Whether it’s seagulls squawking overhead on a scenic day at the beach or crickets chirping from grassy-blade meadows of sun-set covered hills, retirement’s promise of peace and tranquility rests on a nearby horizon. The road to financial freedom, however, does require grit and strategy.
As Robert Kiyosaki, author of “Rich Dad, Poor Dad” and arguably one of the most financially fluent modern business minds, has stated: “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” This guide will break down how you can make your gold investments work hard for you through a precious metals IRA.
What is a Precious Metals IRA?
Investors may already be familiar with Individual Retirement Accounts (IRAs) like traditional or Roth IRAS as a wealth-building strategy. Who doesn’t love the magic of compound interest and tax-deferred growth? A precious metals IRA is a special kind of self-directed IRA. As the name indicates, self-directed IRA holders have the freedom to direct how retirement funds are invested.
Self-directed IRAs also give investors access to alternative assets that exceed the scope of stocks, bonds, or mutual funds made available by standard or traditional IRAs. Through a self-directed IRA, an investor can leverage alternative assets like precious metals. A precious metals IRA narrows that focus down even further. The account holder is able to hold IRS-approved precious metals assets, like gold, silver, or platinum.
What are the Benefits of a Precious Metals IRA?
A precious metals IRA comes with several benefits. For one, it provides diversification to mitigate other assets that undergo market corrections. A properly balanced portfolio that includes physical gold and silver can provide greater security against financial shocks.
Additionally, precious metals like gold are known to provide insurance thanks to having built a reputation around having a long-term store of value. Gold is a phenomenon that goes beyond any other commodity or asset class. It’s a safe haven asset— a rarity in the market. When the prices of other investments are down, gold’s value maintains a steady trajectory and can even increase as investors seek the safety of its harbor.
Similarly, gold acts as a hedge against inflation. When paper and paper-backed assets depreciate, causing a decline in purchasing power, gold shines. Historically, gold and other precious metals outperformed these asset types during periods of inflation and in a recession.
Lastly, investors can take advantage of a Precious Metals IRA’s tax-advantaged status. Gains on precious metals grow tax-deferred, and taxes are paid at a normal income rate once retirement age is reached, so penalty-free withdrawals can be made. All in all, investing in a precious metals IRA could improve your diversity and boost long-term portfolio growth.
Why Should I Open a Precious Metals IRA?
Opening a Precious Metal IRA is easy and provides you with an investment vehicle that will always have value and diversifies your retirement fund. Although much less common than a Roth or Traditional IRA or a 401(k) an increasingly large number of investors are turning to Precious Metal IRA for their retirement funds. The Precious Metal IRA offers investors a number of benefits. These are just three benefits you should expect:
1. It’s Simple & Easy to Do
While you might think the process for opening a Precious Metal IRA would be difficult it’s actually quite simple. Whether you’re opening a Precious Metal IRA from scratch, rolling over your existing retirement fund, or making a transfer within the Precious Metal IRA, it couldn’t be simpler.
2. Diversification Safeguards Your Retirement Fund
Diversification is the cornerstone of any retirement fund. As we’ve seen in recent years, as soon as stocks can gain value, they can also decrease in value. Investing in precious metals through an IRA will help you safeguard against any sharp decreases in value. You don’t want to be left with a big shock come retirement age—a Precious Metal IRA protects against that.
3. Precious Metals Will Always Have Value
Irrespective of its value in hedging against inflation, you can rest easy knowing that no matter what your Precious Metal IRA will always have value. There will always be a demand for gold, silver, and platinum. Additionally, because these precious metals are a physical commodity in an unchanging amount, your investment can’t suddenly “disappear.”
Think of it this way: a company is a man-made creation and can go under as has happened often in recent years. As a mineral, precious metals will always be around. And demand for precious metals has maintained for thousands of year. That demand won’t go away before you retire.
How Much Gold Can I Keep in a Precious Metals IRA?
How much gold you can keep in your precious metals IRA is still regulated by annually set contribution limits. For 2023, contribution limits are capped at $6,500 or $7,500 if you're age 50 or older. This applies to assets combined across one or multiple IRAs. Since a precious metals IRA is self-directed, be sure you don’t entrap yourself with any excess contributions.
How Can I Open a Precious Metals IRA?
The first recommended step is to find a reputable IRA custodian or trustee. Their role is to make sure you remain IRS-compliant so the assets in your account don’t lose their tax-favored status. Setup fees, transaction fees, custodial fees, quality of service, and storage fees should all be taken into account when choosing your precious metals IRA provider.
Note that you cannot store precious metals intended for a precious metals IRA at home. This is done to protect your investment from risks like theft and also prevent any prohibited transactions like self-dealing. Any depository that meets the Internal Revenue Code’s requirements, like the Texas Bullion Depository, will suffice.
The next step is to make sure you are investing in IRA-worthy, IRS-approved precious metals assets. The value of precious metals assets correlates with their purity. Often, metal alloys are added to fortify the structure of softer precious metals like silver and gold. To ensure the precious metals held in your precious metals IRA are of maximum value, the IRS has set uniform and specific regulations around purity standards. They are as follows:
Gold must be 99.5% pure
Silver must be 99.9% pure
Platinum must be 99.95% pure
Palladium must be 99.95% pure
Some gold bullion coins that qualify include Canadian Maple Leaf coins, Australian Koala bullion coins, and PAMP Suisse bars. An exception to the purity standard is the American Gold Eagle coin. All American Eagle Gold Proof Coins have a purity of 91.67 percent. However, as America’s officially recognized gold bullion coin, the IRS permits investors to hold them in their precious metals IRA.
Once you’ve purchased your precious metal investment, the dealer will send it directly to the depository for safekeeping.
The U.S. Gold Bureau — Your Trusted Precious Metals Dealer
As you’ve read, only high-quality precious metals can be stored in a precious metals IRA. You’ll want to make sure your precious metal assets are sourced from a reliable and trusted source. At the U.S. Gold Bureau, our team of precious metal specialists has the expertise and wherewithal to assist you throughout all stages of the precious metals acquisition process.
Our team will handle all of the grading and certification steps prior to purchase, so you can be sure your precious metals assets are IRA-ready. U.S. Gold Bureau is an authorized bulk purchaser of coins and bullion from the U.S. Mint, and an authorized and licensed dealer of investment-grade coins. As such, we can guarantee the origin, authenticity, purity, and quality of every product we offer. We are fully compliant with the regulations governing bodies of the precious metals industry.