Everything you Need to Know About a Gold IRA

Why Should You Open a Gold IRA?

Gold is often called a safe haven investment because it’s not affected by inflation or the stock market. In fact, when the stock market is down, gold’s value rises. For these reasons, investors buy physical gold. But what if you could get the same protection against a down economy in your IRA? You can! In 1998, it became permissible to create IRAs for approved bullion.

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Top Reasons to Invest in a Gold IRA

1. Safeguard & Protection

Like we mentioned, a gold IRA can protect its owner from the declining dollar. As inflation erodes the dollar’s value, gold retains its inherent value and is not affected. The same issue is also present in stocks. If the stock market declines as you’re set to take out your retirement, you could lose money in your IRA. With a gold IRA, this isn’t something you need to worry about. Gold will always keep its value and because its used as hedge against stocks, when the stock market is down, the gold market is up. So, if the stock market tumbles before your retirement, your gold IRA will be worth more than paper money. 

2. Diversification

The number one piece of advice from financial planners is always: diversify your portfolio, and it makes sense. When it comes to investing, putting all your eggs in one basket puts you at risk to lose everything if that particular investment loses value. Just like diversifying with different stock options, you can add a gold IRA to your portfolio. This is also sometimes a better diversification option because gold is fundamentally different than stocks, giving it extra benefits as an investment. 

IRS Accepted Precious Metals

If you’ve previously done some shopping for bullion, you’re familiar with the different bullion products. While all of these are options for personal investing, the IRS only accepts certain bullion products for your portfolio. 

IRS Accepted Gold:

  • American Gold Eagle bullion coins
  • American Gold Eagle proof coins
  • British Gold Britannia coins (from 2013)
  • British The Queen’s Beasts (coin)
  • British gold Shēngxiào Lunar Series (British coin)
  • Canadian Gold Maple Leaf coins
  • Austrian Gold Philharmonic coins
  • Australian Kangaroo/Nugget coins
  • Chinese Gold Panda coins
  • American Gold Buffalo uncirculated coins (proofs not allowed)
  • Gold bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirements

IRS Accepted Silver:

  • American Silver Eagle bullion coins
  • American Silver Eagle proof coins
  • British Silver Britannia coins (from 2013)
  • British The Queen’s Beasts (coin)
  • British silver Shēngxiào Lunar Series (British coin)
  • Canadian Silver Maple Leaf coins
  • Austrian Silver Philharmonic coins
  • Australian Silver Kookaburra coins
  • Chinese Silver Panda coins
  • Mexican Libertad coins
  • Silver bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirements

IRS Approved Platinum:

  • American Platinum Eagle coins
  • American Platinum Eagle proof coins
  • British The Queen’s Beasts (coin)
  • Canadian Platinum Maple Leaf coins
  • Isle of Man Noble coins
  • Australian Platinum Koala coins
  • Platinum bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirements

IRS Approved Palladium:

  • American Palladium Eagle bullion coins
  • Canadian Palladium Maple Leaf coins
  • Palladium bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirements

How to Open a Gold IRA

If a gold IRA is something you want to pursue, you should be aware that some things are similar to the normal IRA you’re used to and some things are different.  We will review all the steps to opening up your own gold IRA. 

Opening a Self Directed IRA

The first step in setting up your gold IRA is to create a self directed IRA (SDIRA); this is an IRS requirement. A self directed IRA can be a Traditional or Roth IRA like a 401k, but it differs in what type of investments can be added. A self directed IRA opens up a huge amount of possibilities for investment, not just bullion. Investors can invest in rental properties or privately held companies with a self directed IRA; this is the appeal of this specific type of IRA. 

Most companies that provide IRAs like your bank will not offer self directed IRA options so you’ll need to shop around. The companies you do find that offer self directed IRAs usually specialize in this type of account so if they are a trustworthy company they should be able to guide you through the process and answer any questions. Make sure you do your due diligence and find a reputable, helpful company for your self directed IRA, more on this below.

