Chris Kline, co-founder of Bitcoin IRA, made some striking revelations about how high-net-worth individuals manage their cryptocurrencies during his appearance on Anthony Pompliano’s podcast.
According to Kline, while many small investors are burdened with heavy taxes due to a lack of financial education, wealthy investors are saving millions of dollars by exploiting legal loopholes and private retirement structures.
Kline emphasized that the “package” in which the investment is held is as crucial as the investment itself. He pointed out that tools in the U.S. tax system, such as Roth IRA, SEP IRA and Solo 401(k), provide enormous benefits not only to wage earners but also to entrepreneurs and those with marginal incomes.
By using the right retirement accounts, capital gains tax on the appreciation in the value of Bitcoin can be completely avoided. Kline explained that individual business owners can accumulate up to $150,000 in income per year through these tax-deferred accounts and can borrow up to 50% of these assets.
One of the main reasons rich people love market downturns is the “Roth conversion” strategy. When the price of Bitcoin drops sharply, investors shift their assets from traditional retirement accounts to Roth accounts. Since the price is low, the amount of tax paid is reduced by up to 50%. When the portfolio reaches its previous peak, the entire gain becomes tax-free for life.
According to Kline, one of the biggest secrets of wealthy families is to never sell their assets. Kline said the wealthy keep their Bitcoins in a trust and meet their cash flow needs by using these assets as collateral for low-interest loans. In this way, they avoid paying sales tax and the Bitcoin legacy is passed on to future generations without being compromised.
*This does not constitute investment advice.
