A gold IRA is a retirement account that allows its investors to hold gold coins, gold bars, or other precious metals as investments. You can set up a gold IRA with dollars before or after tax through a specialized custodian or broker. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible, and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms.
Some IRA companies guarantee that they’ll buy back the gold from you at current wholesale prices, but you could still lose money if you close the account, which is not usually the case when opening and closing regular IRAs. Given that the stock market typically rises by around 7% in an average year, it would be rare for a gold IRA to outperform other retirement investments. If gold seems like a solid choice for you, Sentell suggests investing no more than a third of your retirement savings in a gold IRA. Gold IRAs have higher maintenance fees than other types of IRAs because of the additional costs associated with investing in gold.
While the price of gold rose to new highs over the summer, you’ve probably seen a number of ads recommending investing in gold via an IRA. A self-directed IRA is often referred to as a gold IRA or gold-backed IRA when it is specifically set up to store physical metals in the form of gold bars, coins, or polishing coins. Because the gold in a gold IRA must be stored in an IRS-approved deposit, you can’t store it in a safe, a home safe, or under your mattress. Physical gold can play an important role in a well-diversified retirement portfolio. However, certain rules must be followed if you want to take full advantage of the full benefits that an individual retirement account (IRA) can offer for gold or other precious metals.
Segregated storage is a form of storage that keeps your assets separate from other gold or silver investments that are either outside the IRA or owned by someone else. Over the centuries, gold has proven to be one of the most stable assets, making it a fantastic candidate for your IRA. Setting up a checkbook IRA is complicated because you must be a limited liability company (LLC) and have a business current account, to name just two of the requirements. Storing your IRA gold at home can be considered a distribution, meaning you lose your tax-deferred benefits and could be punished with a fine if you’re under 59½ years of age.
A gold IRA also has similar tax benefits to a normal IRA, allowing interest to accrue tax-free until the owner is ready to retire. Additionally, if the IRS determines that the day your IRA gold entered your home was the “distribution” date, you may end up paying additional penalties and back taxes owed from the time it was distributed. Money Reserve’s Precious Metals IRA program combines the traditional protection of gold and silver with the modern convenience of an individual retirement account.