Gold IRAs are an innovative form of self-directed individual retirement account that allow investors to hold physical precious metals. While these investments typically yield lower returns than more conventional assets, they provide protection from inflation.
Investors looking to move their existing IRA into a gold IRA can do so with help from a precious metal dealer who specializes in such transactions, who will offer expert guidance to ensure it takes place according to IRS rules and guidelines.
Contribution Limits
As part of your retirement portfolio, gold or other precious metals should be considered an investment option with long-term growth or inflation protection in mind. Knowing your choices when looking for a provider for gold IRA accounts will be key.
Contribution limits for gold IRAs are similar to other retirement accounts: you may contribute up to an annual limit in pretax dollars into a traditional gold IRA and pay tax when withdrawing them in retirement; Roth gold IRAs offer another alternative, funded with post-tax dollars instead.
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Taxes
As with any IRA, gold IRAs must abide by stringent tax regulations that must be strictly observed; failure to do so could result in costly penalties. Therefore, it’s wise to consult a tax advisor in order to ensure you’re filling out paperwork correctly and meeting all deadlines on time.
Gold IRAs come in the form of traditional or Roth IRAs and can be funded either pretax or post-tax funds. Investors may also roll funds over from an inherited 401(k), 403(b), 457 or Thrift Savings Plan into one of these gold IRAs.
IRA-approved precious metals include gold, silver, platinum and palladium bullion products that meet certain purity and storage standards set by the IRS. Physical gold coins and bars must be produced through an IRS-approved depository, and then delivered from precious-metals dealer directly to IRA custodian. Investors should keep this cost in mind when considering total investment costs.
Liquidity
Gold IRAs may not be as liquid as other retirement investments such as stocks and bonds, which makes obtaining the money necessary to fulfill required minimum distributions once an account owner hits age 72 more difficult.
Metals aren’t as readily sold on the open market compared to paper assets, and due to IRS restrictions on precious metal IRAs only holding bullion products that meet certain purity standards, investors who wish to close out their gold IRA could incur considerable expenses when trying to return them back to their dealer who originally held them.
Gold IRA providers provide this service through direct institution-to-institution rollovers so investors can avoid any loss of liquidity. However, fees still may apply and may include account setup fees, storage and insurance costs and seller markups that vary based on what type of gold coins or bullion is sold.
Fees
Physical precious metals require separate storage and handling fees in order to comply with IRS rules, which can add up quickly when investing a large sum in an IRA.
Gold IRA investors must also select a depository or vault to store their investment safely. Many custodians offer their own depository or have partnerships with one that make this easier, and some depositories charge annual fees as well.
Gold IRA owners wishing to take distributions after age 59 1/2 can choose either physical metal or cash as their form of distribution. Selling physical metal back to dealers incurs broker fees which could reduce total returns over time; for this reason it’s crucial that research be conducted regarding these fees and their long-term effect on total returns.
