Gold has long been seen as an asset that protects wealth in an IRA portfolio by offering protection against inflation. Many investors seek this form of security in their holdings.
Before investing in physical precious metals, however, you must select an IRA custodian with clear fees – including account setup, maintenance, storage and insurance charges.
What is an IRA?
Gold or precious metals IRAs are retirement accounts designed to diversify your portfolio with physical precious metals as a hedge against inflation and geopolitical instability. Such accounts are increasingly becoming popular among investors looking for security.
Gold must meet certain purity requirements in order to qualify as an investment for an IRA account, such as American Eagle bullion and proof coins being at least 99.5% pure while Krugerrands must be of at least 0.9167 fineness. Gold IRA companies offer products approved for your IRA while also offering safe storage – some offering allocated storage while others use commingled storage which places your precious metals with other approved items in a shared depository.
Your gold IRA requires selecting a custodian with experience holding physical assets, with clear fees listed on its website and good references from precious metal dealers. As is typical for gold investments, markup fees will likely apply when purchasing precious metals, plus storage fees and insurance costs may also incur – you should expect this when opening one up.
How does an IRA work?
An individual retirement account (IRA) is an investment vehicle designed to help you save for retirement. Your pretax dollars go into an IRA account that grows tax-deferred until you take distributions at retirement age.
Gold IRAs (or self-directed Individual Retirement Accounts, or SDIRAs) are retirement accounts that allow investors to invest in physical precious metals like bullion bars and coins. The IRS sets guidelines for eligible metals such as those manufactured at government-approved mints with at least 99.5% fineness – meaning South African Krugerrands do not meet this standard and therefore cannot be used in an IRA.
An SDIRA company will assist in selecting your investments and safely storing them at an approved depository, as this would count as an unlawful transaction and be subject to taxes. Storing precious metals at home or in a safe would constitute prohibited transaction that would be taxed accordingly.
Can I hold gold coins in an IRA?
Gold is an attractive asset to diversify retirement portfolios with, due to its historical ability to withstand inflation. Retirees rely heavily on gold to safeguard their portfolio from stock market declines and other economic challenges. When adding physical gold to an SDIRA account, it’s essential that you understand which precious metals are eligible and how your IRA provider stores the physical gold reserves.
An effective way to comply with IRS rules is by selecting a gold IRA company offering full custodial services. Such firms will assist in selecting precious metals that meet IRS regulations, setting up an account with a trusted self-directed IRA custodian and overseeing delivery to an IRS-approved depository. Most such firms charge fees for their services – common examples being storage and insurance charges.
Can I buy gold coins for an IRA?
Gold can be an important investment for some who believe it can hedge against inflation, provide long-term wealth growth and diversify their retirement portfolio. Most experts advise investing in gold mining company stock or precious metal ETFs instead of physical coins and bullion due to higher storage, insurance and tracking costs for physical gold coins or bullion investments.
The IRS imposes strict rules regarding which forms of gold and other precious metals you can hold in an IRA, so always work with a reliable self-directed IRA (SDIRA) provider who specializes in precious metals IRAs to help purchase and store your precious metals at an IRS-approved depository. You could also keep approved gold stored at home; however, doing this would constitute distribution by the IRS, leading to potential penalties if you’re under age 59 1/2.
Gold you purchase should meet IRS fineness standards of 99.5% for bars and 99.9% for coins; American Eagle proof and bullion coins as well as Canadian Maple Leaf and American Buffalo coins are suitable IRA investments.
