Diversifying your investments is one of the key ways to build up a retirement nest egg. Expert investors advise spreading assets among stocks, bonds and other options so as to optimize returns.
But what if you want to include physical precious metals in your IRA? Just like traditional and Roth IRAs, precious metal IRAs have similar investment limits as other IRAs.
Taxes
Gold coins offer an effective way to diversify your retirement account, but as with any investment, the tax implications must first be understood before beginning to invest.
The IRS allows IRAs to invest in certain physical precious metals, including coins and bullion that meet purity standards, though you won’t take ownership until reaching distribution age; furthermore, stashing gold away in personal safes or homes is prohibited by this government regulation.
Your Gold IRA should be placed with a reliable intermediary that charges an annual storage and administration fee in addition to other costs associated with custodian or asset management costs. Furthermore, it might be wise to pay an initial setup fee that varies between financial services firms–it could even go as high as $500!
Investing
Gold coins are an effective way to diversify and protect your retirement portfolio, offering protection from inflation while maintaining purchasing power over time.
Investors can purchase precious metal coins and bullion from numerous dealers; however, investors should remember that the Internal Revenue Service requires all IRA-approved metals to meet a purity threshold of at least 99.5% for bars; coins must meet other specifications including size (one-ounce gold coins are easier to distribute than 10-ounce bars).
Another option is a self-directed IRA account, which enables you to invest in multiple approved metals. With this type of account, physical metals purchased from dealers will be stored with an independent custodian on your behalf – providing transparency not available with traditional IRAs – though additional fees and requirements must still be fulfilled before investing.
Withdrawals
Gold coins held within an IRA account may appreciate tax-free; however, when withdrawing them for withdrawal the investor may owe taxes and penalties according to her age and account type.
Are You Thinking about Opening a Gold IRA? For best results, investors should search for companies offering transparent pricing with competitive buyback/sellback prices and no ancillary fees. A quality Gold IRA should also offer impartial customer education as well as reliable service with excellent support staff and service records.
Gold IRAs may help investors protect against inflation and diversify away from stocks, bonds and mutual funds, but they shouldn’t be used as an exclusive retirement savings solution. Gold is a volatile investment whose price can both fall and rise; therefore it should represent no more than 10% of your retirement savings plan. Furthermore, as gold doesn’t pay dividends or income stream like stocks and bonds do it should not replace other forms of retirement investments as part of retirement savings plans.
Custodians
Gold coins and bullion bars eligible for an IRA must be stored by an approved custodian company. Their purpose is to ensure your investments adhere to IRS regulations while being safely kept in a depository, and charge annual maintenance and storage fees accordingly.
When shopping for an IRA custodian, look for a company with experience and established relationships with reliable dealers. Membership of trade organizations like the American Numismatic Association or Industry Council for Tangible Assets should also be desirable as well as appropriate licensing, registrations, insurance and bonds to store investments safely.
Self-directed IRAs may provide another viable investment option, enabling you to diversify your portfolio and hedge against inflation by offering access to more assets than traditional or Roth IRAs can, such as precious metals. Unfortunately, these accounts tend to be more costly; however, their additional expense may make the effort worth your while if diversifying and protecting against inflation are your goals.
