What is a Gold IRA?

 

The Gold IRA was created by the Taxpayer Relief Act of 1997 and has become a very popular instrument, used to truly diversify a retirement portfolio. Precious metals have been a universally accepted currency for millennium. Just as an example, the words “silver” and “money” are the exact same word in at least 14 different languages, including French, Swahili, Thai, and Welsh. When wars were won, the first stop of the conquering nation was always the loser’s treasury, because that’s where the gold and silver booty could be found. In today’s world, precious metals are an important part of any retirement plan, due mainly to the protection they provide for other assets, particularly “paper” assets, like stocks, bonds, and fiat currencies.

Historically speaking, during times of economic uncertainty, panic, or devaluation, precious metals prices move in the opposite direction, thereby offsetting losses of those other assets. Additionally, precious metals tend to deliver a long-term increase in value regardless, which makes them perfect components for the long-term saving strategy of a retirement portfolio.

The account itself is capable of holding any IRA-approved precious metals and products. The metals include; gold, silver, platinum and palladium and the products include the following:

Gold   (Minimum fineness: .995%)

 

Silver    (Minimum fineness: .9999%)

 

Platinum   (Minimum fineness: .9995%)

 

Palladium   (Minimum fineness: .9995%)

 

Gold, silver, palladium and platinum bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, as long as they meet minimum coin fineness requirements.

The same reporting and distribution requirements apply to a Gold IRA account, as to a regular traditional IRA. However, the metals must be in the possession of a trustee or custodian. Specifically, “the trustee or custodian must be a bank, federally insured credit union, saving and loan association, or an entity approved by the IRS to act as a trustee or custodian.”

A Gold IRA can be started from scratch, with contributions up to the annual limit, which is $5,500 or $6,500 for those over 50 years of age. Or they can be initiated with funds rolled over from an old (or possibly still in-service) 401(k), 403(b), 457(b), Deferred Compensation Plan, Non-Prototype IRA, Pension Plan, Roth IRA, Thrift Savings Plan, TIAA CREF, Traditional IRA, SEP IRA, SIMPLE IRA, and/or Beneficiary IRA.