Can You Buy Gold in an IRA?
Gold or other precious metal investments can eat away at your retirement savings with fees for account setup and management, storage and insurance coverage.
IRAs generally aren’t permitted to invest in collectibles like gold bullion and coins; further, they must be stored at an IRS-approved depository.
What is an IRA?
An Individual Retirement Account, commonly referred to as an “IRA”, allows people to save for retirement through tax-advantaged accounts such as traditional pre-tax IRAs, Roth IRAs and SEP IRAs.
Gold IRAs are specialized accounts that invest in physical precious metals. To invest successfully, they require special custodial services and an authorized depository; unfortunately, most major IRA companies do not offer gold IRAs, so investors should find an account provider who specializes in such accounts.
These firms charge fees for account setup, annual maintenance and storage of precious metals; fees vary by company. They may also impose markups that are lower than spot prices when selling precious metals they offer for sale.
Taxes
Gold IRAs may provide tax advantages, but their maintenance fees tend to be higher than other retirement accounts. This includes costs related to account setup as well as storage and insurance fees; additional costs associated with actual precious metal purchases, including seller markup charges that vary based on company and type of item sold may also incur fees.
Investors looking into gold IRAs should carefully research their dealer and product choices. Precious metal dealers who belong to reputable trade groups such as the American Numismatic Association or Industry Council for Tangible Assets often represent excellent values in precious metal investing. When making their choice, investors should also think carefully about purchasing and storing metals directly from dealers as this method could save custodian fees; however, IRS requirements dictate physical precious metals be stored at approved depository facilities.
Regulations
IRS rules govern individual retirement accounts (IRAs), setting contribution limits and distribution regulations. You may invest nontraditional assets such as gold in an SDR; however, you must adhere to similar guidelines as normal IRAs in order to avoid taxes and penalties.
To purchase physical metals, it is essential to locate an approved IRA custodian and depository. Some gold IRA companies already have relationships with these institutions, or you can conduct your search online. Look for dealers with a history of transparent pricing with competitive margins as well as membership of industry trade groups.
No matter if it’s a traditional pretax IRA, Roth IRA, SEP IRA, or combination thereof; your annual contribution limit is $6,500 with $1,000 catch-up contributions available to those aged 50 or above.
Fees
Physical gold investments can be expensive and complex, especially when using a self-directed IRA. To secure storage for your gold you’ll require a precious metals dealer, custodian and approved depository, each of whom may charge fees.
Reputable precious metals dealers will advise selecting a bank or trust company as your custodian, as well as depositories where to store your gold. In addition, shipping and insurance costs must also be factored into the equation.
Add gold to an IRA can diversify your portfolio and protect retirement savings from inflation, but before making this decision it is essential that you assess your risk tolerance, financial plan, time horizon and any high-pressure sales tactics from organizations offering assistance in investment decisions.
Storage
Gold IRA companies typically charge an incremental markup between their selling price for gold and the price they buy it back from investors, which can quickly accumulate over time.
Reputable precious metals IRA companies often maintain relationships with multiple depositories and can help you select one that meets your individual requirements best. Some even provide regional diversification as an additional benefit.
Home storage may also be an option, but it carries with it risks such as precious metal theft which may not be covered by home insurance policies. Furthermore, the IRS mandates that assets must be stored in an approved depository – failing which you could face significant fines so it’s vital that you research any company you select as your depository provider.
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