A gold IRA or precious metal IRA is an individual retirement account in which physical gold or other eligible precious metals are stored for the benefit of the IRA account holder. It works in the same way as a regular IRA, except that it holds physical investment coins or bars instead of paper assets. Precious metal IRAs are usually self-directed IRAs, a type of IRA in which the custodian allows you to manage more diverse investments in the account. Gold IRAs are a type of self-managed individual retirement account.
You can use them to invest in precious metals such as gold, silver, platinum, and palladium. Then you can enjoy the tax benefits that come with an IRA. A Gold IRA must be managed separately from a traditional retirement account, although the rules regarding things like contribution limits and payouts remain the same. Since there are multiple Gold IRA providers to choose from, it’s helpful to know what factors to consider when choosing one.
Although investors can undoubtedly buy physical gold and store it in a private safe, the IRS strictly prohibits this for gold (and other precious metals) purchased by the IRA. Gold IRA providers usually offer plenty of assistance in setting up and funding your account, as well as extending existing retirement accounts. Here’s how you can use a Gold IRA to save money that would otherwise have gone to the government. To own gold, whether in coins or gold bars, in an IRA, you need a genuine, self-directed IRA, which is offered by some custodian banks.
There are currently a variety of precious metals that meet the minimum purity requirements allowed for inclusion in a Gold IRA account. An IRA also allows gold bars and bullets made of gold and silver if they have a fineness of 99.9%. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian can. The IRS has issued private letter rulings to the most important gold ETFs, which state that IRAs may own the ETFs.
After you’ve funded your account, you can let your IRA custodian know which gold bars you need to buy (and how much). You probably also know that gold is a “collector’s item” and that IRAs are not allowed to own collectibles. Therefore, gold IRAs require the use of a custodian bank, usually a bank or brokerage firm, that manages the account. The Internal Revenue Service (IRS) allows holders of self-managed IRA accounts to purchase bars and coins minted from gold or other approved precious metals such as silver, platinum, or palladium.