IRAs offer investors access to precious metals via a custodian who will purchase from dealers and store it safely; however, IRS regulations limit which coins and bullion qualify as investments in an IRA.
IRAs do not allow the storage of collectibles such as many gold coins and bullion. But there are ways around this rule.
IRA Custodians
Self-directed IRA custodians are responsible for the safekeeping and compliance of retirement account assets under IRS regulation. Custodians could include banks, trust companies or other approved entities by the Internal Revenue Service. When selecting an IRA custodian it’s essential that it has an excellent track record, with systems in place to protect personal data as well as transparent fees (administrative and transaction) being disclosed adequately as they could quickly eat into investment returns if not disclosed correctly.
Once you have selected a trustworthy custodian, the next step should be deciding what precious metals products you wish to invest in. Be sure to choose a dealer who adheres to best practices when it comes to sourcing and quality control – many belong to industry trade groups like American Numismatic Association or Industry Council for Tangible Assets for this reason. Do your own research on dealers or ask your IRA custodian for suggestions.
Self-Directed IRAs
Self-directed IRA owners looking to invest in precious metals can use banks or trust companies approved by the IRS that specialize in managing self-directed investments – including precious metals.
Precious metals held within an IRA offer tax-deferred benefits similar to stocks, bonds and mutual funds but may also provide the potential to be less vulnerable to economic factors beyond your control. A fall in stock markets or rising interest rates could increase demand for precious metals as safe-haven assets.
Once you have selected an IRA custodian that allows precious metal investments, the next step should be selecting a dealer and depository for your precious metal investment. Your IRA custodian will send money directly to the dealer who will purchase precious metals before transporting them directly to a depository for storage at an annual storage fee; either flat rate or according to account balance.
Exchange-Traded Funds (ETFs)
The best gold IRA providers allow their clients to select which precious metals they wish to invest in: from eligible bullion such as bars, rounds and coins to platinum and palladium investments approved for an IRA. Many will also provide ETF shares that are physically backed by precious metals; although ETFs holding physical precious metals may technically qualify under IRS guidelines for an IRA account, due to being treated as sold each time an investor sells shares from such an ETF.
To fund a precious metals IRA, you can transfer funds from another retirement account – such as a 401(k), 403(b), 457 plan or pension – if conducted appropriately. Doing this provides diversification across an asset class which has historically held its value during volatile market conditions – although you should carefully consider your time horizon and risk tolerance before investing too heavily in precious metals.
Mutual Funds
There are two methods available to you when it comes to holding precious metals in an IRA: creating a self-directed IRA and investing directly with a dealer of precious metals or through an ETF that invests directly in commodities. Each option offers different advantages and drawbacks; therefore it is wise to research both companies carefully in terms of reputation, fees, accreditation, storage options etc before making your decision.
A company specializing in precious metals IRAs can help you navigate the complexities of IRS rules and ensure your account complies. They may provide advice about which metals best suit your investment goals and risk tolerance, delivery/storage facilities as well as possible setup fees which vary depending on which institution offers their services.
