And if savers choose to roll money over from a traditional or Roth IRA to a self-directed one and don't do a direct transfer from one custodian to another, they could also be penalized.

There's also the uncertainty of how the IRS could weigh in on crypto taxes in the future. The agency hasn't set official rules on some crypto innovations, so retirement investors could get burned when it finally takes a stand. For example, collectibles are listed as one of the prohibited investments for self-directed accounts. Those wanting to put the blockchain-based digital art items known as non-fungible tokens into their self-directed IRAs should be aware that while the IRS hasn't said anything official yet, the agency's definition of collectibles would seem to include these NFTs.

Finally, going through centralized cryptocurrency exchanges such as Coinbase reduces the risk of fraud, but for those wanting to use decentralized exchanges such as Uniswap to trade cryptocurrency, there's more exposure to swindlers. And unlike traditional IRA investments, digital currency isn't regulated like a stock or bond, so there's less vetting required or recourse for recouping losses from scams.

There are some savvy crypto investors for whom trading and selling via a retirement account makes sense because they can save on capital gains taxes they would have to pay if using a taxable account. But for most people, thinking that investing in crypto with retirement money could save on taxes may just wind up jeopardizing a retirement.

Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. Previously, she oversaw tax coverage for Bloomberg News.

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