Investing in a precious metals individual retirement account (IRA) is an excellent way to grow your retirement savings over several decades. These investment options give you the freedom to purchase and hold multiple assets, including gold, silver, and platinum. A self-directed precious metals IRA also allows you to accumulate your earnings tax-free until you decide to close the account.
Still, knowing how to open a new retirement account can be challenging without the right information. IRS rules, maintenance fees, and asset requirements are all important factors to consider.
Selecting the Right Type of IRA
Select an IRA account that suits your retirement needs. Most investors choose IRAs that offer the best tax advantages.
For example, traditional IRAs allow you to grow your retirement funds tax-deferred from conventional assets like stocks and bonds. This advantage enables you to claim annual deductions on your contributions and only pay tax during withdrawals.
Alternatively, gold Roth IRAs allow you to invest in unconventional assets like precious metals. These accounts do not have required minimum distributions after retirement, and your earnings grow tax-free.
However, you should expect higher fees when managing Roth IRAs than traditional IRAs. Some expenses include storage, custodian, and administrative costs.
Consider investing in exchange-traded funds (gold ETFs) if you want to invest in precious metals using a traditional IRA. This solution operates similarly to mutual funds – allowing you to trade paper assets that represent physical gold. The IRS also treats ETFs as long-term capital gains, meaning you can enjoy lower tax rates the longer you hold your investment.
Finding a Custodian for Your Self-Directed IRA
Find a reliable custodian to help you manage your precious metals IRA account. Custodians will help you set up your profile, produce monthly statements, and relay your contributions.
Your custodian will do the actual purchasing of assets from a precious metals dealer on your behalf. Hence, you need to find a reliable custodian that respects your wishes and operates according to your best interest.
A self-directed IRA custodian could be your bank, a trust company, or another IRS-approved establishment authorized to purchase alternative investments. Take time to find a custodian that primarily focuses on the commodities you want for your portfolio.
For instance, some custodians buy gold and also manage real estate or private equity investments. If you don’t want to invest in real estate or private equity, it might be worth exploring other options.
Precious metal IRA custodians usually ask investors to submit applications before partnering up. These forms vary from custodian to custodian. However, most typically ask you to list which type of self-directed IRAs you want to open and if you expect to purchase precious metals like gold bars or silver.
How to Set Up Your Precious Metals IRA Account
Online gold IRAs usually help you set up your account quickly. However, maintaining your account requires more diligence than a traditional or Roth IRA account because you are investing in tangible commodities.
Choosing a Precious Metals Dealer
Partner with a reputable precious metals dealer that sells bullion bars or other gold IRS-approved assets. You can avoid scammers by partnering with dealers that belong to the American Numismatic Association or Industry Council for Tangible Assets.
It is also a good idea to ask your IRA custodian for suggestions. Many of these precious metal IRA professionals already work with an extensive network of dealers. Verify the reputation of any recommendations you receive, just to be safe.
Once you find a dealer, thoroughly research which assets you want to add to your portfolio. Your IRA custodian can provide accurate reporting on your investments, but they cannot offer financial advice or advocate for certain products your dealer offers.
Precious Metals IRA Fees
You should expect to pay a first-time user fee when setting up a new IRA account. These charges could range from $35 to $150, depending on the precious metal IRA you choose. Some companies allow you to skip the fee if you make a large initial investment.
Annual custodial fees may also cost up to $150 if you own a sizable precious metal IRA account.
You may also need to pay a purchasing fee every time you complete a transaction. Some companies charge a flat rate, while others charge a percentage of each purchase. Commission fees by the administrator may apply, sometimes costing up to $50 every time you purchase gold.
Expect to pay a termination fee if you decide to close your account. Some precious metal IRAs charge up to $150.
Requirements When Setting Up a Precious Metal IRA
You qualify to open a precious metal IRA account if you earn a regular income or if your spouse is the primary wage earner.
