.99||$1.49|
|$100 – $249,999.99||1.49%|
|$250,000 – $499,999.99||1.25%|
Traditional asset trades, such as individual stocks, are executed through Interactive Brokers. Choice does not charge fees when you trade assets through that platform, but you will pay a very small fee to Interactive Brokers of $0.005 per share with a $1 minimum per trade.
Choice IRA Account Types
Choice lets you open a self-directed traditional or Roth IRA.
A traditional IRA lets you deduct contributions from your taxes. The Roth does not, but withdrawals in retirement are tax-free.
Choice IRA Pricing
Choice offers three subscription tiers for IRA clients, which are categorized by how you’d prefer to store your digital assets.
- No Annual Fee: Your digital assets are “in motion,” which means Choice lends them out to earn money (for itself).
- Cold Storage: Your digital assets are more securely stored with Fidelity Digital Assets.
- Hold Your Keys: You hold your own digital assets using a multi-signature cold storage solution powered by Casa.
Here are the features and benefits of each plan:
|No Annual Fee||Cold Storage||Hold Your Keys|
|Annual account fee:||$0||1%||$160|
|Traditional asset custody:||$0||$0||$0|
|Traditional asset trading fee (Choice):||$0||$0||$0|
|Interactive Brokers’ trading fee:||$0.005 per share ($1 minimum).||$0.005 per share ($1 minimum).||$0.005 per share ($1 minimum).|
|Location:||In motion.||Choice’s cold storage.||Your personal cold storage.|
These fees are good compared to other crypto IRAs. As you’ll see below, the alternatives tend to be much more expensive.
Choice IRA by Kingdom Trust vs. Alternatives
Here’s how Choice stacks up against some of its main competitors.
Choice IRA vs. Bitcoin IRA
For starters, Bitcoin IRA charges an up-front 12.5% fee to move assets into an account and minimums start at $3,000. This includes both cash and rollovers.
That fee decreases to 10% if you’re transferring more than $50,000, and to 7.5% when transferring more than $100,000.
Any additional buy orders (after the initial fee) cost 5%, and there’s a 1% fee for sell orders.
Those fees are astronomical and a deal-killer for me.
In the past, Bitcoin IRA allowed you to earn interest on your holdings through its “Interest EARN” program, but this feature is temporarily on hold for both new and existing clients.
Choice IRA vs. Rocket Dollar
With RocketDollar you must first set up an LLC. Your IRA LLC then holds your assets.
The benefit of this arrangement is that you can invest in anything on any platform (as long as the IRS doesn’t prohibit it). That opens up the option to have alternatives such as private equity deals and commodities like timber, as there’s surprisingly very little the IRS restricts you from holding in an IRA.
There’s a one-time $360 set-up fee, as well as a $15 per month maintenance fee.
Choice IRA vs. Alto IRA
An option that’s more similar to Choice is Alto, which you can learn more about in our Alto IRA review. Alto offers a wider range of investment opportunities but does not allow you to own equities.
Related: Learn more about these and other alternatives in our list of the best crypto IRA accounts.
Where Is Your Crypto Held?
With Choice IRA, custody depends on the plan you choose.
The No Annual Fee plan puts your crypto “in motion.” This means Choice lends your assets to other institutions, similar to how a bank lends out your deposits to make money.
The Cold Storage plan puts your Bitcoin into (as the name suggests) “cold storage.” This means that your Bitcoin is entirely offline and not accessible from the internet in any way. This makes it extremely difficult for cyber criminals to try and steal your assets.
In practice, cold storage means storing your cryptocurrency in a paper wallet or hardware wallet. Neither of these is connected to the internet. You can learn more about how cold storage works here.
The Hold Your Keys plan lets you store your Bitcoin in your own cold storage. That means you can get your own paper or hardware wallet and keep your digital retirement assets wherever you’d like.
Pros and Cons of a Self-Directed IRA
Regular IRAs — both traditional and Roth — are known for offering more investment flexibility than employer-sponsored plans like 401(k)s. However, IRAs generally limit you to traditional types of investments, such as stocks, bonds, mutual funds and ETFs.
Self-directed IRAs — which come in both traditional and Roth formats — expand your options by letting you choose alternative investments such as precious metals, real estate, private stock, and now cryptocurrency.
Self Directed IRA Pros:
- More control: SDIRAs expand your investment options to include many unique types of investments.
- More retirement diversification: Retirees (and those soon to retire) may want additional diversification if their main retirement investments see volatility. SDIRAs let them expand into other investment types to possibly hedge against downturns in their regular retirement accounts.
- Tax benefits: SDIRAs can offer the same tax-deferred or tax-free benefits as traditional or Roth IRAs. Thus, if you can make large gains on crypto investments, you could potentially add a healthy amount to your tax-advantaged retirement savings.
Self Directed IRA Cons:
- Riskier investments: Alternative investments like cryptocurrency tend to offer higher reward potential, but also higher risk — both in terms of price movements and liquidity. Additionally, SDIRA custodians are generally not responsible for investigating an alternative investment’s legitimacy or quality.
- Complexity: Many rules surrounding IRAs are easier to break with a traditional IRA. For instance, you can’t buy a property for personal use in an SDIRA. If you buy a rental property and you or any of your relatives spend a night in it, you might face tax consequences. You may also have to funnel your income and expenses associated with the property through the IRA.
- Additional fees: Some investments may come with additional fees that more mainstream investments don’t have. For example, if you buy gold in an SDIRA, you may need to pay for its storage and insurance.
Choice IRA Review: Final Thoughts
Overall, Choice IRA can be a good option for retirement investors looking to diversify their holdings and potentially add to their savings with the large gains some crypto traders see.
The company stands out with its low fees, and gives customers the ability to pay a reasonable fee for a more secure storage solution.
Personally, considering the 2022 “stablecoin crash,” I’d pass on the free option and only consider Choice’s cold storage or hold your own keys option.