Although IRAs used to be limited to owning American Eagle gold and silver coins, IRAs can now invest in IRS-approved gold, silver, palladium, and platinum bars and coins.. Gold and precious metals have long been used as inflation hedges and can help diversify investment portfolios in times of economic uncertainty. You can buy gold and precious metals directly, but with an IRA, those saving for retirement can take advantage of valuable tax benefits.. A precious metals IRA is an individual retirement account that allows you to invest in physical metals..
They are sometimes referred to as gold IRAs, but silver, platinum, and palladium can also be purchased within these accounts.. Since gold and precious metals are considered alternative investments by the IRS, they can only be held in self-directed IRAs. As you’ll see below, there are also requirements for the type of precious metals you can buy in a pension fund and where you can store them.. Since precious metals are an alternative investment, opening a gold or precious metal IRA is a more complex process than setting up a regular IRA..
Not all brokers are equipped to handle self-directed IRAs, and you should research carefully to ensure that you hire a reputable company.. Some IRA gold and precious metals providers only work with a limited number of custodian banks and depositories. While it’s easier to let them make these decisions for you, it’s always good to do your own research too.. Gold and precious metals IRAs could be a good choice for investors as long as they understand the steps and costs involved, says Daniel Milan, managing partner of Cornerstone Financial Services, LLC in Southfield, Michigan.
Milan, however, likes strategic asset funds better. However, strategic funds such as the one offered by Toronto-based Sprott hold physical gold investments.. The downside of these funds is that some may only be available to investors who meet the minimum wealth or income requirements.. For those who decide to open an IRA for gold or precious metals, Milan urges people to do their research.
Regardless of how you buy precious metals, be sure to balance them with other investments.. Diversity is a hallmark of a successful investment strategy, and it’s never wise to keep too much of your portfolio in a single asset, particularly an asset as illiquid as gold and precious metals.. Thanks to rising inflation, interest in gold and precious metals is high. Unfortunately, that also means that fraudsters want to take advantage of unsuspecting investors..
If you choose the actual metal, there are certain criteria for it to be stored in an IRA.. In addition, there can be costs associated with precious metal transactions, and these can result in owners taking home less than the current spot price when selling.. If you already have an IRA or 401 (k), either a regular IRA or a Roth, you have the option to convert some or all of your balance to a Gold IRA. In other words, no trustworthy financial advisor would recommend that you invest all of your assets in precious metals..
In addition to brokerage fees and account setup fees, the investor must pay additional costs to store and insure the precious metal. If you die, your IRA and its assets will be transferred to your IRA beneficiary or beneficiaries. Precious metals invested in a self-governing IRA must be stored in an authorized depository such as the Delaware Depository. The following is a list of IRA-approved precious metals that can be purchased for an IRA for precious metals..
However, there are specially designed precious metal IRAs that allow you to invest in gold, palladium, silver, and other valuable metals for retirement.. The IRS requires that precious metals owned by an IRA be kept in the possession of a trustee or custodian.. Whether you’re worried about the dollar’s falling purchasing power or the prospect of a recession, a precious metals IRA could help address your concerns. If you decide to sell precious metals but keep the money in the IRA, you don’t have to worry about taxes..
Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your retirement savings in precious metals.