Choosing Your Custodian

Another difference between a 401k and self directed IRA is: it’s an IRS requirement to have a custodian of your SDIRA account. This company will store your gold and administer your account. There are brokerage firms that can both open an SDIRA for you and be the custodian of the account. The custodian is more like a passive overseer; it’s up to the investor to be active in their SDIRA account and ensure they are compliant with IRS regulations. 

While it’s up to the investor to choose investments for their SDIRA, the custodian should guide their customers through the process of SDIRAs and answer any questions. If they cannot do this, then you should find a custodian that will be more supportive to ensure you understand everything about your account. Below are some things to look for when choosing a custodian:

Tips for Choosing Your Custodian

  1. Licensure
    1. Only IRS approved custodians are allowed to administer your gold IRA account. It’s vital to ensure the custodian you choose is part of this approved list. There are many different players in the SDIRA field like administrators, facilitators and promoters. While all these individuals serve a different role, only approved custodians can administer your SDIRA.
  2. Fees
    1. This is where SDIRAs can differ from 401ks. There will be fees for administering the account and fees for storing the bullion. Make sure the potential custodian has a clear pricing structure and feel free to shop around for the best price, while also making sure the custodian is professional and IRS approved. 
  3. Specialization
    1. While people open SDIRAs for many reasons, investing in bullion is a very specific reason. So, you want to make sure your custodian is well versed in this type of investment. Ensure they have experience in gold IRAs before making the leap with them and opening an account. 

Purchasing Bullion to Add to Your IRA

Once you have your account set up and custodian chosen, you will need to fund your SDIRA. This is the same process as any IRA account; you will add funds to the account, but then you can use these funds to purchase bullion. It’s very important to pay attention during this step! Do not buy bullion directly from the provider. This is disallowed by the IRS. You will need to direct your custodian to buy the bullion you would like with the funds in your SDIRA. This is the process for every gold IRA so your custodian should have no problem completing the transaction.

Storage of Precious Metals in Your IRA

Another IRS requirement is that you cannot personally store the bullion in your SDIRA. This means no home lock boxes or safes! Your bullion needs to be stored in an IRS approved facility. When you open your account and choose your custodian, the custodian, the majority of the time, has a relationship with several approved facilities and will allow you to choose or they will recommend a company for you to reach out to. Although it may seem frustrating to not be able to possess your gold, these facilities carry complex, comprehensive insurance to ensure your bullion is safe. The insurance covers, usually, both storage and delivery. 

You might have heard the terms “home storage Gold IRAs” or “checkbook IRAs”, but these types of accounts should be avoided. Storing your bullion at home isn’t worth severe penalties from the IRS. It’s important to have a reputable custodian and storage facility. 

Can You Rollover Your Current IRA into a Gold IRA?

Yes! Just like other IRA options, you can opt for a direct or indirect rollover. If you choose the direct option, the IRA goes from custodian to custodian, so your IRA broker will send the funds directly to the custodian of your gold IRA. The indirect option involves your IRA broker sending you a check for all or a portion of your IRA and you sending it to your gold IRA custodian. This process must be done in 60 days or you will receive a penalty from the IRS, as it will count as an IRA withdrawal.

Receiving Gold IRA Distributions

If it’s time for you to start receiving your distributions, there are two options: receiving the physical bullion or the custodian liquidizing the gold and sending you the money. Just like a normal 401k, if you’ve chosen the Traditional option you will pay tax on the amount withdrawn. With a gold Roth IRA, you will not pay any tax. The same early withdrawal rules apply to a gold IRA as a 401k. If you take out money before age 59.5 and don’t meet any of the exceptions, you will incur a 10% penalty. 

Want to Learn More?

Recommended Follow Up: Gold Investment Guide

If you’re ready to invest in bullion, Nationwide Coins & Bullion Reserve is a reputable precious metals seller that has over 100 years of combined experience! Our experts would love to help you choose a bullion that’s perfect to add to your gold IRA. We have both gold and silver bullion available and can answer any questions you might have about the buying process. We also welcome you to check out our blog that has information on investing, bullion and the most up to date market news!

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