Mainstream IRA custodians do not typically permit self-directed IRAs to invest in precious metals; however, there are some strategies available that could circumvent this restriction.
IRS rules allow IRAs to own physical gold bullion and coins as long as it meets specific fineness standards, and there may also be other requirements which must be fulfilled.
Taxes
Gold can provide an effective diversification strategy in an investment portfolio by protecting against inflation and economic volatility. But there are two things to keep in mind when investing in physical gold for an IRA: (1) it doesn’t produce any income, apart from when sold; and (2) there are stringent requirements regarding the fineness of precious metals which may be included.
Your Gold IRA may incur several fees. This could include one-time setup charges, annual maintenance costs and storage and cash-out fees when withdrawing assets from it. These costs tend to be higher than with most IRAs because physical gold costs more to buy/sell than paper assets.
Storage
Gold has long been seen as an asset that holds or increases in value during times of political unrest and economic distress, so investing in it has become increasingly popular for retirement investments. You can buy coins and bars through an Individual Retirement Account called a Gold IRA; however, there are a few key things to keep in mind before opening one yourself.
Your IRA requires both a custodian and depository that meets IRS regulations to store precious metals safely; you should not store them at home or a bank as these are considered inappropriate storage locations by the IRS.
Avoid potential pitfalls by consulting an experienced financial advisor before deciding if a gold IRA is right for you. Request your free gold IRA kit now to gain more insight into its advantages and disadvantages – both traditional and Roth IRAs, SEP IRAs and SIMPLE IRAs may all qualify for gold IRAs as investment vehicles.
Insurance
Gold should form part of any well-rounded retirement portfolio, but investors must keep in mind that it does not yield cash dividends like stocks, bonds or mutual funds; its value comes solely from price appreciation over time.
Physical metals typically require storage outside your home and aren’t covered by homeowners insurance (which only provides up to $200 coverage for safes and bank vaults), meaning you must purchase additional storage options to safeguard IRA investments.
Many dealers that provide IRA-eligible precious metals will charge additional hidden fees, such as one-time and ongoing account setup and maintenance fees, gold dealer markups or “spot prices”, storage fees to an approved depository facility and cash out fees – making the choice of your IRA custodian and precious metals dealer more important than ever – you must ensure they possess all required licenses, registrations, insurance policies and bonds from the IRS.
Fees
Gold investors often fear currency collapse and holding physical coins or bullion may provide an effective means of diversification for their portfolio. It is important to keep in mind, though, that when selling precious metals through an IRA account the gains will be taxed at ordinary income rates (with an upper collectibles tax rate of 28% applied only if selling within this tax bracket).
Transferring precious metals IRAs can be challenging because dealers will only purchase what you offer them – which means if you sell at a loss, money could be lost. Finally, when investing in gold for retirement accounts it is essential that any company selected has all necessary licenses, registrations, insurance and bonds necessary to protect your investment; any reputable IRA custodian should provide documentation demonstrating this fact.
