Investing in Gold and Other Precious Metals Through an Individual Retirement Account
Gold and other precious metals are an increasingly popular investment option within Individual Retirement Accounts, due to their inflation-hedging qualities and ability to diversify a portfolio.
But gold IRAs come with higher fees than traditional IRAs that invest in Wall Street stocks, bonds, or mutual funds. This article will explain what a Self-Directed Gold IRA is and how it works.
What is a Self-Directed IRA?
A precious metal IRA (SDIRA) is an individual retirement account that allows investors to invest in physical gold and other IRS-approved precious metals, rather than investing in paper assets like stocks, bonds, mutual funds and money markets. Compared with traditional IRAs offered by brokerages or banks, an SDIRA provides greater freedom in selecting investments outside the traditional realm of paper assets like stocks, bonds, mutual funds or money markets.
Gold IRAs can be either traditional or Roth accounts and follow all the same regulations that apply to other retirement accounts, although you’re only allowed to purchase actual gold coins or bullion with your IRA dollars and store it at an IRS-approved depository; any distribution from your IRA would trigger taxes and penalties.
Most SDIRA providers partner with depository firms such as FideliTrade or Delaware Depository Company to safely store your precious metals IRA investments. These custodians do not take commissions for trading your IRA precious metals and are independent from any dealer you choose.
How to Open a Self-Directed Gold IRA
Investment in precious metals through an individual retirement account (IRA) can be an excellent way to diversify your portfolio and protect against inflation, but it’s essential that you understand all associated fees before committing funds. Gold IRAs tend to charge higher fees than conventional IRAs; typically these costs include setup, transaction, custodial and physical asset storage fees.
To set up a gold IRA, first select an IRS-approved custodian (such as banks, credit unions or trust companies). Look for companies offering self-directed IRAs which allow you to invest in alternative assets like precious metals, real estate or private businesses.
Madison Trust is one of the leading gold IRA providers, with a six-step process to open an IRA and partnerships with FideliTrade and Delaware Depository that ensure a fair price while your metals are stored safely at Delaware Depository.
How to Buy Gold in a Self-Directed Gold IRA
Purchasing physical gold in your retirement account is possible, though you’ll require a specific kind of account called a self-directed IRA in order to do so. These accounts allow investors to invest in precious metals as well as alternative investments like real estate and private businesses.
As part of your search for an account custodian, Madison Trust can be an excellent option that offers gold IRA accounts in six easy steps.
Once your account has been opened, you can purchase gold bullion from reputable dealers like Money Metals Exchange. Your custodian will ship the bullion directly to a depository for safekeeping; its cost includes seller fees (markup) and an initial setup charge; this can differ depending on vendor and type of product purchased, in addition to shipping and insurance costs.
How to Sell Gold in a Self-Directed Gold IRA
Self-directed individual retirement accounts allow investors to invest in alternative assets, including precious metals. To start investing with an IRA in gold, first identify an approved custodian. Typically this will be either a bank, brokerage firm, or trust company who offer this investment type.
Once you’ve identified an investment custodian that accepts your funds, you can buy and store gold bullion coins and bars through reputable dealers like Money Metals Exchange. However, keep in mind that only certain forms of bullion meet IRS requirements; make sure any products purchased meet them!
When the time comes to sell your precious metals, begin by reaching out to your custodian and requesting a portfolio valuation. Next, locate a reputable third-party buyer like American Bullion to complete your sale; they’ll evaluate your metals and provide a fair market price for their investment. Ensure you keep thorough records so you can accurately report gains on your annual tax return.
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