Can You Have Physical Gold in an IRA?
Gold IRA investments won’t generally be subject to tax until you start withdrawing them during retirement, with some key exceptions that must be kept in mind.
First and foremost, when investing in physical gold you cannot use traditional custodians like Fidelity or Schwab as they don’t specialize in precious metals IRAs. Instead, find a self-directed IRA custodian who specializes in precious metals IRAs instead.
Though gold can serve many purposes in industry and jewelry design, its primary use is as an inflation hedge. Unfortunately, unlike traditional stocks and bonds, it doesn’t generate any income or dividends; therefore it should only be added as part of a diverse investment portfolio rather than be the primary holding. Furthermore, physical storage costs incur additional expenses for rebalancing purposes.
Unfortunately, most standard custodians like Fidelity or Schwab don’t offer physical precious metal investments; therefore a self-directed IRA that specializes in these assets will be necessary. Furthermore, you will require finding an IRA-eligible dealer like American Bullion or APMEX; both companies provide this service.
Typically, an IRA custodian will store bullion in their vault or provide you with a record of specific coins or bars (allocated) or an amount of unallocated gold (unallocated). Storage fees and insurance costs may apply, while it is also important to comply with rules regarding contributions, withdrawals and taxes when setting up an IRA account.
Physical gold investments offer full ownership and the convenience of keeping investments closer to home, yet come with additional expenses such as storage fees. Furthermore, unlike traditional IRA investments such as stocks or bonds that provide dividends or interest payments that can be reinvested, physical gold doesn’t provide similar advantages.
Additionally, most mainstream IRA custodians do not possess the necessary capabilities for opening and operating SDIRAs that invest in physical precious metals such as Gold. Therefore, you will require finding an IRA custodian specializing in Gold IRAs – American Bullion or APMEX may specialize in such accounts; but for your own financial goals it is always wise to perform your due diligence to find one best suited to you and your individual financial goals.
Physical Gold investments within an IRA carry with them additional risks of theft or loss when compared with investing in shares of Gold mining and metallurgical companies via standard IRAs, which typically come with their own insurance protection from both custodians and individual policies. This makes Gold investments less liquid.
If you plan on investing in physical gold and other precious metals as part of your retirement portfolio, partnering with a reputable precious metals IRA provider is essential. They’ll assist in opening a self-directed IRA, connecting with an approved dealer and shipping your IRA gold to an IRS approved depository for storage purposes – note that doing so yourself could constitute distributions subject to taxes and penalties.
Fees associated with investing in physical gold may include one-time setup fees, annual maintenance costs, storage and insurance costs. Many IRA companies specializing in precious metals provide buyback services designed to make selling back your IRA gold easier – which may reduce some of the recurring expenses related to investing in this asset class.
Precious metals companies provide you with an easy, six-step, secure process to purchase and store physical gold for your IRA. As legally obligated firms, these firms prioritize your best financial interests first and often work closely with reputable dealers such as American Bullion or APMEX to make sure you receive fair pricing while purchasing high quality precious metals.
Your company of choice may charge fees related to owning physical gold in an IRA account. These may include one-time account setup and maintenance fees as well as seller’s markup (an increase over spot market prices for gold), storage, and insurance expenses.
When it’s time to sell, most gold IRA companies provide in-kind distribution or liquidation of precious metals at market value. Your IRA custodian will convert them to cash at current market rates and send the funds by check, wire transfer or ACH. From there you can use those funds in another investment or pass them down as inheritance.
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