How Do I Add Gold Coins to My IRA?
With inflation at its highest and recession on the horizon, many Americans are reevaluating their financial priorities and looking into precious metals like gold as an inflation hedge to safeguard savings and hedge against potential inflationary changes.
If you want to open a precious metals IRA, first you’ll need to find an account manager who complies with IRS regulations, followed by an authorized gold dealer that sells coins that meet this criteria.
Find a custodian.
When investing in precious metals, a custodian will be necessary. A custodian is a company that manages an individual retirement account and reports investment activity to the IRS; to own gold coins in your IRA it must use this service, as the IRS doesn’t permit purchasing them directly with cash contributions.
Your IRA custodian will purchase gold on your behalf and store it safely with a third-party depository. They may have established relationships with specific dealers; however, it’s essential that you do your own research and choose an established vendor with excellent credentials.
Consideration should also be given to a custodian’s security measures and experience when it comes to storing precious metals. Furthermore, be sure that there is a buyback program should you ever need to liquidate your assets; this will make selling gold coins faster and simpler.
Find a gold dealer.
Although your custodian may offer some recommendations, it is vitally important that you do your own research. Choose a reputable dealer with ample experience handling investments of this nature, as well as coins which meet IRS purity guidelines; purchasing them from the United States Mint may be best.
These coins will be held for safekeeping at an approved depository, eliminating the need to store precious metals at home – this would constitute a distribution and could incur taxes and penalties, depending on how old you are at withdrawal time.
Your custodian will offer two storage methods to meet your needs: segregated or commingled storage. In commingled storage, your precious metals will be kept with those of other investors while in segregated storage they are labeled and specifically allotted to you; this storage method may provide easier access.
Purchase the coins.
Physical gold cannot be stored independently like company stocks or mutual funds can, so you will need an IRS-approved depository in which to store them – this means paying annual storage and insurance fees as part of their annual fees.
Gold coins, bars and rounds eligible for inclusion in an IRA must meet minimum fineness standards set by the IRS and manufactured from national government mints or an accredited refiner, assayer or manufacturer. Unfortunately, however, popular South African Krugerrand coins don’t make the cut due to their 0.9167% fineness which falls short of these IRA criteria.
If you buy bullion coins that do not fulfill these criteria, the IRS could consider them collectibles and forbid their inclusion in your retirement account – this would trigger taxes and penalties upon withdrawal in retirement which is something you probably want to avoid anyway. But choosing a self-directed IRA may help circumvent such issues.
Add the coins to your IRA.
Add precious metals to your IRA as an excellent way to protect against declining purchasing power of the dollar, political and financial instability, inflation and inflationary trends. Although they do not generate interest or dividends like other investments do, gold coins and bullion offer protection from stock volatility while providing a store of value.
Gold can be stored in traditional, Roth, SEP and self-directed IRAs; additional precious metals may also be added by investing in self-directed IRAs. When purchasing coins or bullion for an IRA-eligible coin purchase or bullion investment you will require the services of an expert custodian in this type of investment.
Keep in mind that any coins or bullion already in your possession, even if they meet purity guidelines set by the IRS, cannot be transferred into your IRA. Instead, an in-kind distribution can be made to purchase coins eligible for storage in an IRA custodian’s depository.
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