Why XRP in an IRA?

Summary

Buying and selling XRP in an IRA allows investors to gain exposure to the cryptocurrency while taking advantage of the tax benefits associated with retirement accounts. Depending on the account type, investments can grow tax-deferred in a Traditional IRA or tax-free in a Roth IRA, eliminating capital gains taxes on transactions made within the account. Crypto IRAs also provide institutional-grade custody and are designed to support long-term retirement investing. For investors looking to buy and sell XRP in a tax-advantaged account, platforms like iTrustCapital offer both Traditional and Roth Crypto IRAs with secure custody and 24/7 access.

Key Benefits of Holding XRP in an IRA

Here are the three primary advantages of holding XRP in an IRA:

Tax Advantages: Grow your XRP investment tax-deferred (Traditional IRA) or tax-free (Roth IRA), avoiding capital gains taxes on every trade.
Retirement Savings: IRAs encourage long-term savings habits, allowing investments to grow significantly over time through the power of compounding.
Institutional Custody: Assets held through iTrustCapital are maintained off balance sheet with custodial partners, helping separate client assets from company operating funds.

Some investors prefer buying and selling digital assets, like XRP, in an Individual Retirement Account (IRA) for several reasons:

Tax Advantages
1. The key reason investors use IRAs is the associated tax benefits. There are two main types of IRAs: Traditional and Roth. Traditional IRAs allow for tax-deductible contributions (subject to income limits), but distributions in retirement are taxed as regular income. Roth IRAs are funded with post-tax dollars (subject to income limits, but both contributions and earnings can be withdrawn tax-free in retirement. The IRS classifies cryptocurrency as property (Notice 2014-21), meaning gains are subject to capital gains tax when sold outside an IRA.
Retirement Savings
1. IRAs have been designed to facilitate long-term savings for retirement. They encourage regular savings and investment habits, which can grow significantly over time due to the effect of compounding. Withdrawals made after age 59½ (and meeting the five-year rule for Roth IRAs) are penalty-free.
Assets Held Off Balance Sheet
1. At iTrustCapital, safeguarding clients' assets is of the utmost importance. We've adopted a strategy of preserving client assets off balance sheet, holding them in custodial accounts with a regulated chartered trust entity. This approach enables us to offer compliant retirement accounts, assuring that client funds are never mixed with our businesses' operational capital. When buying crypto from an exchange, it's worth noting that even today, some large-scale exchanges and platforms continue to hold client assets ON their balance sheet. Consequently, these client assets may be used for speculative ventures or operational purposes for their own accounts.

When you combine both XRP and an IRA, an individual can benefit from not only the tax benefits but asset security offered by these investing vehicles.

XRP on Exchange vs. XRP in IRA

Feature	XRP on Exchange	XRP in IRA
Tax Treatment	Capital gains tax on every profitable sale	Tax-deferred (Traditional) or tax-free (Roth)
Custody Type	On-balance sheet (assets may be commingled)	Off-balance sheet with regulated trust entity
Capital Gains Liability	Yes, on each taxable event	No immediate capital gains tax
Long-Term Growth	Taxed annually on realized gains	Compounds without annual tax drag

What Happens When You Buy XRP Outside an IRA?

When you acquire cryptocurrency outside of an IRA, you're essentially utilizing post-tax dollars in a crypto exchange account. If the cryptocurrency appreciates and you decide to sell, you will pay capital gains tax on profits.

Tax Comparison Example: XRP Inside vs. Outside an IRA

Scenario: Outside an IRA (Crypto Exchange)

Say you buy $10,000 worth of XRP on a crypto exchange. Over the next few years, the value of your XRP holdings increases to $60,000. If you decide to sell your XRP at this point, you'll have capital gains of $50,000 ($60,000 - $10,000). The exact amount owed in taxes will depend on how long you've held the XRP and your overall tax situation—potentially 15% to 20% or more in federal capital gains taxes.

Scenario: Inside a Roth IRA

Now, consider the same investment made within a Roth IRA. You purchase $10,000 worth of XRP using after-tax dollars, and over the next few years, its value increases to $60,000. If you sell the XRP within the Roth IRA, the $50,000 gain is not subject to capital gains tax. Once you reach age 59½ and the account has been open for at least five years, you can withdraw those gains tax-free.

