Precious Metals IRA, also referred to as Gold or Silver IRA, is an investment vehicle for retirement savers that permits investment in physical precious metals like gold coins, bars and coins. This self-directed account separate from your traditional IRA allows you to buy, sell and store your metals directly through an independent custodian of your choosing.
Precious Metals IRAs differ from traditional IRAs in that they are self-directed accounts that provide both physical asset security and tax advantages of an IRA. It’s an excellent way to diversify your portfolio, protect against inflation, and provide a valuable stream of income during retirement.
Opening a Precious Metals IRA
If you’re thinking about investing in precious metals as an alternative form of investment, be sure to select an established custodian who knows the IRS regulations for purchase and storage of precious metals. Common custodians include banks, trust companies, credit unions, brokerage firms or savings and loan associations approved by federal or state agencies to offer asset custody services to individual investors and financial advisors.
Once you have selected the best gold IRA company for your needs, it is time to select a precious metals dealer to send your physical metals for storage. Make sure the company you select is familiar with IRS guidelines in order to avoid any tax penalties.
The custodian will provide you with all necessary forms and information to set up your account. With these forms, you can make a transfer, rollover or contribution from your existing IRA into the Precious Metals IRA. Once sent to them, they’ll acquire and store your precious metals until you are ready to distribute them.
You may opt to store your precious metals at home or a safe deposit box. While this option can be convenient for those who feel more secure storing investments at their residence and want to avoid the expense of a depository, it should be noted that it is not the ideal method for preserving precious metals. Furthermore, those holding an IRA account through this method face an increased risk of IRS penalties since the government does not recognize it as legitimate ownership structure for precious metals.
In addition, many custodians charge an administrative fee for handling your IRA. This can range from $50 to $150 depending on the size of your account. Therefore, it’s important that you select a company who takes time to explain all fees and costs involved with opening an account.
If you plan to sell your precious metals before age 59 1/2, other options such as a CD or checking account might be better for you. Keep in mind that any early withdrawals from these accounts could subject you to an additional 10% tax penalty, so it is essential to plan ahead and decide how you will manage these withdrawals before they take place.