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A Gold IRA is a retirement savings account that lets you convert your nest egg to gold. Like other IRA accounts, investing in a Gold IRA has tax benefits, with the option for contributions to be tax-deferred or after-tax. However, unlike other IRA accounts, a Gold IRA allows you to purchase and store physical assets, such as precious metals.
There are many benefits of investing in a Gold IRA. Many investors are worried about an inevitable stock market crash – and with good reason. If stocks in a non-gold IRA fail, precious metals investors can remain confident that their Gold IRAs are protecting their wealth.
One of the most common reasons people open Gold IRAs is that they can hedge against inflation. In a way, an investment in gold is a bet against the stock market – as the value of the dollar falls, the value of gold rises. With the exception of those who don’t subscribe to the stock market game, many investors concentrate on gold or other precious metals as a way to diversify their investment portfolio.
Those concerned with economic collapse might choose to invest all of their money in gold as a safeguard. The reasons you choose to invest in gold may be one, or all, of the above, or it might be something entirely different. Precious metals are just one asset class people who want to build their nest egg can invest in.
As mentioned before, gold is on the upturn. Although it is impossible to precisely predict the future value of gold, historical charts show a promising rise.
Your nest egg is your safeguard for the future. In such a volatile economy, many Americans are worried about losing their hard-earned wealth. That’s why financial advisors recommend allocating between 5% to 25% of your portfolio for liquid assets like precious metals. In an economic collapse, gold and other precious metals can be easily liquefiable, reducing the stress of wondering how your stocks will perform in a market crash. In a way, you can think of a Gold IRA as disaster insurance.
Tax benefits are part of the reason why gold can protect your wealth so well. The same tax laws apply to Gold IRAs as regular IRAs. There are some lesser-known tax benefits as well, such as relief from inheritance tax and saver’s tax credit.
You have many choices with what you want to do with your Gold IRA. Unlike regular IRAs, which are usually employer-directed, a Gold IRA lets you choose what you want to invest in – gold, silver, platinum, or palladium, and what type of investment you want to make. Not only can you choose what type of metal to invest in, but you also get to decide what form of metal you want. You can choose bullion, coins, or even ETFs.
Your nest egg is your safeguard for the future, and you don’t want to put all your eggs in one basket. That’s why many financial advisors recommend investing in physical assets as a means to diversify your portfolio.
Most investors are obsessed with the dividends or interest payments that stocks and bonds, respectively, provide. A Gold IRA will not yield you either of these. When you invest in gold, you are crossing your fingers that gold will appreciate over time, making it a long-term investment rather than a short-term one.
Gold IRAs aren’t free. There are several expenses you will incur from setting up and maintaining a Gold IRA. You may be charged to set up the account initially. You will certainly be charged an annual custodial and storage fee.
Overall, there is an ongoing debate about whether Gold IRAs are a safe investment. Many people reason that there is no inherent value to gold except for metals like silver or copper. Other people believe that an economic collapse will force America back to the gold standard, in which case, gold will be the most valuable asset. But, just like investing in stocks, you are taking a risk. Gold IRAs let you hedge your bets against the stock market.
We created our best gold IRAs rating based on what’s offered, what fees are charged, and various trusted consumer websites and reviews. Our goal is to bring you up-to-date comparisons so you can make a measured, informed decision about where to invest your money.
A Gold IRA is a retirement savings account specifically for holding gold and other precious metals, such as silver, platinum, and palladium. Gold IRAs are also referred to as Precious Metals IRAs. A Gold IRA is unique in that it allows account holders to invest in precious metals, whereas traditional IRAs, Roth IRAs, and SEP IRAs do not. Like other IRA accounts, Gold IRAs have their own contribution limits and are subject to tax regulations. In addition, investors can use a Gold IRA to retain bullion, coins, and stocks in precious metals.
The first step is to select a custodian for your self-directed IRA, followed by choosing a precious metals dealer. After researching and selecting a reputable dealer, you can work with them to decide which precious metal products to buy. The purchased precious metals must be stored in an approved depository, which can be recommended by the custodian or chosen by the investor. Finally, the custodian will handle the payments, and the dealer will ship the precious metals to the chosen depository.
Similar to the various types of non-Gold IRAs, there are several different Gold IRA accounts. Which one you choose will depend on your desired tax advantages. A traditional Gold IRA is tax-deferred, while a Roth IRA is after-tax. No matter which account you go with, you will have to purchase and store metals as physical assets.
Some people prefer to keep the contents of their Gold IRA in their possession. However, storing your Gold IRA at home is not legal. For this reason, many Gold IRA companies employ a custodian – usually a bank or brokerage firm – to store the account safely. If you prefer to manage your Gold IRA yourself, without the aid of a gold company, you will need to store the assets in a depository or bank of your choice.
Gold IRAs can only contain four precious metals – gold, silver, palladium, and platinum. Furthermore, these metals must be IRS-certified. IRS certification is granted to gold that meets a certain purity, or fineness, standard. For gold coins or bullion to be IRA-eligible, they must have a class of at least .995. They also need to have been produced by a government mint or other accredited manufacturer. However, Gold American Eagle Bullion Coins are an exception to this rule – they only need to meet a .9167 fineness. Platinum and palladium must have a fineness of .9995. Silver must have a fineness of .999.
Although Gold IRAs are self-directed retirement savings accounts, you can’t set up a Gold IRA with just anyone. Gold IRAs are specialty accounts that can only be managed by companies that sell and maintain IRS-certified gold.
