Gold coins and bars can be invested in through traditional individual retirement accounts (IRAs) or self-directed IRAs, though these typically incur high fees. To get the best value for your investments, look for a custodian with experience handling precious metals from top dealers that has an established track record.
Physical gold does not generate income and thus won’t help reduce your taxes, but it still offers several benefits that could bolster your retirement savings plan.
Tax-Free Growth
Gold IRAs allow investors to invest in precious metals without incurring capital gains taxes and the associated 10% early withdrawal penalty that’s usually applied when withdrawing early from traditional IRAs.
As with other IRA investments, contributions to a gold IRA must be made using pretax dollars, with distributions taxed as ordinary income. Furthermore, any physical assets held within an IRA require storage fees to keep.
Start off by finding a self-directed IRA custodian that allows you to invest in alternative assets such as precious metals. Reach out to banks, trust companies or any entity approved by the IRS as custodians; next find an approved dealer selling precious metals that your IRA custodian can instruct to buy with your funds.
Gold’s price can increase during times of economic turmoil or inflation, offering you a way to diversify your retirement portfolio and protect it from political instability or inflationary risks.
Hedging Against Inflation
Gold can provide an effective defense against inflation by investing in physical gold. Gold tends to retain its value during times of inflationary pricing pressures in the wider market, making it an attractive bet as an inflation hedge.
However, taking this route does have its risks. First and foremost, when selecting gold IRA companies it’s wise to avoid those employing high-pressure sales tactics because you are dealing with long-term savings and should take time in making an informed decision.
Storage fees must also be considered. Ideally, storing precious metals with an IRS-approved depository would be optimal; keeping gold at home may qualify as a distribution and be taxed at that rate if under 59 and half years old – or you could opt to invest in an ETF or mutual fund that offers exposure without needing a home safe or mattress for safekeeping.
Privacy
As global economies face potential economic disaster, it can be comforting knowing that part of your retirement account is stored in physical gold. Unfortunately, owning physical gold in an IRA requires special authorization by the IRS for their custody; only certain custodians offer these accounts as safekeeping solutions for precious metals.
These accounts require you to contribute either cash from your own resources, or roll over an existing IRA or 401(k), into it. After opening an IRA custodian will work with a gold IRA company who specialize in precious metal investments – from coin and bullion purchases through to delivery to an external depository for storage purposes.
These firms may charge fees for account setup, maintenance, storage and insurance services; therefore it’s advisable to select one with clear fees breakdown on its website so you can see upfront what their charges will cost you.
Diversification
Gold IRAs can be an excellent way to diversify your retirement portfolio and protect against inflation while weathering market fluctuations. However, it should be remembered that gold is not considered liquid investment and could incur storage and insurance fees.
To open a gold IRA, it is essential that you select an authorized custodian and depository. Your custodian should ensure your precious metals meet IRS guidelines while being safely stored offsite; many gold IRA companies have preferred custodians/depositories they require their customers to use.
After choosing a company to manage your account, you can purchase gold and other precious metals that meet IRS guidelines and store them in traditional pre-tax IRAs, Roth IRAs or SEP IRAs – or alternatively self-directed accounts holding precious metals but no traditional investments such as stocks and bonds; though such accounts still fall subject to contribution limits, early withdrawal penalties and required minimum distributions once you reach age 73.
