Can You Hold Gold in an IRA?
Considering investing in gold? Be aware of its legal constraints before doing so. In general, the IRS prohibits individual retirement accounts (IRAs) from owning collectible metals but there may be exceptions.
One such account is a Precious Metals IRA, which allows investors to store physical precious metals within an IRA account. Learn more by requesting your free information kit now.
Taxes
Gold has long been seen as an attractive investment choice among those concerned about financial uncertainty, yet it should not be seen as a replacement to traditional investments such as stocks and bonds. Furthermore, there may be costs associated with holding gold in an IRA including one-time setup fees and annual custodian fees that vary by institution and may even increase for precious metal IRAs; storage fees also apply when physically storing your precious metals.
As part of investing in gold, it’s crucial that you become informed on IRS rules and regulations. Be wary when seeking advice from companies with financial interest in selling you gold; use independent sources instead. When selecting an IRA provider, use caution as some providers use misleading language such as “rare” and “exclusive” in their ads to coax customers into purchasing more expensive coins than necessary. Physical possession of IRA-eligible gold will count as distribution; tax payments on its early withdrawal will incur according to your current tax rate.
Storage
IRA custodians must abide by IRS regulations when handling and storing gold assets eligible for an IRA. Non-bank trustees with experience managing retirement funds and offering comprehensive audits are best; secure storage options like segregated storage are recommended, along with insurance coverage options and having an experienced public accountant on retainer to conduct audits to ensure compliance with all tax laws are also desirable.
Home storage may be risky because it does not comply with IRS standards for depository facilities approved to hold IRA investments and cannot provide tax-deferred growth like those found in an IRA investment portfolio.
An alternative option is storing gold in a private vault or bank safe deposit box, but this may come with higher fees and make tracking your inventory difficult. Keep in mind that gold does not generate dividends and should only be considered a long-term investment; should you decide to sell your gold, there may be taxes and fees attached when selling.
Investing
Gold IRAs are self-directed retirement accounts that enable investors to invest in precious metals such as coins, bullion and bars. While the IRS does not maintain an official list of what assets are allowed, it’s wise to work with a reputable company who can assist in selecting appropriate investments to fit your goals.
Long-term investors may prefer investing in gold ETFs or mining stocks over physical coins and bullion for greater diversification of their portfolios. These investments offer more seamless investing.
Many investors view gold as an asset with which to buffer themselves during times of economic instability and currency devaluations, as it offers protection from currency depreciations while at the same time acting as an inflation hedge due to its price trending upward faster than that of the dollar.
Eligibility
Investors interested in precious metals must meet certain criteria, such as investing in coins and bars produced from an official mint or refinery, with minimum fineness requirements met by investment-grade gold. Furthermore, tax implications will arise should an IRA-approved gold investment be liquidated for cash or taken physical possession of, leading to tax consequences that are far-reaching and complex.
Addition of gold to an IRA can be done through traditional, Roth, or SEP IRAs; pretax contributions made into these plans remain tax-free until distributions start during retirement.
Gold IRAs come with several fees, such as account setup and maintenance costs, storage costs and insurance premiums. Investors may also face markup on the price of gold purchased; storage can either be combined among multiple investors’ holdings in one facility (known as commingled storage) or kept separately within its own vault.
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