At this time of financial instability, many are taking this as an opportunity to reexamine their priorities. One growing option is investing in gold.
IRS rules permit Individual Retirement Accounts (IRAs) to invest in precious metals, real estate and certain alternative assets. To purchase physical gold in an IRA there are a few steps you should follow.
Find a Self-Directed Custodian
As is common knowledge, the IRS forbids physical possession of an IRA asset. Instead, your gold must be sent directly from its dealer to an approved depository – your gold IRA company can assist with performing due diligence to find one with proven track records.
Gold IRA custodians may charge fees for storage and insurance; in addition, there may be an additional markup on your gold investment depending on which company it comes from. Their fees may not always be listed clearly on their websites – to find out more, call them directly instead of browsing them on your own!
Your gold purchases must meet IRS purity standards; specifically, in the form of bullion coins or bars manufactured by a national mint or certified refiner; jewelry and collectible items do not qualify. Furthermore, there may be limits placed upon how much can be contributed annually into either your Roth or traditional IRA; these amounts could change in future years.
Select a Custodian
A trustworthy gold IRA company will guide you through every step of the process, from complying with IRS rules to opening an IRA custodian account and selecting precious metals for your portfolio – as well as safe storage at an IRS-approved depository. They typically charge fees for these services; expect annual and vaulting/insurance fees respectively.
The custodian will also oversee the purchase and storage of physical gold that meets IRS purity standards, so no distribution taxes and penalties would apply if you took physical possession. Instead, your IRA custodian will ship it from a dealer directly to an approved depository for secure storage; they are essential in upholding your tax-advantaged status of gold investments as they can help avoid prohibited transactions such as life insurance policies or stocks of an S-corporation that could void them outright.
Purchase Gold
A traditional self-directed IRA (SDIRA) provides many tax benefits, with contributions being tax deductible and its value accruing tax-deferred until retirement when withdrawals may be made penalty free.
Physical gold can add significant diversification and inflation hedge benefits. A good rule of thumb for allocating up to 10% of your IRA to precious metals; this amount may change based on your investment goals and risk tolerance.
To purchase gold within your SDIRA, it is important to work with a reliable dealer and select your type of gold that meets IRS purity standards and can either come in coin or bar form. After making your selection, the dealer will ship it directly to one of the third-party depository facilities recommended by your custodian or gold IRA company, where vaults that meet top security standards have been built; you will pay an annual storage fee as part of this transaction.
Store Your Gold
Physical gold IRAs require you to ship precious metals directly from their dealer and store them at an IRS-approved depository, due to its value not producing dividends or interest like stocks and mutual funds do, thus necessitating extra precaution against theft in case it is kept close by at home.
Your IRA custodian will assist in selecting an approved third-party depository that complies with IRS security standards. They’ll charge a small storage fee annually.
Although gold has experienced dramatic price gains over recent years, that doesn’t guarantee it will do so again. Gold provides your portfolio with diversification benefits while performing particularly well during times of economic instability. Before making this investment decision, be sure to conduct enough research. Unlike many investments, its cost can be high and future prices cannot be guaranteed.
