Gold IRAs are individual retirement accounts designed specifically for purchasing precious metals with pretax or after-tax dollars, much like traditional IRAs do. Both accounts feature rules regarding contributions, distributions and taxes that should be adhered to when investing.
Gold IRAs require careful consideration since they involve physically holding metal in an IRS-approved depository. Be wary of companies offering opaque prices, excessive storage fees and biased educational materials.
Taxes
If you’re considering rolling over your retirement savings into a gold IRA, look for a company with transparent pricing and competitive wholesale purchasing prices. Avoid high-pressure sales tactics or companies claiming special relationships with the US Mint; additionally, avoid those that charge additional fees and provide impartial customer education.
As with other types of IRAs, setting up and annual storage fees vary by institution.
Prior to investing in any asset, it is wise to discuss its pros and cons with both legal and financial advisers. Keep in mind that like any investment, your gold IRA’s value could fluctuate; additionally, consider your retirement income needs, risk tolerance and time horizon prior to making any decision; withdrawing before reaching 59 1/2 could incur stiff IRS penalties.
Investing
Many investors turn to Gold IRAs due to the inflation-hedging benefits offered by this precious metal, but before making your investment make sure you fully comprehend all tax ramifications associated with such an endeavor.
Gold IRAs can be either traditional or Roth, like other IRA accounts. You deposit pretax dollars that grow tax-deferred until withdrawals in retirement; but unlike traditional IRAs, gold IRAs allow investors to hold physical precious metals that don’t appear on paper assets.
Gold IRA providers often charge setup and rollover fees. You also incur storage and insurance expenses when owning physical precious metals, which can add up over time. To reduce expenses, select a trusted provider with fair rates; research online before engaging any prospective IRA custodians; ask plenty of questions during meetings with them, and don’t be afraid to find another solution if one appears excessive.
Rollovers
Gold IRAs allow individuals to invest in physical precious metals like coins and bars using funds from retirement accounts such as 401(k), 403(b), pension, Thrift Savings Plan or Thrift Investment Account – without incurring taxes or penalties upon rollover.
Like other IRAs, Roth IRAs allow you to choose between traditional and Roth contributions. Traditional contributions must be made using pretax money, with distributions taxed as ordinary income; with Roth contributions made using after-tax dollars distributions are tax-free.
Metal investments aren’t as liquid as other investments, increasing the risk that required minimum distributions (RMDs) will exhaust your cash reserves when the time comes to take them out. Therefore, it’s wise to speak to a certified financial planner about whether a gold IRA fits with your long-term retirement planning goals and find a trustworthy service with transparent prices and educational materials on how precious metals have performed under different economic circumstances.
Insurance
Before opening or closing any precious metals account, it’s essential to conduct adequate research. Some IRA gold companies have been known to employ questionable tactics, including promising an excessive amount of “free silver.” Unfortunately, this comes at a price.
In order to invest in physical gold, a self-directed IRA (which allows investors to manage their own investments instead of the limited options provided by traditional IRAs and other retirement accounts) must be used. A good IRA company will assist in creating your account as well as finding storage depository space where your gold will reside.
Gold IRAs can provide an effective defense against inflation and help diversify a portfolio, but it may not be suitable for everyone. Before making your decision on investing in this way, consult with financial, tax, and legal professionals and determine whether gold is right for you – just like any investment, the price can fluctuate as prices change over time.
