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IRA-Approved Gold: How To Determine if It's Right for You

IRA-Approved Gold: How To Determine if It's Right for You

December 20, 2023866 view(s)

Gold is popular for a wide range of reasons. Even the color inspires feelings of being luxurious and high-class. It symbolizes success and the extravagance that comes with doing well in life.

This symbolism comes honestly considering that an IRA gold investment can ensure long-term success during retirement. It's a great way to get reliable money down the line.

Read on to learn the ins and outs of IRA-eligible gold and why buying it is beneficial to your retirement plan.

The Basics of IRA Gold Investments

An individual retirement arrangement is a plan that helps people save for retirement. You place assets into a designated account and hold them until you retire. During this holding period, you won't be taxed on the assets (or, in some cases, will have extremely low rates of taxation).

Traditional retirement plans hold tax-advantaged cash investments. They also may hold stocks and bonds. These assets will be cashed in when you reach retirement age, and you can use the funds to relax and have fun when you no longer have to work.

A precious metals IRA is a specific type of retirement plan that allows you to hold gold for several years or decades tax-free. You purchase the gold and hold it at the bank. It accrues value over time, and since you're not paying taxes on it, you maximize that value.

Diversification is key to any portfolio, and IRA accounts are no exception. Gold is a great way to ensure that you have an asset that retains and holds value upon retirement. It offers guaranteed money when you sell it upon accessing your retirement account in the future.

Gold IRA Types

There are three core types of gold IRAs.

SEP gold IRAs are not open to individuals. They're meant for small business owners and self-employed people. They work like traditional IRAs but have a higher contribution limit, so those who set them up can put more gold into the IRA than an individual could.

This is not an option for most people. You're likely going to choose one of the other gold IRA paths meant for individuals.

Traditional gold IRAs are funded with upfront money before taxes. You put the money into the account without it being taxed at all. When you withdraw them upon retirement, that's when you pay taxes on the gold.

Roth gold IRAs are the opposite. You pay taxes on the gold when you put it into your IRA account, which means that you need to give money to the IRS upfront. But when you retire and take the gold out of your account, you pay no taxes.

These are the types of gold IRAs open to individuals. You will need to choose which is right for you based on how much money you're currently willing to invest.

If you don't have the funds to pay taxes now, a traditional gold IRA will work. However, if you can pay now for a Roth gold IRA, you may have lower tax rates (and thank yourself later when you don't need to pay.)

Requirements for IRA-Eligible Gold

Not all gold is IRA-eligible. It needs to meet specific standards in order to go into retirement accounts.

All gold bullion that goes into an IRA needs to be at least 99.5% pure. This applies to bars and rounds. They also need a 0.999 fineness.

Weight also matters. 100-ounce and 400-ounce bars are eligible, as are small bars created to match exact weight specifications. Look for the "IRA-approved" symbol on a reputable distributor's website to ensure that you choose the right gold investment.

Bullion also must have been produced by an approved mint. The national government mint is a common entity that will produce certified gold bullion. However, it can also be manufactured by a refiner that's been approved by organizations like COMEX, NYMEX, or LBMA.

Gold coins are also eligible assuming that they're 99.5% pure. The only exception to this purity requirement is the Gold Eagle coin, an extremely popular collectible investment. All coins need to be in mint condition, come in their original packaging, and be stored alongside a certificate of authenticity.

How to Choose the Right Gold to Invest In

Gold has steadily increased in value over the past century. It's currently worth over $2000 per ounce. It was only worth $600 in 1915.

In the short term, gold's value has also increased. It was only worth about $1892 at the end of 2022.

Despite short-term fluctuations and volatility, the gold market has proven itself one of stable growth. By investing in gold, you choose a retirement plan that is sure to steadily increase in worth.

However, to reap these benefits, you'll need to select the right gold to invest in now. This doesn't just mean choosing something IRA-eligible. It also means weighing these IRA-approved options and selecting the right one for your needs.

Bullion vs Coins

Gold bullion includes bars and rounds with no numismatic value. They have no government-assigned worth or collector's value. Their price comes solely from the intrinsic value of the gold content.

Gold coins either hold fiat or collector value. They have worth beyond just the weight of the gold material. This makes them highly coveted, and people buy and sell them for more money than bullion.

Both of these options are IRA-approved, so do some research, figure out your goals, and determine what best fits your budget.

A Reputable Dealer

It's important that you work with a reputable precious metals dealer like the United States Gold Bureau when buying IRA gold.

First, there are purchasing requirements for IRA-approved metals. You need to work with a vendor that has all the appropriate certifications. If you don't, your purchase still will not be eligible for your IRA even if it meets purity and weight requirements.

Reputable retailers also eliminate your chances of being cheated, jilted, or scammed. You don't want to send money to a random seller and receive fake gold (or nothing) in return for your money. Gold is expensive, so this is a surefire way to lose a lot of funds.

Plus, you can't store IRA-eligible gold investments at home anyway. Buying from a dealer yourself won't give you the gold you need for a traditional or Roth IRA account. The custodian who places the investment into a secure depository needs to buy it and store it, not you.

Investing in Gold for Your Retirement Plan

Once you choose what gold you want in your precious metal IRA, you'll need to purchase it the right way.

Unlike personal investments that are unregulated, you need to go about your IRA investment in a specific manner. Though gold IRAs are self-directed, you must go through a custodian who buys the selected gold for you. This custodian needs to have met IRS approval requirements.

After making the purchase, your custodian will place your IRA-approved gold into a depository that was pre-approved by the IRS. You choose the depository, though the custodian will recommend a secure location if you're unsure of where to store your metal.

Remember: you cannot store the gold yourself. It can't be in your house or a personal safe.

The custodian's role is then to handle and store the precious metals to IRS requirements. They keep it safe until your retirement. This usually costs about a $50-$150 annual fee.

This isn't just because of legal requirements, either. Custodians know how to store your precious metals in conditions that help them retain their value. They won't tarnish or decay, so you don't need to worry about being stuck with worthless, ruined gold when you retire.

The Benefits of Investing in Gold for Retirement

Gold is a tangible asset. It has intrinsic value because of its natural properties such as rarity, beauty, and utility. The value isn't assigned by the government, centralized bank, or any business entity.

This sets it apart from stocks and bonds. There's no way for it to lose its value because a business went bankrupt. No matter what happens, you'll have an inherently valuable gold asset to sell when you retire.

As a result, gold also serves as a hedge against inflation. If cash assets lose their value, gold still retains its worth. In fact, people tend to turn to precious metals as currency value inflates, making it more valuable when money becomes worth less.

IRA gold is also ideal because it is easy to store. Your custodian manages its storage, and the gold never sees your hands until retirement. This means that you don't need to find a secure and trusted banking institution or worry about theft.

IRA-Approved Gold How To Determine if It's Right for You

Start Buying Gold the Right Way

Now that you know all about IRA gold investments and why they're beneficial, it's time to begin building a retirement portfolio. The United States Gold Bureau is committed to helping you select high-quality IRA-eligible gold bullion and coins.

We work with both individual investors and their custodians to ensure that retirement accounts are set up successfully and simply. Secure your free investor's kit today to learn the secrets of making successful precious metal investments for your IRA.

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