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Precious Metals IRA Account (What to Know)

You won’t often hear this from your financial professionals, (because they don’t get commission on physical gold coins and other precious metals) but many people are taking advantage of an IRS loophole that allows you to invest in precious metals using retirement accounts.

Precious metals iras have been around for decades, but have gained popularity in recent years due to market turbulence, geo-political turmoil, and of course, inflation. Many people, including myself, have made the move to diversify our retirement accounts by adding precious metal assets like gold, silver, and other precious metals by setting up a Self Directed IRA.

Often referred to as the “gold ira,” you must make sure your precious metal coins are IRA eligible. For this reason I’ve made a list of the best gold IRA custodians who are fully vetted, reputable, and known for helping people with these investment strategies.

Definition and Explanation of a Precious Metals IRA

IRA in Precious Metals

A Precious Metals IRA is a specialized type of Individual Retirement Account (IRA) that allows you to invest in physical precious metals like gold, silver, platinum, and palladium. Unlike traditional IRAs, which typically hold paper assets such as stocks and bonds, a Precious Metals IRA is a form of Self-Directed IRA. This means you have greater control over your investment choices, enabling you to diversify your retirement portfolio with tangible assets. Precious Metals IRAs are particularly appealing for those looking to hedge against inflation and economic uncertainty, providing a stable and secure investment option in turbulent times.

What Should I Put in My Precious Metals IRA?

You have many investment options, including:

  • Gold bars & coins
  • Silver coins & bars
  • Platinum coins & Platinum bullion
  • Palladium bullion & palladium bars

Silver investments can also include one ounce silver coins minted by the Treasury Department.

Approved precious metals will be presented to you by any reputable company (I used Goldco) as they have to meet minimum fineness requirements to become IRA assets. Gold bars are one of the most common investments, followed by silver bars.

Types of Precious Metals Allowed in an IRA

1 Ounce American Gold Eagle Coin

The Internal Revenue Service (IRS) has specific guidelines on the types of precious metals that can be included in an IRA. Eligible investments include:

  • Gold Coins: Popular options like the American Eagle and the Canadian Maple Leaf.
  • Silver Coins: Widely recognized coins such as the American Eagle and the Canadian Maple Leaf.
  • Platinum Coins: Options like the American Eagle and the Canadian Maple Leaf.
  • Palladium Coins: Various approved coins and bars.
  • Bullion: Gold, silver, platinum, and palladium bars and rounds that meet IRS fineness standards.

It’s crucial to ensure that the precious metals you choose meet the IRS’s stringent requirements to be eligible for inclusion in your IRA. This ensures compliance and maximizes the benefits of your investment.

Gold Coins in an IRA

American eagle coins are one of the most traded gold coins as American eagle gold is well known and this makes it a popular choice inside of a gold IRA. That’s not to say that silver, platinum, and palladium aren’t common precious metals investments.

Unlike a traditional IRA, which offers specific tax advantages and eligibility criteria, a Roth Gold IRA allows for tax-free growth and withdrawals.

Roth Gold IRAS are also a possibility, so if you have money saved in a Roth IRA, you can leverage the tax advantages of having money in a Roth account as long as it’s a Self Directed ira.

Precious Metals Gold IRA Advantages

The major advantage of holding physical gold in an IRA account is diversification. Most people hold retirement accounts that invest in stocks, bonds, mutual funds, and occasionally, commodities. Traditional investments, if you will.

But what happens when economic uncertainty comes about? You need a safe haven asset like gold that acts as a counter-investment to the rest of the market. In my individual retirement account, I have about 17% of my savings in precious metals. I’ve heard numbers ranging from 5-25% from people I know who have invested in precious metals as well, but the level of investment is up to you.

Roth IRAs also offer significant tax advantages, allowing for tax-free growth and withdrawals, which can be beneficial for long-term retirement planning.

I, for one, sleep better at night knowing that if a World War comes about and the markets crash, I’m protected by a safe haven asset that is highly liquid and traded globally vs traditional assets like stocks that could not only tank, but also become liquidated.

Working with a precious metals dealer who specializes in precious metals iras to set up the account is a process you’ll want to understand, so let’s get into that.

Tax Implications

When it comes to tax implications, Precious Metals IRAs operate similarly to traditional IRAs. Contributions to a Precious Metals IRA may be tax-deductible, and the earnings on your investments grow tax-deferred. This means you won’t pay taxes on the gains until you start taking distributions. However, it’s important to remember that withdrawals are subject to income tax. Additionally, the IRS mandates that the precious metals be stored in a secure, IRS-approved depository, and you will be responsible for any associated storage and insurance fees. Understanding these tax implications can help you make informed decisions about your retirement investments.

Risks and Considerations

Investing in precious metals through an IRA comes with its own set of risks and considerations. Here are some key points to keep in mind:

  • Market Volatility: The value of precious metals can fluctuate significantly, influenced by market conditions and economic factors.
  • Liquidity: Precious metals can be less liquid than other investments, and you may face penalties for early withdrawal.
  • Storage and Insurance: You’ll need to pay for secure storage and insurance, which can add to the overall cost of your investment.
  • Counterfeiting: The risk of counterfeit precious metals exists, so it’s essential to purchase from reputable dealers.
  • Regulatory Risks: Changes in laws or regulations can impact the value of your investments and your ability to hold precious metals in an IRA.

Given these complexities, it’s best to consult with a financial advisor and conduct your own research before committing to precious metals investments in your IRA. Although, if I’m being honest with you, a financial advisor most likely will try to steer you away from a gold IRA because again, they don’t earn any commission.

Steps to Set Up a Precious Metals IRA Account

For starters, view the list below of reputable companies. I know all of them well and can vouch for their service, fee structure, and buyback program.  (My full library of reviews is here.)

Each have different investment minimums, so if you are unsure, request a free investing kit from each company to understand how self directed IRAs work and feel out which one you are most comfortable with.

After you review the kit, you’ll have the ability to schedule a call (or web conference, in the case of Augusta Precious metals). During this call you’ll get an education on how this process works, including an understanding of tax advantages and tax consequences, in addition as to who your custodian options are.

Why do you need a custodian?

It is illegal to hold gold or physical metals anywhere other than with a custodian when it’s inside your retirement accounts. You can choose from many options (mine are in the Texas Depository) and have a small storage fee each year to keep the precious metals safe and secure.

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Tim Schmidt

About 

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.