Choosing your Gold IRA company is the first step to opening your IRA. If you decide to invest in a precious metals IRA, you should do so conservatively. Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your retirement savings in precious metals. Acceptable products that meet these criteria include Canadian Maple Leaf coins, Australian Koala investment coins, and PAMP Suisse bars.
The IRS also allows American Eagle coins even though they don’t meet the 99.5% purity standard for gold. You can’t currently hold rare or collectible coins, Swiss francs, British government bonds, and German marks in a self-governing IRA. Many people who open gold IRAs use funds from another IRA to do so, but it’s not a good idea to convert your entire nest egg into a gold IRA. Your chosen Gold IRA company will help you get started by reaching out to your plan administrator with a request to transfer funds to your new Gold IRA.
They also perform the necessary administrative functions to ensure that your Gold IRA complies with all IRS regulations. Opening a self-directed IRA and investing in precious metals is a bit more complicated than opening a traditional IRA or Roth IRA. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as fiat currency and stocks. To avoid the possibility of having to pay taxes and penalties, your Gold IRA company can process the transfer on your behalf.
Consult reputable outside sources or a fee-based financial planner for investment advice if you’re not sure whether a gold IRA is right for you. Another alternative is a gold ETF, an exchange-traded fund that tracks the performance of gold as an asset. Given that you can also hold silver coins or gold bars, platinum, and palladium in a gold IRA, the correct term is technically “precious metal IRA.” To set up a Gold IRA, you’ll need to work with a Gold IRA company to set up an account and buy the precious metals of your choice to fund it.
In fact, Augusta Precious Metals, one of the best gold IRA companies, specializes in helping people make just that choice. To comply with the many regulations surrounding gold IRAs, you can’t store your gold at home or in a safe deposit box. A key selling point that gold IRA companies like to tout in their marketing is that if you own a gold IRA, you own the physical precious metals. A self-managed IRA offers the same tax benefits as a traditional IRA, but allows you to hold precious metals and other alternative assets in accordance with IRS regulations.
You’ll also need to choose a precious metals dealer who will make the actual gold purchases for your IRA (your custodian may be able to recommend one for you). As with other retirement accounts, if you withdraw gold from your IRA before you turn 59½, you must pay income tax on the value of the gold, plus a 10% upfront withdrawal penalty.