There are two ways to invest in gold using an IRA. One option is to set up a self-directed gold IRA, which allows you to buy physical gold and silver with pension funds. A gold IRA can give you the tax benefits of a traditional retirement account, but you must follow IRS regulations or you risk fines and penalties. Buying physical gold for a retirement account can also be more expensive than investing in assets such as stocks, bonds, or
mutual funds.
It’s important that you understand all costs and expenses before you buy physical gold to keep in an IRA. Gold IRAs follow the same general rules as traditional IRAs when it comes to tax benefits. You can choose between traditional IRA or Roth IRA contribution limits and withdrawals. Gold IRAs are known as self-directed IRAs, but you can use them to buy certain IRS-approved gold bars and precious metals. Even with a long time horizon, gold investors have no guarantee of making money from their investment, particularly if you’re planning to rely on a gold IRA company’s repurchase program to sell your gold when you need to accept distributions from that IRA.
Over the centuries, gold has proven to be one of the most stable assets, making it a fantastic candidate for your IRA. An important rule to know about keeping physical gold in an IRA is that your precious metals MUST be kept at an approved depository such as the Delaware Depository Service Company or Brink’s Global Services and not in your home or in a safe deposit box. A gold IRA is an alternative investment option for pension savers who want to own gold to hedge against inflation or diversify their assets beyond the stock market. Your custodian bank can refer you to an approved institution and process the gold transfer as part of setting
up your Gold IRA.
The IRS does not allow popular gold coins such as the South African Krugerrand or British state coins to be stored in a gold IRA. To avoid running afoul of tax rules for proprietary transactions, self-directed IRAs, including gold IRAs, must have an IRS-approved custodian bank. Given the many scams and misleading advertising, it’s important to do your research before opening a Gold IRA account. Most IRA companies will buy back gold, but be aware that the price at which they buy gold is lower than the price at which they sell
gold.
Annual fees are generally charged by the account manager, and storage and insurance fees are more often owed to the depositary than to the Gold IRA company. If you withdraw gold from your IRA before you reach the age of 59½, you’ll have to pay income tax on the value of that gold, as well as a 10% penalty for an early withdrawal from a retirement account. These investments are available in a normal brokerage IRA, meaning you wouldn’t have to go through the work and additional costs of setting up a self-directed gold IRA. Unfortunately, most Gold IRA companies don’t have a particularly good record when it comes to fee transparency on their websites, so finding out the details can result in a phone call or two
.