This highlights the main advantage of buying and selling XRP within an IRA—the tax benefits!

Get Started with XRP in a Tax-Advantaged IRA

With a clearer picture of XRP and the advantages of leveraging an IRA for buying and selling digital assets, one can see the potential benefits for long-term investors. If you're looking to buy and sell XRP in a tax-advantaged Crypto IRA,* iTrustCapital can pave the way!

Click here to create an account today!

*Some taxes may apply

Frequently Asked Questions

Can you buy XRP in an IRA?

Yes. You can buy XRP through a self-directed Crypto IRA with platforms like iTrustCapital. Investors can choose either a Traditional IRA, where investments grow tax-deferred, or a Roth IRA, where qualified withdrawals are tax-free. If you're investing outside of retirement, iTrustCapital also offers a Premium Custody Account (PCA) for taxable crypto investing.

Why do investors buy XRP in an IRA instead of on an exchange?

Many investors choose an IRA because it allows their investments to grow without creating a taxable event every time they sell or rebalance their holdings. Traditional IRAs offer tax-deferred growth, while Roth IRAs offer tax-free qualified withdrawals. Outside an IRA, selling XRP at a profit generally creates a capital gains tax obligation.

Is XRP taxed in a Roth IRA?

No. Buying and selling XRP within a Roth IRA does not create capital gains taxes. As long as IRS requirements are met, including the five-year rule and age 59½ requirement for qualified distributions, withdrawals of earnings are tax-free.

What are the tax benefits of holding XRP in a Traditional IRA?

In a Traditional IRA, investment gains are generally tax-deferred, meaning you typically won't owe taxes when buying and selling XRP within the account. Taxes are generally paid when distributions are taken during retirement.

How is XRP securely stored at iTrustCapital?

iTrustCapital holds client digital assets off balance sheet with regulated custodial partners. Client assets are segregated from company operating funds, helping provide an additional layer of protection. This custody approach is available for both Crypto IRAs and Premium Custody Accounts.

Can I transfer an existing retirement account to buy XRP?

Yes. Many investors fund a Crypto IRA by rolling over an eligible 401(k), 403(b), TSP, or other employer-sponsored retirement plan, or by transferring an existing IRA. This allows investors to gain exposure to XRP without creating a taxable event when completed properly.

What are the IRA contribution limits?

IRA contribution limits are established by the IRS and may change each year.

For 2026, individuals under age 50 may contribute up to $7,500, while those age 50 or older may contribute up to $8,600, subject to IRS eligibility and income rules. Rollovers and transfers from eligible retirement accounts are generally not subject to these annual contribution limits.

Can you buy other cryptocurrencies besides XRP in a Crypto IRA?

Yes. Many Crypto IRA providers, including iTrustCapital, offer access to dozens of cryptocurrencies in addition to XRP, including Bitcoin, Ethereum, Solana, Chainlink, and many others. Investors can also diversify with physical gold and silver, all within the same retirement account.

Is a Crypto IRA right for everyone?

A Crypto IRA may be appropriate for long-term investors who want exposure to digital assets while potentially benefiting from the tax advantages available through retirement accounts. Investors who prefer a taxable account without IRA rules may instead consider a Premium Custody Account. Choosing between the two depends on your investment objectives, time horizon, and overall financial plan.This article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any cryptocurrency, digital asset or security or to participate in any particular investment strategy.

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DISCLAIMER

iTrustCapital is a fintech software platform for alternative assets. iTrustCapital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager or adviser. iTrustCapital has no direct relationship, and is not associated with XRP. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.

Investing in any digital asset or cryptocurrency carries significant risks due to their speculative and highly volatile nature. No investment is completely risk-free, and every investment carries the potential for losing some or all of the principal amount invested. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Digital asset (Cryptocurrency) deposits held with institutional storage providers are never FDIC insured and may lose value. Clients do not receive a choice of custody partner.

Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Conduct your own research and consult with a qualified legal, investment, or tax professional to assess your own risk tolerance prior to investing.

iTrustCapital makes no representation or warranty as to the accuracy or completeness of this information and does not have any liability for any representations (expressed or implied) or omissions from the information contained herein. iTrustCapital disclaims any and all liability to any party for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this information, which is provided as is, without warranties.