Should Gold Be in an IRA?
Gold can be an attractive investment option for retirement savers looking to diversify their portfolio and protect themselves against inflation. But when considering precious metals IRAs, be sure to select only reputable providers.
Precious metal IRA custodians typically consist of credit unions, banks, or brokerage firms who have received IRS approval to handle precious metal IRAs and charge management fees as well as storage and insurance costs for these accounts.
Gold fits nicely into this latter category and would make an excellent asset in an investment portfolio or retirement account.
Gold IRAs come both traditional and Roth versions, following the same rules and contribution limits as any IRA account. Distributions from them are taxed just like ordinary income while early withdrawals incur an early withdrawal penalty of 10%.
As with other IRAs, gold IRAs require one-time fees to open an account as well as annual custodial and transaction fees. Furthermore, physical gold investments incur storage fees that can significantly eat into returns over time. You can minimize these extra expenses by choosing an IRA custodian who charges reasonable rates for services provided – ultimately though it’s up to you and your team of financial, legal and tax professionals to create a savings plan that best meets your needs.
Gold’s low correlation with stocks and bonds makes it an effective tool to lower portfolio risk, though its holding costs exceed those associated with paper assets such as storage or custodial fees.
Investment in precious metals for retirement requires you to locate a reputable provider with transparent pricing, competitive discounts, free storage of your metal, as well as education and impartial customer service – not high-pressure sales tactics!
Investments that qualify for an IRA include gold investments. You have two main choices for making these investments: traditional or Roth accounts. With traditional accounts, funds are deposited pretax before retirement withdrawals become taxable; with Roth accounts, however, contributions are made after tax and withdrawals at retirement are tax-free. Self-employed investors may use Simplified Employee Pension (SEP) accounts instead; additionally, only certain physical assets like gold coins and bullion that meet specified fineness standards are permitted in an IRA account.
Gold IRAs provide you with an effective way to diversify your retirement portfolio by investing in physical precious metals, providing tax benefits both when making contributions or withdrawing assets, protecting against inflation and offering security against paper investments such as stocks and bonds that could lose value due to rising interest rates. However, you should take note of any fees involved when opening or maintaining such an IRA; such as initial setup charges; ongoing account maintenance charges; dealer markups on spot market prices of gold; storage and insurance fees when keeping and insuring it; etc.
Your next step will be finding a reputable custodian familiar with IRA rules and regulations for safely storing physical assets, like gold. However, certain coins such as American Gold Eagles, South African Krugerrands and British Sovereigns cannot be stored within an IRA due to IRS restrictions; so research will need to be completed. As there is no master list of eligible gold products provided by them either!
Inflation can be a great threat to retirement savings plans. Gold has long been considered an excellent hedge against inflationary risks; on the other hand, traditional assets like stocks and bonds may experience price declines during times of economic instability.
Physical gold IRAs come with additional costs associated with ownership, such as selling fees. When closing out an IRA, dealers often want to buy back your metals at below market value; resulting in money lost when prices have increased since your original investment. Furthermore, gold IRAs tend to incur higher account fees than more traditional investments; self-directed IRAs may give investors greater oversight and control of retirement savings accounts and offset these additional expenses; ultimately only you and your legal, tax and financial advisors can decide whether a gold IRA is right for them!