Can You Buy Gold in a SIMPLE IRA?
Gold and precious metals can provide an effective means of diversifying an investment portfolio against economic uncertainty.1
Can gold be purchased using a SIMPLE IRA? This article will examine its unique features, along with comparisons between it and more commonly-held retirement accounts.
IRAs come with different tax rules depending on the type of account you hold, but in general contributions aren’t taxed while withdrawals are taxed as income; to minimize taxes when making withdrawals it may be wiser to invest in gold ETFs instead of physical gold bullion bars and coins.
Gold IRAs may carry higher fees than paper assets due to the need for your custodian to store and insure the actual metal itself. Furthermore, since gold does not pay dividends it reduces the overall return on your investment which means it must be invested for longer before seeing returns.
Although not often utilized as a retirement asset, gold can provide investors with a way to ward off inflation and economic volatility, while also appreciating its inherent value and stability. If this is your situation, rollover into a gold IRA could be an ideal option; just be wary of any applicable taxes when purchasing precious metals.
Gold can help boost your retirement savings by defying inflation and protecting purchasing power over time. But precious metals come with high holding costs: for instance, one-time account setup fees, annual maintenance fees, seller’s fee (the markup on price that your IRA custodian charges you for), storage fees and insurance fees for keeping it at an IRS-approved depository). Furthermore, physical assets don’t produce dividends like stocks do and therefore tend to be less liquid investments.
SIMPLE IRAs can be an easy and straightforward way to create and administer retirement savings plans for employees, with employers having the flexibility of matching employee contributions dollar for dollar up to a set percentage of salary. Furthermore, unlike traditional IRAs there are no filing requirements or penalties associated with them and all funds in a SIMPLE IRA are tax deductible and must be distributed before reaching age 59 1/2 in order to avoid incurring income taxes and 10% additional penalties.
SIMPLE IRAs allow employees to save a portion of their paycheques tax-deferred until retirement. Employers are also required to contribute an optional non-elective contribution of at least 2% towards employee accounts.
As soon as an employee leaves an organization, their assets can be moved into either a SIMPLE IRA or 401k plan – however this must occur within two years from their first SIMPLE IRA deposit and subject to income tax plus an early withdrawal penalty of 10%-25 per annum unless over 59 1/2 or meeting certain exceptions apply.
The Protecting Americans from Tax Hikes Act of 2015 expanded the types of plans SIMPLE IRAs can accept rollovers from. Beginning December 18th 2015, SIMPLE IRAs can accept assets from traditional or SEP IRAs as well as eligible employer-sponsored retirement plans like 401k’s, 403(b), and government 457(b) plans for rollover.
Gold investment can be an essential component of a diversified retirement portfolio, but not everyone should do it. Consulting a financial advisor or tax professional will help determine if this form of investing makes sense given your budget and goals.
If you decide to invest in precious metals in a SIMPLE IRA, you will require the services of a custodian approved by the IRS as a custodian of individual retirement accounts. Such entities typically maintain relationships with multiple precious metal dealers for this service.
These custodians can assist in selecting and storing the bullion, coins or bars you’d like to purchase in an IRS-approved depository. Some institutions charge one-time account setup fees while others incur transaction and asset costs on an ongoing basis.
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