To set up a Gold IRA, you will first need to find a custodian. This can be done through the gold dealer you purchase from (who will often have a custodian on retainer), or you will need to coordinate with a bank or depository on your own.
Next, you need to select a precious metals dealer. Be sure to conduct plenty of research into a gold company before deciding to invest your money there. Each dealer has its own unique services and offerings. For example, some may only offer certain types of Gold IRAs or may require you to reach a minimum investment amount. For help finding a precious metals dealer, check out the review section of McGruff.com. We rate and review gold dealers to help you compare your options.
Once you have found your precious metals dealer, you will need to instruct your IRA custodian to send funds to the dealer. Through the dealer, you will be able to purchase IRA-eligible gold, platinum, palladium, or silver.
The next step is to decide which precious metals you’d like to invest in. There are four precious metals you can choose from: gold, platinum, silver, and palladium. For a precious metal to be eligible for a Gold IRA, it will need to be one of these four, be produced at a national mint, and meet a purity standard. Which metal (or combination of metals) you want to invest in is a purely personal decision. Gold and silver are the most popular precious metals for Gold IRAs. American Eagle Bullion Coins, which the U.S. Mint manufactures, are also a popular choice.
Next, all that’s left is to make your purchase and start building your golden nest egg.
If you want to convert a non-gold IRA to a Gold or Precious Metals IRA, you will need to first roll over the funds from your regular IRA into a self-directed IRA. The IRS allows you to roll over your IRA funds once every 12 months. To avoid incurring a penalty or tax, make sure you transfer the money from your initial IRA account into your new Gold IRA account within 60 days.
Once you have money in your new IRA account, you can use it to purchase precious metals.
Note that you can only purchase approved precious metals that meet a purity standard produced by a national mint. To purchase the actual metals, you will need to locate both an IRA custodian and a reputable gold dealer.
You are not required to convert your entire IRA into gold when you roll over your account. However, there are several considerations you need to take into account when deciding how much of your IRA to convert to gold or other precious metals.
Timing is one of them: the IRS allows account holders to roll over their IRAs into a new account once in 12 months. Additionally, if you do not distribute the funds from the rollover account into a new IRA within 60 days, you will incur penalties and be taxed. For this reason, it’s advisable to either roll over all of your funds into a Gold IRA or roll over the old IRA into two different accounts (one for precious metals and one for the rest of your IRA money).
How much of your IRA you choose to convert to precious metals is an entirely personal matter. Your reasons for choosing to invest your money in gold will steer you in the right direction. For example, investors concerned about the stock market crashing may think it wise to invest all of their money in gold. On the other hand, investors who are not ready to take the leap and only want to diversify their investment portfolio might only invest some of their money in gold.
Finally, you should know that your gold IRA does not need to be entirely composed of a certain precious metal. Instead, you can spend some of your IRA on one metal or a combination of several.
Do your own research or speak to a financial advisor before you fully or partially convert to gold to ensure that you understand any consequences of rolling over your IRA.
There are several fees associated with opening a Gold IRA. To complete the initial setup process, you will typically need to pay a one-time account setup fee ranging from $50 to $150. Then, depending on how many physical metals you have, you will need to pay a storage fee ranging from $50 to $300 (billed annually). There is also usually a “markup” fee. This varies by dealer.
Then, there are transaction fees. These fees may differ depending on the type and amount of metal you purchase. For example, the same weight in gold bullion and gold coins may be priced differently.
Most Gold IRAs will have a minimum investment amount. The amount will vary from dealer to dealer, though. For example, some dealers may allow you to invest in a Gold IRA with as little as $100 (plus transaction, storage, and setup fees), while others may require a minimum investment of $50,000. The typical range for the initial minimum investment is $2,000 to $5,000.
There are different types of Gold IRAs – how your account is taxed depends on which type of IRA you have. Gold IRAs are taxed the same way non-Gold IRAs are. Traditional Gold IRAs are tax-deferred, meaning you will pay taxes on the IRA upon withdrawal. Roth Gold IRAs are after-tax, meaning that gold is purchased with after-tax money, and there is no tax upon withdrawal. The same tax penalties for early withdrawal from non-Gold IRAs also apply to Gold-IRAs.
You can withdraw from your Gold IRA in two ways: with in-kind distributions or depository purchases.
In-kind distributions are deducted from your account and shipped to you, at which point you take physical possession of your precious metals.
Depository purchases are when you sell your metals back to the depository in which they are being stored. This option gives you the dollar value of your investment.
No matter which option you choose, you will need to contact your IRA custodian to initiate a withdrawal. Remember that your withdrawals are subject to taxation rules. Taxation will depend on which kind of Gold IRA you set up. In addition, you will face penalties if you make a withdrawal before you turn 59 and a half(with some exceptions).
As with regular IRAs, you must start taking required minimum distributions when you turn 72. However, minimum withdrawal rules for Gold IRAs are more complicated than the rules for non-Gold IRAs because you must take withdrawals by the whole piece of metal you own. As a result, you cannot always decide how much money you want to withdraw because precious metals vary in cost and may have appreciated or depreciated by the time you withdraw. This makes estimating the dollar amount you must withdraw somewhat tricky.
McGruff.com rates and reviews select gold dealers to help you narrow down your options. The actual transaction will have to be conducted through the IRA custodian. Once the transaction is complete, the dealer will ship the metals to the custodian’s depository. Note that you cannot store your Gold IRA metals yourself; you will need to use a verifiable bank or depository. For your convenience, many gold dealers also supply their own Gold IRA custodians and secure storage facilities.