An excellent way to increase your retirement savings is to invest in a precious metals individual retirement fund (IRA). These options allow you to buy and hold multiple assets such as gold, silver, or platinum. You can also accumulate your earnings tax-free through a self-directed precious metals IRA until you close it.
Even so, it can be difficult to know how to open a retirement account without the right information. You should also consider the IRS rules, maintenance fees, as well as asset requirements.
How to choose the right type of IRA
Choose an IRA account that best suits your retirement goals. Most investors prefer IRAs with the highest tax advantages.
Traditional IRAs, for example, allow you to grow retirement funds tax-deferred from traditional assets such as stocks and bonds. This allows you to take annual deductions for your contributions, and pay no tax on withdrawals.
Alternately, you can also invest in rare assets such as precious metals with gold Roth IRAs. These accounts don't require minimum distributions upon retirement and your earnings grow without tax.
You should expect to pay higher fees for managing Roth IRAs, than you would for traditional IRAs. Some expenses include storage, custodian and administrative costs.
If you are looking to invest in precious metals with a traditional IRA, consider investing in gold ETFs (exchange-traded funds). This option works in the same way as mutual funds, allowing you trade physical gold with paper assets. ETFs are also considered capital gains by the IRS, which means that you will be subject to lower tax rates for longer periods of time.
Find a custodian for your self-directed IRA
You need a trustworthy custodian to manage your precious metals IRA. Custodians can help you create your profile, prepare monthly statements, and relay your contribution.
Your custodian will purchase assets from precious metals dealers on your behalf. You need to find a trustworthy custodian who will respect your wishes and work in your best interests.
Your bank, trust company or any other IRS-approved institution authorized to buy alternative investments could all be self-directed IRA custodians. It is important to choose a custodian who focuses on the commodities that you need for your portfolio.
Some custodians may buy gold, but also manage private equity or real estate investments. It might be worthwhile to explore other investment options if you do not want to invest in private equity or real estate.
Investors are often required to complete applications by precious metal IRA custodians before they will partner up. These forms can vary from one custodian or another. Most forms ask you to indicate which type of self-directed retirement account you would like to open, and whether you plan to buy precious metals such as silver bars or gold bars.
How to set up your Precious Metals IRA account
You can usually set up an online gold IRA quickly. Because you're investing in tangible commodities, it takes more effort to maintain your account than a Roth IRA or traditional account.
How to choose a Precious Metals dealer
A reputable precious metals dealer should be able to sell bullion bars and other IRS-approved assets. Partnering with dealers who are members of the American Numismatic Association and Industry Council for Tangible Assets will help you avoid being scammed.
Your IRA custodian may also have suggestions. These precious metal IRA professionals have a strong network of dealers. To be sure, verify the reputation of any recommendations.
After you have found a dealer to represent you, you should thoroughly research the assets that you wish to add to your portfolio. While your IRA custodian will provide you with accurate information about your investments, they are unable to offer financial advice or advocate for specific products.
Precious Metals IRA Fees
When you open a new IRA account, you should expect to pay a fee for the first time. These fees can range from $35 to $150 depending on which precious metal IRA you choose. If you make a substantial initial investment, some companies will waive the fee.
If you have a large precious metal IRA account, annual custodial fees could cost as high as $150.
A purchase fee may be required for each transaction. Some companies charge flat rates, while others charge a percentage for each purchase. Sometimes, you may be charged a commission fee by the administrator. This can sometimes amount to $50 for every purchase of gold.
If you close your account, expect to pay a termination charge. Some precious metal IRAs can charge as high as $150.
Precious Metal IRA Setup Requirements
If you have a steady income and your spouse is the primary earner of your wages, you are eligible to open a precious metal IRA.
You are allowed to open as many precious metals IRAs as you like without any penalty. The IRS rules say that the annual maximum contribution limit for people under 50 years old is $6,000. This limit does not apply to any precious metals IRAs that you may have.
The IRS doesn't limit dollar amounts for rollovers to precious metals IRAs if you already have an IRA.
Pay attention to minimum investment fees. When ordering gold, some companies require that you invest at least $5,000. Depending on your financial situation, these requirements might encourage you to choose a different type of gold IRA.
Selecting physical precious metals
Your portfolio will be significantly diversified by investing in precious metals. When opening a self-directed IRA, you can usually invest in four types.
- Gold
- Silver
- Platinum
- Palladium
The IRS rules require that all assets must be 99.9% pure, except gold which must be 99.5% pure. PAMP Suisse silver bars and Canadian Maple Leaf Coins are two of the most sought-after IRA-eligible items.
You cannot contribute physical or gold that you don't already own to your retirement fund. This is even if they meet minimum purity requirements. All bullion bars that you put into your retirement fund must be produced by an approved mint.
Find the right storage for your physical gold assets
If you don't have somewhere to store your physical gold, it can be difficult to owning physical gold. Many coin collectors keep precious metals in their homes, usually in safes or dressers. The IRS prohibits you from storing precious metals in your home for self-directed IRAs.
