A gold IRA is a type of retirement account that allows an investor to hold physical precious metals as a retirement savings option. This is a great option for those who want tax-deferred growth and diversification, and it often serves as a hedge against both inflation and a volatile market.
Gold IRAs, or precious metals IRAs, work by allowing investors to contribute money to their account, which is then used to buy precious metals, including gold, silver, platinum, and palladium.
These might come in the form of coins, bars, or bullion, but you can't hold physical gold or other precious metals at your home or bank and expect that you can use them as part of your IRA.
Instead, you have to store the metals in a depository, and as with everything, there are fees involved.
Keep reading to find out more about how much storage fees are for a gold IRA, and other costs that might be associated with them.
Gold IRA Storage - The Basics
Gold IRA storage fees are what you have to pay to keep your physical precious metals in secure storage facility, known as a depository. These fees often include insurance costs, and also are used to maintain security in the facility, as well as administrative fees that are associated with the account.
Storage fees are often charged annually, and it varies based on several factors.
There are two main types of gold IRA storage: segregated storage and non-segregated storage.
Segregated storage means that your gold is stored away from other people's gold. Non-segregated storage means that your gold is stored with other people's gold.
Typically, segregated storage fees are higher due to the management of the metals and the additional security that is needed.
Factors That Influence the Cost of Storage
There are a number of factors that influence how much you will pay in gold IRA storage fees.
First, as mentioned above, the type of storage you choose might influence the cost. Since segregated storage requires more maintenance and security, it is often more expensive than non-segregated storage.
Another thing that goes into how much you will pay for storage is the size of your investment.
Generally, larger investments are more expensive to store. Therefore, if your IRA account is larger, your storage fees will be, too. Some depositories, however, offer tiered pricing, which reduces the cost as the gold volume increases.
The location of the depository also can affect the cost of storage. Depositories that are located in high-demand areas charge more due to the higher costs of operation.
Though insurance is often included in the cost of gold IRA storage, it can affect what those fees are. The more gold or precious metals you have, the more insurance will cost.
Finally, administrative fees are usually included, too. These fees cover the cost of managing your account, and they vary depending on the depository you use.
All of these can affect the total gold IRA fees you will pay each year.
Always Compare Storage Fees
In general, precious metals IRA custodians have their favorite depositories that they suggest to customers.
Most of the time, you can choose the depository even if your custodian suggests a different one. Thus, you need to compare the fees from one depository to another. These often range from $100 to $500, but can go up and down depending on several factors.
It doesn't matter if you have a traditional gold IRA or a Roth gold IRA, the fees for storage are the same.
Some depositories have lower storage fees, but they might charge high administrative fees. Other depositories give a flat rate fee that includes everything, so make sure you are comparing the depositories fairly.
For instance, one depository might charge $150 a year for non-segregated storage and $250 for segregated storage. Another depository might simply charge a flat fee of $200, which includes everything.
As you go through the process of choosing the best depository for you, keep that in mind, and make sure you read the fine print.
Other Gold IRA Costs to Keep in Mind
In addition to the storage fees associated with a gold IRA, there are other fees to keep in mind, too. These include:
Setup Fees
Many, if not most, IRA custodians charge a setup fee. These can range from about $50 to $150.
Transaction Fees
Custodians might also charge transaction fees if you buy or sell precious metals within your IRA. These might range from $40 to $75 each time you buy or sell.
Wire Transfer Fees
If you want to wire funds to your custodian to add to your gold IRA, there is often a fee associated with that, too. Generally, it's less than $50.
Account Termination Fees
If you want to close your gold IRA, there may be a termination fee. I've seen them as high as $250.
Shipping Fees
Finally, you need to consider shipping fees. These will apply if you take possession of your gold, which may happen after you get to full retirement age. The fees will depend on the weight of the gold, as well as the destination.
Why It's Important to Have the Most Secure Storage for a Gold IRA
Even though it will cost money, it's very important to have the best and most secure storage for your gold backed IRA.
Reputable depositories have the highest levels of security. These include 24/7 surveillance and vaults that have the best technology keeping them secure.
Insurance is also important to have as it helps to protect your metals against natural disasters, theft, and other risks. Having all of this in place helps to ensure that your gold is safe.
Final Thoughts
Choosing the right depository is just as important as selecting your gold IRA custodian. Make sure that the depository you choose is IRS-approved, and has a strong reputation. You don't want to take a chance when it comes to the security of your gold IRA.
About Tim Schmidt Sr.
Tim Schmidt is an Entrepreneur and Serial Investor. Since 2012 he's been an advocate of alternative investments using a Self Directed IRA. His work has been featured in Yahoo! Finance, USA Today, Business Insider, and Tech Times, among others.