You can open as many precious metals IRA accounts as you want without penalty. However, IRS rules state that the maximum annual contribution limit for those under 50 is $6,000. No matter how many precious metals IRAs you have open, you cannot exceed this limit.
If you have an existing IRA, the IRS does not restrict dollar amounts on rollovers into a precious metals IRA.
Keep an eye on minimum investment fees. Some companies require you to invest at least $5,000 or more when ordering gold. Depending on your financial limitations, these requirements may encourage you to work with a different gold IRA.
Selecting Physical Precious Metals
Investing in precious metals diversifies your portfolio significantly. You can typically invest in four types of metals when opening your self-directed IRA:
However, IRS rules dictate that each asset must be 99.9% pure – except for gold, which must be 99.5% pure. Some of the most popular IRA-eligible products include Canadian Maple Leaf Coins and PAMP Suisse silver bars.
The IRS does not allow you to contribute gold or physical metal that you already own, even if they meet the minimum purity requirements. Any bullion bars you invest in your retirement fund must also come from an approved mint or producer.
Finding Adequate Storage for Your Physical Gold Assets
Owning physical gold can be challenging if you don’t have anywhere to store your precious metals. Some coin collectors try to hold precious metals in their homes – typically in safes or dressers. However, the IRS does not permit you to store precious metals for self-directed IRAs at home.
These environments can deteriorate the quality of gold, silver, platinum, and palladium while making them vulnerable to theft.
Any products you invest in a precious metals IRA must go to an IRS-approved depository, like the Delaware Depository Service Company.
Some precious metals IRA companies already have preferred depositories and will choose one if you aren’t sure where to store your physical metal. Most reliable dealers offer secure shipping to these locations whenever you buy precious metal bullion and bars.
Monthly storage fees will vary depending on the size of your account. On average, most companies charge at most $10 a month to hold precious metal investments worth less than $10,000.
Adding Funds to Your Precious Metals IRA Account
You can invest retirement funds from non-precious metal IRA accounts (such as a 401(k) plan) into a precious metals IRA. If you complete this IRA rollover within 60 days of opening your account, you won’t need to pay a tax on the transfer. An IRA rollover can take several days to complete, depending on which IRA custodian you choose.
Converting Your IRA From Gold or Silver to Other Metals
You can transfer IRA funds from one precious metal account to another. For example, some investors start saving for retirement by investing in less expensive metals – like silver – and then use an IRA transfer later to fund a new account to invest in gold.
Working with a Gold IRA Company
You can enjoy some tax benefits when working with a gold IRA company. For example, all custodial fees associated with your precious metal IRAs are tax deductible.
Gold companies also have the resources to quickly purchase, ship, and hold precious metals on your behalf. They will keep you updated on the state of your investments and provide data upon request.
Frequently Asked Questions About Precious Metal IRAs
Here are some questions investors frequently ask about precious metals IRAs:
Why Do People Invest in Precious Metals?
Many investors grow their retirement accounts with a precious metals IRA because they worry about market volatility. Unlike paper assets, physical commodities – like gold and silver – tend not to drop in significant value during stock market crashes and inflation.
What Happens if I Withdraw From My Precious Metal IRA Before Retirement?
You can withdraw money from your precious metal IRA funds at any time. However, you will be subject to a 10% federal tax penalty if you do so before turning 60.
How Can I See My Gold After I Purchase It?
When you buy precious metals for an IRA, your gold IRA company will ship it to storage in a secure facility. You can see your investments by contacting your custodian and requesting an in-person visit. However, the staff will not allow you to take anything from storage.
Find a Precious Metals IRA Partner Today
At Learn About Gold, we can help you find the precious metal IRA options you need to boost your retirement savings. Our simple online catalog lets you compare prices, reviews, and more, so you are confident about opening an account. We also offer educational articles to help you learn about what to expect when opening a new account or managing an existing IRA.
Contact Learn About Gold to learn more about precious metals IRAs. Take our online quiz to see if you qualify for free gold.