Gold has long been seen as a safe haven in times of market unpredictability and turmoil, and gold IRAs provide investors with a great way to diversify their retirement portfolio with physical precious metals.
However, these accounts come with additional costs you might not experience with other types of investments. First is the account setup fee charged by your custodian.
Costs
There are various costs associated with owning a gold IRA, including storage and transaction fees. While these charges can differ between providers, most provide an upfront list of their charges on their website to help prospective clients make an informed decision about which investment might best suit their goals and save the most over time. It is wise to compare prices carefully when making this investment decision.
Establishing your account comes with an upfront setup fee that varies between financial institutions, plus ongoing custodian fees of $10-60 monthly and storage costs that could range between $50 and $150 annually.
Physical precious metals can add diversification and an inflation hedge to your portfolio, with low correlations with other assets for increased diversification. Furthermore, they’re an affordable investment option. But be mindful of any associated risks with owning precious metals in an IRA – such as being stolen or lost during transit. To mitigate such risk effectively, work with an established dealer.
Taxes
Gold IRAs can provide an excellent means of diversifying retirement portfolios, but investors must carefully consider how taxes affect these investments. High fees can erode investments over time so it’s crucial that investors understand how these charges are assessed.
Many gold IRA companies charge various fees, from setup and service charges, to account balance fees. If your account balance is substantial, these expenses can quickly add up, so before investing it’s advisable to review the custodian’s fee schedule so you know what costs may arise from managing it.
Gold IRAs can be established both as pretax or Roth IRA accounts and feature similar annual contribution limits as other IRAs. Early withdrawal penalties of 10% apply if precious metals are withdrawn before age 59 1/2; to protect yourself from this penalty it’s wise to consult with a financial advisor first before making decisions regarding your gold IRA, so they can help customize a plan tailored specifically to your goals and risk tolerance.
Requirements
If you want to invest in gold through an IRA, make sure the precious metals dealer you select has all of the required licenses, insurance policies and credentials, as well as an excellent track record in customer service.
An ideal gold IRA company should offer transparent pricing, competitive markups and an easy method for buying precious metals. Furthermore, their dealer should provide you with a detailed breakdown of fees such as account maintenance charges, storage and insurance fees.
Gold IRAs can be opened as traditional pre-tax, Roth or self-directed individual retirement accounts (SEP), all subject to similar contribution limits and rules, including required minimum distributions when you reach age 70.5 or 72. Gold IRAs may also be transferred from another retirement account as long as appropriate rules are observed, and held with an approved custodian/depository.
Options
Gold IRAs can be established either as traditional pretax or Roth individual retirement accounts. Like other IRAs, they may include contribution limits and penalties for early withdrawals; any distributions made are taxed as ordinary income when you reach age 59 1/2.
Metals must be stored at an IRS-approved depository that charges storage fees. Unlike stocks and mutual funds, precious metals don’t yield dividends – you only see returns by selling your assets for more than you paid for them.
Due to working with three entities–precious metal dealer, custodian, and depository–for a gold IRA, you’re likely to incur higher fees than with traditional IRAs. To offset these costs and ensure competitive pricing and transparency are met by each party involved, selecting an accredited dealer with buyback guarantee and commitment to customer education will help minimize these fees as much as possible. When making this choice be mindful of how liquid your metals are and if selling may become necessary during its lifespan.
