Can You Hold Gold in a Self Directed IRA?
IRS rules make holding physical precious metals in an IRA difficult, with numerous rules and hurdles for those wanting to do so. Many gold IRA companies charge annual maintenance fees to maintain the account and store bullion safely.
Investors who breach these rules by keeping gold purchased through an IRA in their home could face distribution penalties as well as fines from the IRS if their violation becomes known to them.
One reason many investors choose gold over other investments is due to its physical nature. They can either hold precious metals themselves directly, or invest in them via a self-directed IRA (an individual retirement account that allows people to invest in more assets than just stocks and mutual funds). While traditional IRAs only allow investing in stocks or mutual funds, the IRS allows people to use their IRA funds on investments such as precious metals.
Prior to investing in precious metals for an IRA account, it’s essential to understand how taxes apply. Unlike stocks or mutual funds, precious metals do not produce income and will be taxed when withdrawn just like any traditional IRA account.
Consider all fees involved with buying, holding and selling precious metals carefully before making your selection. Seek a company with an established history and transparent practices.
Precious metals can help diversify a retirement portfolio and provide some protection from inflation, yet may have lower liquidity than more traditional investments, like stocks or bonds.
Investment through a self-directed IRA requires finding a trustworthy custodian, an IRS-approved depository and a company to purchase and ship physical precious metals to it on your behalf. Storage fees and insurance costs should also be factored into this investment decision, while some gold IRA companies add markup fees when selling to self-directed IRAs.
Finding an efficient Gold IRA custodian and investigating their fees & costs is the key to cost-effective investing. When purchasing bullion coins or bars, be sure to partner with a company offering no initial purchase minimum, an affordable gold bar spread and excellent customer service – plus remembering to store it all with an IRS approved depository in order to keep its tax benefits intact.
IRA Financial’s Self-Directed IRA allows its clients to invest in any asset permitted under the Internal Revenue Code, such as gold and other precious metals, real estate, shares of an LLC company shares of promissory notes etc. Additionally, our storage services for physical gold/precious metals with no initial purchase/account minimum requirements or reasonable spreads provide satisfactory customer service and meet our clients’ investment goals.
IRAs must store precious metals in an approved depository to qualify as tax-advantaged accounts, which may reduce liquidity of any IRA that invests in precious metals. Furthermore, metals do not generate income unlike stocks and bonds which do.
Some companies market IRA accounts by providing “home storage” of metals purchased by account owners; this practice does not comply with IRS rules and could result in an early distribution penalty. Instead, bullion coins and bars approved for storage under an IRA must be stored with an authorized depository under its name.
Physical gold investments are an attractive way to diversify retirement portfolios. Furthermore, gold has proven an effective hedge against inflation as its value has steadily risen over the years. It’s essential that your investments don’t overexposed your retirement account to unnecessary risk.
One of the greatest risks with gold IRAs is theft or loss. For this reason, it is vital that they are stored in an IRS-approved depository that offers insurance policies against potential mishaps.
Additionally, it is critical that investors purchase precious metals that comply with strict purity guidelines when investing in an IRA-approved precious metals portfolio. Investors looking for indirect exposure can invest in gold exchange-traded funds (ETFs); however, these ETFs do not count as direct ownership of the metal itself – many investors therefore opt for working with a self-directed IRA company which can manage all necessary paperwork and requirements associated with opening an IRA for gold investment purposes.
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