Can You Buy Gold in a Roth IRA?
Gold offers investors a diversified asset that can help safeguard retirement savings against inflation and economic uncertainty, but as with most collectibles it must be stored with an approved custodian who charges storage fees which eat into investment returns.
There are a number of alternatives for owning physical gold in an IRA account, and this article will outline these strategies and any key considerations before investing.
Taxes
Gold IRAs allow investors to diversify their investments with physical precious metals like gold. But investing in gold might not be suitable for everyone.
Addition of physical Gold to an IRA requires creating a self-directed individual retirement account (SDIRA), with a custodian that specializes in holding precious metals as investments. Most major retirement account providers don’t offer SDIRA accounts so you may need to find a separate provider who provides both services.
These custodians will typically charge annual account maintenance and storage fees as well as one-time set-up fees. Furthermore, dealer’s markup (selling price) may also apply; all these costs can quickly accumulate over time when investing regularly through an IRA account. Therefore, it’s wise to do your research when opening one and speaking to various Gold IRA providers; most will have dedicated specialists that can walk you through every step.
Fees
Physical gold IRAs typically require a higher account minimum and incur setup, storage and custodian fees which reduce returns significantly. Furthermore, any gold you withdraw before age 59 1/2 is treated as a distribution subject to tax and early withdrawal penalties.
Precious metal prices fluctuate wildly, and premiums–the difference between spot price of gold and what you pay for bars or coins–can often be steep. Some Gold IRA companies offer special edition Proof Coins as an attraction strategy; however, this strategy could backfire should they become unpopular during sell back time.
Physical gold IRAs can provide an excellent way to diversify their retirement portfolio with tangible assets, and financial advisors often recommend keeping precious metals at only a small portion of your overall portfolio.
IRA Providers
If you’re considering opening a Roth IRA, there are various options to consider. From discount brokers such as Charles Schwab or Fidelity to online investment management services that specialize in managing diversified portfolios.
Some providers provide more assistance than others, hosting seminars and webinars to inform investors of the market. Beginner investors are best served by providers with lower fees and account maintenance charges, as well as an impressive selection of no-transaction-fee funds.
Firstrade, which is considered the top provider for both new and active investors, does not charge account setup, maintenance or inactivity fees, offering customers a $50 bonus just for opening an account and funding it. Another excellent choice is TIAA-CREF which does not impose minimum requirements or fees when opening and maintaining an IRA and provides access to various investments such as real estate, partnerships, tax liens etc.
Self-Directed
As inflation soars and recession looms large and banks continue to shutter branches, many Americans are reconsidering their financial priorities – with precious metals increasingly seen as part of retirement portfolios.
Self-directed Roth IRAs provide investors with access to physical gold as well as other precious metals and even real estate; however, this type of account comes with additional fees that make investing in stocks less attractive.
Physical gold must be stored in an IRS-compliant depository. Many IRA companies recommend certain custodians and depositories; alternatively, you can select your own. Once you’ve chosen a dealer, your precious metals will be sent directly to the depository – as otherwise the IRS would consider this distribution and tax you accordingly with taxes and penalties. That is why working with a reliable company that can guide you through this process can save both time and money by handling custodial services on your behalf – saving both.
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