As a courtesy to our visitors nationwide who are considering adding physical gold to their IRA, we’ve put together a comprehensive set of gold retirement FAQ commonly asked by investors looking to open a Gold IRA.
Do you have Gold IRA questions? If its been asked, we’ve answered it here on our Frequently Asked Questions page.
Covering every possible question new investors may have about gold IRAs, with a further wealth of detailed information available in our free IRA gold investment kit.
At last, you can learn exactly what you need to know about gold-backed retirement accounts – essential if you’re serious about investing in, and protecting, your future.
Gold IRA’s do not necessarily only contain gold or precious metals – the can include any IRS allowed investments from real estate to paper assets.
Any asset classes in a retirement account can be adversely affected by forces out of your control at any time. Accounts can lose value for a wide variety of reasons from market crashes and recessions to political instability and war.
When you diversify your portfolio, this strategy typically limits your overall risk. The reason why this is so effective is due to the fact that it is very unlikely that any crisis will affect all your investments at the exact same time – in reality, gold is regularly used to diversify investment and/or retirement portfolios due to the fact that gold traditionally perform quite nicely when other assets are in a downturn.
Learn which precious metals are acceptable here: IRA Approved Precious Metals
Except where transfers or rollovers are involved, your account contributions can only be made in cash. You can only buy metals with funds that are in your IRA, to be delivered directly to your custodian’s precious metals storage facility.
Metals you already own cannot be added even if they otherwise meet IRS requirements.
Your IRA can include Real Estate, LLC’s Private Loans, Private Equity, Mutual Funds, Stocks, Bonds and a whole lot more.
Notably for precious metals investors, collectibles are not allowed – so any metal valued for its age, beauty or rarity rather than the intrinsic value of the metal itself will usually be unsuitable, although as usual there are some limited exceptions.
The IRS allows an IRA, Individual 401(k), HSA or ESA to acquire some types of precious metals, but not all accounts will be managed or set up to allow this.
The best way to see if this is possible is to ask your provider. If they say no, then it should be a simple case to transfer or rollover your existing account into a gold IRA.
Alternatively, because you can have more than one retirement account, you can set up a separate additional account to house your precious metals, leaving your current account as is.
You can take a distribution from your IRA, however this will be taxable and may carry additional fees and penalties.
In recent years IRA companies have started promoting “Home Storage”, “Check Book” IRAs or “LLC” IRAs as a loophole to this rule, where the IRA holder forms a Limited Liability Company. This LLC then buys gold coins (not bars, and so far only American Eagle coins are used in the scheme), which can be stored at the company HQ, which in most cases is the IRA holder’s home.
However IRS Publication 590 specifies that for all IRAs, “The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.”
Storing Gold IRA products in the IRA owner’s home or in a safe deposit box to which the IRA owner maintains a right of access is not within the letter or spirit of the Internal Revenue Code – that is, the tax-advantaged IRA assets should be held outside the possession and personal control of the IRA owner until retirement or early distribution.
Some Home Storage IRA companies mention the Swanson v. Commissioner case in 1996, adding that the IRS and the Department of Labor have, through field service advisory letters, and DOL advisory opinion letters, consistently acknowledged the existence of the CheckBook IRA – however the Self-Storage IRA arrangement has not been approved or recognized by the Internal Revenue Service – formally or in a no-action letter issued by the IRS, Employee Plans Division.
Because many providers set minimum purchase limits, you could find yourself unable to add to a particular asset class in a particular account if you were spread too “thin” over multiple accounts, plus an added disadvantage of having too many accounts would be paying multiple maintenance fees.
These facilities use state of the art security and are insured to protect your investment.
Look out for low or zero fee deals however, as there’s no such thing as a free lunch. You will usually pay in some other way, typically through increased premiums on the metals themselves.
For 2019, 2020, and 2021, your total contributions to all of your traditional and Roth IRAs cannot be more than $6,000 ($7,000 if you’re age 50 or older), or your taxable compensation for the year, if your compensation was less than this dollar limit.
Note that the IRA contribution limit does not apply to rollover contributions or qualified reservist repayments.
It is always advised to discuss your individual circumstances with a tax advisor.
A qualified plan will need to have been established by the last day of your fiscal year if you are to make any contributions for that year.
It is important you seek advice from your tax advisor as circumstances may vary.
It is therefore essential to research your chosen gold dealer carefully, looking at their BBB rating, time in business, complaint history and even where possible looking at their accounts if published, to check current liabilities.
Dealers tend to show warning signs prior to suddenly declaring bankruptcy, and these can be anything from sudden shipping delays and unhappy customer ratings to active court cases and federal investigations.
Thankfully the internet is at your disposal and you can find out a lot about any given company very quickly.
Always try and buy investment metals at their lowest possible premium over the spot price.
This tends to be easier with larger purchases, either through a volume discount of small bars and coins, or because larger bars naturally have lower premiums.
But even looking at similar bars or coins, there can be huge variety in markup from dealer to dealer. If you pay less at the start, you need a smaller increase in market prices to be in profit, or can bear a bigger drop in price without loss.
Popular coins and bars are simply easier to sell. No matter what the market conditions for example you can always sell well known and instantly recognizable coins such as a Canadian Maples or US Eagles at a fair market price.
But without the benefit of a time machine the lower you can buy gold at the better, typically after a major drop.
For example at the moment (March 2021) gold is trading almost 350 dollars lower than its most recent peak of US$2,067.15 on August 7, 2020, giving you a price advantage built into your investment.
Many speculators think it’s likely that the current lull in price is simply gold catching its breath before continuing its climb to $2,000+ and onward as COVID-19 economic uncertainty continues to dominate the landscape. Do you buy now, or wait for the next inevitable price correction?
Truth is most investors in physical gold buy to hold for the long term, not trade on dips and troughs, so therefore precise timing isn’t essential. For this reason despite media hype or hatred of gold, any time is a good time.
Basically over time gold tends to hold and gain in value against weaker paper currencies and volatile paper assets.
For example $33,000 put into a gold IRA in 2001 was worth $175,155 in 2013.
By comparison, $33,000 in the FTSE100 index climbed to $42,570 – $1000 lower than the initial dollar amount adjusted for inflation – at $42,570.
During this time period, yes absolutely the gold price rose and fell, but its overall trend is typically upwards – and this is why gold bought at any price or time tends to be a great investment over the longer term.
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