How Do I Put Gold in My IRA?
Precious metals can make an excellent addition to an IRA or retirement account, but it’s essential that investors understand all the rules and pitfalls before opening such accounts.
Physical gold and silver investments may qualify for inclusion in an Individual Retirement Account as long as they meet IRS guidelines for collectibles. Be mindful of any fees related to storage or insurance when investing in physical precious metals.
Buying Physical Gold
Investing in physical gold requires opening a self-directed IRA account with an approved custodian. Once established, these accounts allow investors to direct their IRA funds towards buying IRS-approved metals from companies like American Bullion or APMEX and store it securely at an approved depository.
These types of IRA accounts charge setup, annual maintenance and storage fees to maintain an account, seller fees to cover seller commissions and insurance fees for insuring precious metals at depository facilities, transfers between IRAs or retirement accounts and often repurchase fees when customers want to sell back into the same company from which they purchased.
Over time, fees associated with investing can accumulate to a considerable sum of money. Furthermore, due to being non-liquid investments that must be held for long periods in order to see returns. Therefore, this type of investment may not be appropriate for most retirement portfolios.
Buying Bullion
Gold can add diversification to a retirement portfolio by protecting against inflation and other potential risks. Before purchasing gold bullion or opening an IRA account with precious metals-backed investments, make sure the company possesses all of the licenses, registrations, insurance and bonds required by the IRS to manage your investment responsibly.
Select a gold dealer, select coins or bars you would like to buy and research each dealer you consider carefully for credentials such as membership in respected trade organizations like the American Numismatic Association, Industry Council for Tangible Assets or Professional Coin Grading Service. Also avoid investing in collectible gold as this could subject you to an IRS 10% penalty fee.
Once your IRA custodian purchases metals on your behalf, they should be stored in an IRS-approved depository. Keep an eye out for storage fees, insurance costs and management charges; then when you turn 72 years old you will need to either take an in-kind distribution or liquidate precious metals to cash out your investment.
Buying Precious Metals ETFs
Investing in precious metals through an IRA follows the same rules as investing in any retirement account: investments may grow tax-free while in your account; but upon withdrawing them you will owe taxes and possibly penalties, depending on its type and age of account holder.
If you choose a self-directed IRA, your custodian will direct you towards an IRS-approved metals dealer where IRS gold bullion and coins can be purchased directly or on your behalf with your IRA funds.
Be sure to do your own research when selecting a dealer. Make sure they belong to industry trade groups like the American Numismatic Association or Industry Council for Tangible Assets, and check if they provide online dashboards that allow you to monitor the performance of your investments if they do not. If this service is missing from their offerings, another dealer could be more suitable.
Buying Precious Metals Mutual Funds
Gold investments held within an IRA follow the same regulations as any retirement account. If you withdraw it before reaching age 59 1/2, income taxes and possible 10% penalties may apply, plus minimum distribution requirements must be fulfilled once that age has been reached.
As precious metals do not offer dividends or yields like stocks do, meeting minimum distribution requirements when the time comes may prove challenging.
Consider these issues carefully when opening a precious metals IRA. Additionally, review their reputation, accreditations, fees and storage options carefully; some brokers or custodians charge high fees so it’s advisable to compare different services before making your choice. IRA custodians often offer both commingled and allocated storage solutions; allocated storage involves keeping your precious metals with other investors’ precious metals rather than maintaining an individual storage unit – an option often more practical and less costly.
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