Can I Contribute to a Gold IRA?
Gold and other precious metals can make for an excellent diversifier in your retirement savings portfolio, protecting against inflation while helping balance out any single asset class that might otherwise dominate it.
Before making any definitive decisions about gold IRAs, it’s essential to carefully assess their merits and demerits.
Taxes
While gold IRA companies make investing easy, you must still understand which IRS taxes apply based on whether or not you’re making a direct transfer or performing a rollover from one retirement account to the new one.
As physical precious metals must be stored in an IRS-approved depository, these assets are subject to annual storage fees that range between $10 and $60 monthly – or 0.35%-1.0% of their value respectively.
When opening a gold IRA, there will also be one-time account setup fees as well as transaction and custody costs. Be sure to choose a company without additional ancillary charges or opaque pricing of its coins and bars; inquire before placing your first order so you have an accurate picture of all costs involved.
Liquidity
Physical precious metals cannot be liquidated instantly, meaning investors will not have as easy access to their money through a gold IRA.
Solution to this issue? Work with a company offering all-in-one service to assist in setting up a precious metals IRA. Such companies typically function as metals dealers, custodians and depository for your precious metals IRA while offering expert guidance during the rollover process to ensure it complies with IRS guidelines and avoids tax complications.
According to law, precious metal investments approved for storage within an Individual Retirement Account must be stored with an approved depository. Storing them at home or in a personal safe is considered illegal and could incur taxes and penalties; furthermore, storage fees will apply and increase overall costs; but this shouldn’t be an obstacle for those looking to protect savings against inflation and volatile markets.
Security
An individual retirement account (IRA) allows you to invest in physical precious metals like silver, platinum and palladium. You can buy bullion or coins that meet IRS guidelines and store them with an approved depository until you’re ready to withdraw your funds.
Precious metals tend to appreciate in value during times of inflation, making them an effective means for protecting wealth. But diversification should still be part of your investment portfolio’s makeup; otherwise you risk investing too heavily in gold alone.
Be mindful that once you turn 70.5 or 72, required minimum distributions become mandatory – possibly necessitating selling off metals that make up your gold IRA if they’re the sole assets within it. To avoid this scenario and to create an appropriate strategy that meets both IRS regulations and your individual needs, consult a financial advisor in advance to help build a customized solution tailored to both.
Choosing a Custodian
Gold IRAs require a different custodian than traditional retirement accounts. Being IRS-approved investments, any precious metals must be stored with an IRS-approved depository – it’s therefore vitally important that a company with an excellent track record and compliance with IRS regulations be selected as your gold IRA custodian.
Consider your reputation, accreditation and track record when choosing a custodian for precious metals investment. When making this important decision, as many investors have been the victims of fraudulent dealers charging excessive fees or even disappearing with financial assets from investors’ portfolios. When making your selection, take the time to do your research properly before selecting your custodian.
Gold IRA investments require at least five years before withdrawals can be made, and you must be at least 59 and half to avoid penalties. While this might not be an issue if you’re near retirement age, those seeking immediate access may find this disconcerting. Furthermore, these accounts do not offer passive income – something which may prove crucial if looking forward to retirement in comfort.
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