Physical gold and silver must be stored with an IRS-approved depository, but this costs money and involves potential risks. As a result, most IRA investors opt to work with a third-party custodian/depository.
IRS rules clearly stipulate that in order to avoid incurring taxes and penalties, any assets held within a self-directed IRA cannot be physically taken possession of until you reach retirement age. This prevents you from incurring taxes on assets taken out before that point.
What is an IRA?
An Individual Retirement Account, or IRA, is a retirement savings vehicle designed to protect retirement savings against inflation and economic uncertainty. Many investors use their IRA to invest in stocks, bonds or cash but many IRA owners have started diversifying by including precious metals like gold and silver as part of their portfolio to protect it against inflationary forces and uncertainty.
Gold-backed IRAs may not be right for everyone, but they can be an effective way to protect your wealth. Gold is widely seen as an asset that performs well during times of economic instability and serves as an effective hedge against currency devaluation risk.
When it comes to physical gold in an IRA, IRS regulations mandate its storage with a qualified custodian. While buying and storing coins or bullion directly can work too, but this comes with several disadvantages – theft is harder to protect from and penalties may apply as well.
Keeping control of your gold in your own hands means opening a self-directed IRA. Most custodians only permit investments in publicly-traded securities; however, certain offer the opportunity to buy and store physical precious metals like gold. Such accounts are known as true self-directed IRAs with segregated storage of your metals.
How do I open an IRA?
Gold IRAs offer an effective means of diversifying your retirement portfolio with physical precious metals. Unlike traditional IRAs and 401(k) accounts that only offer indirect exposure to gold, a Gold IRA provides direct ownership of wealth via physical coins and bullion; this decreases counter-party risk while increasing privacy, giving investors greater control over their savings.
Investors opening Gold IRA accounts have access to several IRS-approved custodians and distributors, such as U.S. Money Reserve. When funds are added, your custodian will purchase gold on your behalf from your distributor; then this gold will be transported directly to a third-party depository that specializes in protecting physical precious metals; until you reach retirement age when you can request distributions from your account.
Investors should note that the IRS requires gold eligible for their IRA to be kept in a segregated, secured account rather than stored at home or in personal security deposit boxes. Storing such gold at home could constitute an illegal act which could incur heavy fines and back taxes dating back to its distribution date. To minimize risks associated with improper storage and custody arrangements for precious metal IRA investments, investors are advised to work with an experienced precious metals IRA specialist who will ensure safe custody and storage arrangements are adhered to.
What are the fees associated with an IRA?
Starting your gold IRA from scratch or consolidating existing retirement accounts requires creating a self-directed IRA. Traditional custodians only permit investments in publicly-traded securities, while self-directed accounts offer you greater flexibility by permitting you to invest in alternative assets such as physical precious metals.
Once your IRA has been opened, the next step should be finding an IRS-approved storage facility for its metals. Most gold IRA providers recommend third-party custodians that offer secure storage solutions – usually these depository options charge annual fees to store your gold and other metals.
Purchase of an in-home storage safe can also be an option, though this could pose more of a risk due to IRS regulations and theft risks.
If you want to access the gold in your IRA physically, wait until your retirement age has been reached or face penalties for withdrawals prior to it. Oxford Gold Group provides guidance for physically accessing it from an IRA; their team specializes in IRA gold investments and will gladly answer any queries that arise about the process of physical ownership. Reach out now and discover their services – they look forward to speaking with you!