Can I Buy Physical Gold With My IRA?
Costs associated with buying, storing and selling physical gold can quickly accumulate; it is therefore crucial that investors understand these fees prior to making any decisions about investing in this precious asset.
Fidelity, Schwab or TD Ameritrade do not permit physical gold in an IRA account; thus you will require a self-directed IRA with a custodian who specializes in gold IRAs such as American Bullion or APMEX for your gold holdings.
Taxes
Gold IRAs may not be appropriate for everyone, and their fees can quickly accumulate. Before investing, it is crucial that investors understand all potential tax implications before making their decision.
IRS rules stipulate the type of gold which can be included in an Individual Retirement Account (IRA). Typically, coins or bullion from approved sources that meet purity standards must be included; additionally, an approved custodian must store and insure this metal in an IRA, says Sentell.
Investors must pay one-time and ongoing fees to open an IRA, including annual storage, insurance and service charges that are comparable to those charged by other IRAs. Fees charged by precious-metals dealers, custodians and depository services typically range between 1-3 percent – typically the IRA custodian charges the most for his/her services.
Fees
Many IRA investors can be confused by advertisements suggesting they can store physical gold at their homes as long as they meet stringent IRS requirements. Unfortunately, doing so would constitute a distribution and would result in a 10% penalty if under 59 1/2.
As part of their services, most custodians that offer Gold IRAs charge annual account fees as well as storage and insurance fees to hold your physical precious metals – expenses which eat into returns. Furthermore, when closing out your Gold IRA the company typically sells it off to third-party dealers who might pay less than what you bought it for in your IRA and then adds a markup before selling it back to you again at retail value.
Storage
The Internal Revenue Service requires that gold purchased for an IRA be stored in an approved depository to meet security and insurance standards, so you cannot store your gold at home in your safe. Unfortunately, many investors find this limitation frustrating.
Custodians typically charge fees to vault and store precious metals held in an IRA account, typically either flat fees or percentage based fees based on total gold value. Shipping costs could also add up over time and offset any potential gains from investing in gold IRAs.
Insurance
Investment in physical gold requires careful research. Investors should ensure their chosen dealer has an impressive track record and transparent business practices; and should prioritize a company offering secure storage options and depository options.
Investors should ensure their gold meets IRS approval. The IRS only permits certain bars and coins that meet purity and weight standards to be included in IRA accounts; often collectible or semi-numismatic coins are ineligible for investment in an IRA account.
Investors must recognize that many gold IRA companies charge fees. These costs cover storage, ongoing account maintenance and insurance costs; fees vary between companies but should always be disclosed upfront; investors should avoid companies that claim no charges apply at all.
Liquidation
Gold IRAs provide diversification benefits and protection against inflation; however, such investments carry risks.
Risks associated with precious metal investing include the cost of storage and insurance premiums, storage fees charged by custodians, and fees that eat into returns. Furthermore, withdrawing gold before retirement age or seeking physical possession could incur severe tax penalties.
If you want to own physical gold with your IRA, it will require working with a self-directed IRA custodian that specializes in this account type, like American Bullion or APMEX. When choosing your custodian it is also essential that they accept the types of gold you plan on purchasing as the IRS maintains a list of prohibited collectibles which cannot be held within an IRA account.
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