Can I Hold Precious Metals in My IRA?
Precious metals may add an eye-catching flourish to your retirement savings strategy, but they should not be your sole investment strategy. Their higher costs compared to many alternatives and need special accounts such as an IRA make them less suitable as investments for retirement savings.
Notably, only certain gold and silver coins qualify for IRA investment accounts; other collectible coins do not fit this description and cannot be held within an IRA.
What is an IRA?
An Individual Retirement Account (IRA) is a tax-deferred retirement account. Contributors pay taxes up front, then the IRS defers them until retirement. You can choose a traditional, Roth, SEP or SIMPLE IRA as an investment tool in precious metals or other assets; however, storage at home or safe deposit boxes could constitute distribution by the IRS and lead to penalties if under age 59 1/2.
Coins, bars and rounds eligible to be stored in an IRA must adhere to IRS purity standards; this includes bullion coins that meet this threshold such as legal tender and have a fineness level of 99.5% (this currently excludes South African Krugerrands and British Sovereign coins). Furthermore, all such products must have been manufactured either by a national government mint or accredited refiner/assayer/manufacturers.
Precious metal IRAs tend to be more costly than their traditional counterparts due to account setup fees, transaction fees and custodial fees that add up quickly. Plus, precious metals don’t tend to be liquid enough for easy selling in times of financial need; exchange-traded funds that track precious metal indexes or prices may provide greater exposure.
To hold and store physical bullion safely within an IRA, you’re required to work with a custodian that provides secure storage facilities for it. They’ll also help select appropriate precious metals for your investments. Unfortunately, having physical gold as part of an IRA presents additional hurdles when withdrawing assets at age 72 or later as required minimum distributions (RMDs) become due – meaning taxes on spot prices of bullion when taking distributions must also be paid in addition to RMD fees.
Precious metals are generally seen as a safe investment that can provide protection from inflation and market instability, although like all investments they come with fees and risks that must be considered before investing.
One of the primary costs involved with precious metal investment is its price, which can differ widely based on product type, demand, and dealer premium. Transaction fees also need to be considered; typically these fees represent a percentage of transaction values.
Before selecting one of these IRA-approved products, be sure to conduct thorough research and compare prices between dealers and IRA custodians as well as annual fees associated with specific precious metals IRAs – this may include account setup fees, wire transfer fees and storage charges.
As per IRS regulations, precious metal investments purchased for an IRA must be stored somewhere other than your own home. A Self-Directed IRA custodian or third-party depository are safe solutions, often offering segregated storage solutions so your gold doesn’t mix with everyone else’s metals in a vault.
As an investor, you should conduct thorough research into each dealer, depository and IRA administrator that you consider. Be sure to understand their fees associated with storage; some companies charge higher annual storage fees than others. Do your homework!