How to Invest in Gold in an IRA
Gold investments can provide an IRA with diversification benefits and protect it against inflation, economic challenges and market fluctuations.
To invest in physical precious metals using an IRA, you will first need to select an IRA custodian who accepts self-directed investments. Many gold IRA companies will provide access to such custodians and approved depository facilities.
IRA Custodians
An SDIRA (self-directed individual retirement account) is the ideal vehicle to hold physical gold as part of an IRA (traditional or Roth). An SDIRA works similarly, except it allows holders to invest in precious metals instead of paper assets such as stocks and bonds.
Search for an IRA custodian that specializes in precious metals and offers low minimum investments, with secure storage facilities. In addition, look for one with an excellent reputation.
Search for a company that works closely with both investors and metals dealers, so as to ensure the process is transparent and compliant with IRS regulations. Furthermore, it would be ideal if they could assist with rollovers and transfers – both often required to avoid penalties; Noble Gold provides this service in-house.
IRA Account Setup
By choosing a precious metals dealer as your IRA custodian, you can access the gold market with minimal expense. Simply choose which metals you wish to invest in and your custodian will purchase them on your behalf. Ideally, choose an IRA provider with experience handling precious metals who can offer expert guidance throughout the process.
Your IRA custodian will purchase and store the metals you select in an IRS-approved depository. Typically, your IRA provider has preferred custodians and depository facilities they work with; if not, however, you are free to choose your own.
Your IRA custodian may charge annual and storage/insurance fees, so when shopping around make sure they provide transparent pricing that doesn’t hide these expenses.
IRA Funding
Investing in precious metals requires more work than opening a traditional IRA account, since you need to work with both a dealer that specializes in IRAs and an independent custodian who will purchase your metal and store it with an IRS-approved depository. Most dealers aren’t licensed investment professionals so won’t provide comprehensive financial advice.
Gold IRAs typically require higher fees than traditional IRA accounts, such as account setup and storage fees, though many investors consider these fees worth their while due to diversification benefits provided by physical bullion ownership, potential inflation hedge properties, and its diversifying qualities as an inflation hedge. Unfortunately, unlike stocks, bonds, or mutual funds that generate regular cash flows for investors such as dividends or distributions, which provide income tax advantages compared with gold investments.
IRA Purchases
The IRS provides clear guidelines on what is and isn’t allowed when investing in an Individual Retirement Account (IRA). A retirement account cannot purchase collectibles such as artwork, stamps or rugs or invest in certain metals and vehicles.
Dodson noted that investors who wish to open a gold or precious-metals IRA must comply with specific guidelines set by its custodian. He or she must work with a precious-metals dealer and store the metal at an IRS-approved depository.
Typically, an Individual Retirement Account can be opened with any bank, brokerage firm, federally insured credit union, savings and loan association or other institution with IRS approval. Some may charge fees to transfer assets from old IRAs into your new IRA; otherwise you must complete transfer forms online or on paper and sign them.
IRA Taxes
When withdrawing precious metals before age 59 1/2, income taxes may apply on their value. But by moving them into another IRA designated for “alternative investments”, tax can be avoided altogether.
As opposed to stocks or bonds, gold doesn’t pay interest or dividends; its only reward lies in an increase in price that can help fight inflation.
As per IRA guidelines, physical coins or bullion must not be stored at home, making a custodian necessary. Not all major investment firms offer gold IRAs so you may need to find one which does. Your dealer should be able to recommend an experienced custodian.
Comments are closed here.