These environments can lead to a decrease in the quality of gold and silver as well as make them more vulnerable to theft.
All products that you purchase in a precious metals IRA have to be sent to an IRS-approved depositories, such as the Delaware Depository Service Company.
Precious metals IRA companies have preferred depositories. If you're not sure where to store your metal, they will recommend one. These locations are available to you whenever precious metal bars and bullion is purchased.
Depending on how large your account is, monthly storage fees may vary. Most companies charge $10 per month for precious metal investments less than $10,000.
Adding funds to your Precious Metals IRA account
Retirement funds can be invested from non-precious IRA accounts, such as a 401k plan, into a precious metals IRA. You won't have to pay tax if you do this IRA transfer within 60 days after opening your account. Depending on the IRA custodian chosen, an IRA rollover may take several days.
Converting your IRA from Gold or Silver to Other Metals
Transferring IRA funds between accounts in precious metals is possible. Some investors save for retirement by first investing in cheaper metals, such as silver. Later they use an IRA transfer to fund a new account that will invest in gold.
Work with a Gold IRA Company
Working with a company that offers gold IRAs can provide tax benefits. You can deduct all custodial costs associated with precious metal IRAs.
The resources and expertise of gold companies can also be used to purchase, ship, or hold precious metals quickly on your behalf. They can keep you informed about the status of your investments, and will provide data on request.
Frequently Asked Questions about Precious Metal IRAs
These are the most common questions investors ask about precious metals IRAs.
Why do people invest in precious metals?
Because of market volatility, many investors increase their retirement funds with a precious metals IRA. Contrary to paper assets, physical commodities like gold and silver do not lose significant value in times of stock market crashes or inflation.
What happens if I withdraw from my Precious Metal IRA before retirement?
You can withdraw any amount from your precious metal IRA funds at anytime. If you do this before you turn 60, however, you'll be subject to a 10% federal penalty.
What is the best way to see my gold after I have purchased it?
Your gold IRA company will store precious metals you have purchased for your IRA. Your custodian will allow you to view your investments in person. The staff won't allow you to take anything out of storage.
Find a Precious Metals IRA partner today
Learn About Gold can help you locate the right precious metal IRA options to increase your retirement savings. You can easily compare prices, reviews, etc. online to make sure you're confident in opening an account. You can also find educational articles that will help you understand what to do when opening a new account, or managing an existing IRA.
Learn About Gold for more information about precious metals IRAs. To find out if you are eligible for free gold, take our quiz online
Frequently Asked Questions
How is gold taxed by Roth IRA?
An investment account’s tax rate is determined based upon its current value, rather than what you originally paid. If you invest $1,000 in mutual funds or stocks and then later sell them, all gains are subjected to taxes.
If you place the money in a traditional IRA, 401(k), or other retirement plan, there is no tax when you take it out. You pay taxes only on earnings from dividends and capital gains — which apply only to investments held longer than one year.
The rules that govern these accounts differ from one state to the next. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. You can delay until April 1st in Massachusetts. And in New York, you have until age 70 1/2 . You should plan and take distributions early enough to cover all retirement savings expenses to avoid penalties.
Should You Open a Precious Metal IRA?
It is essential to be aware of the fact that precious metals do not have insurance coverage before opening an IRA. You cannot recover any money you have invested. This includes all investments that are lost to theft, fire, flood, or other causes.
Investing in physical gold and silver coins is the best way to protect yourself from this type of loss. These items can be lost because they have real value and have been around for thousands years. If you were to offer them for sale today, they would likely fetch you more than you paid when you bought them.
You should choose a reputable firm that offers competitive rates. It is also a smart idea to use a third-party trustee who will help you have access to your assets at all times.
Remember that you will not see any returns unless you are retired if you open an Account. Do not forget about the future!
What are some of the benefits of a gold IRA
The best way to save money for retirement is to place it in an Individual Retirement Account. It is tax-deferred until it’s withdrawn. You are in complete control of how much you take out each fiscal year. There are many types to choose from when it comes to IRAs. Some are better suited for college students. Others are made for investors seeking higher returns. For example, Roth IRAs allow individuals to contribute after age 59 1/2 and pay taxes on any earnings at retirement. These earnings don’t get taxed if they withdraw funds. This account is a good option if you plan to retire early.
Because you can invest money in many asset classes, a gold IRA works similarly to other IRAs. Unlike a regular IRA which requires taxes to be paid on gains as you wait to withdraw them, a IRA with gold allows you to invest in multiple asset classes. This makes gold IRA accounts excellent options for people who prefer to keep their money invested instead of spending it.
An additional benefit to owning gold through an IRA, is the ease of automatic withdrawals. That means you won’t have to think about making deposits every month. You could also set up direct debits to never miss a payment.
Finally, gold is one of the safest investment choices available today. It is not tied to any country so its value tends stay steady. Even during economic turmoil, gold prices tend to stay relatively stable. This makes it a great investment option to protect your savings from inflation.
Statistics
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you’ll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
