Can You Invest in Gold With an IRA?
Gold IRAs are self-directed individual retirement accounts (IRAs) designed to allow investors to invest in precious metals without incurring significant expense.
As with anything, there are fees associated with purchasing and storing precious metals, as well as managing and insuring an IRA custodian who holds them.
IRAs were intended to encourage retirement savings, with tax breaks helping facilitate this goal. But the government still wants its share, so an experienced financial advisor will assist investors in understanding all the tax implications associated with investing in an IRA, including rules related to inherited accounts.
An inheriting IRA poses the potential risk of shifting into a higher tax bracket, but working with an experienced financial advisor can help investors avoid this by setting a withdrawal schedule that won’t put them into an expensive year.
At age 70.5, an IRA owner must begin taking required minimum distributions (RMDs). These distributions are calculated based on both the value of their account at year-end as well as their life expectancy factor from IRS tables; failure to take an RMD could result in both regular income taxes as well as an excise tax penalty of 50% excise tax penalty.
Fees can make a considerable impactful to your retirement savings plan. According to one CBS article, an American worker contributing $4,000 annually into her IRA with an 8 percent return and paying one percent in fees would see their balance grow from $403,605 after 35 years to over $5222,000!
Common investment fees include expense ratios, management fees (also referred to as wrap fees) and transaction fees charged when buying or selling mutual funds and ETFs. These costs come out of your fund returns over time and add up.
Account-level fees and trading commissions have seen considerable reduction in recent years. Look for brokers or robo-advisors that don’t charge these fees; those without them offer you a better chance of growing your money over time.
Gold has long been a sought-after investment choice among investors because it provides a sound alternative investment opportunity that’s independent from stocks, bonds, real estate or any other investments. Gold can help protect against inflation and currency devaluation while serving as an inflation protector.
Physical gold may not be readily liquid or affordable to sell; furthermore, its lack of dividend or interest distributions means you won’t see tax-advantaged growth if held within an IRA account.
If you want the advantages of gold ownership without worrying about liquidating assets, a self-directed individual retirement account (SDIRA) might be right for you. All it requires is finding a custodian who specializes in SDIRAs and brokers who allow purchases of precious metals such as gold. Although SDIRA providers typically charge higher fees, their flexible investing approach gives you more freedom and control to diversify across investments that include gold. Furthermore, your chosen provider should possess all required licenses and registrations so your investments remain safe.
No matter the method you select for transferring funds or rolling over funds within your retirement account, it is imperative that they are done properly. Otherwise, the IRS considers this distribution and taxes you accordingly. There are specific rules governing each type of fund which must be observed to avoid tax-accruing events – you should seek guidance from either a financial advisor or tax professional on what options exist for you.
A traditional and Roth IRA differ in their funding mechanisms: you can either transfer existing IRA or employer sponsored plan funds directly into one, using a rollover, or open an entirely new account and fund one with direct deposits directly.
Start investing with an Individual Retirement Account by opening a self-directed brokerage account with U.S. Bancorp Investments or U.S. Bank, or consulting a wealth professional who can assess all the available investment and retirement account options and help identify which is most suitable.