Choosing your Gold IRA company is the first step to opening your IRA. If you decide to invest in a precious metals IRA, you should do so conservatively. Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your retirement savings in precious metals. Acceptable products that meet these criteria include Canadian Maple Leaf coins, Australian Koala investment coins, and PAMP Suisse bars.
The IRS also allows American Eagle coins even though they don’t meet the 99.5% purity standard for gold. You can’t currently hold rare or collectible coins, Swiss francs, British government bonds, and German marks in a self-governing IRA. They also make it easier to open your Gold IRA account, but they don’t provide investment advice, and you shouldn’t use the marketing material they publish as guidance in this regard. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as fiat currency and stocks.
Remember that not every self-governing IRA custodian bank offers the same investment options. So make sure that physical gold is among their offerings before you open an account. With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. Many people who open gold IRAs use funds from another IRA to do so, but it’s not a good idea to convert your entire nest egg into a gold IRA. To avoid the possibility of having to pay taxes and penalties, your Gold IRA company can process the transfer on your behalf.
Consult reputable outside sources or a fee-based financial planner for investment advice if you’re not sure whether a gold IRA is right for you. As with other retirement accounts, if you withdraw gold from your IRA before you turn 59½, you must pay income tax on the value of the gold, plus a 10% upfront withdrawal penalty. Many people who want to avoid this risk instead have their Gold IRA company carry it out as a transfer from institution to institution instead of taking it on themselves. You can set up the SDIRA either as a traditional IRA (tax-deductible contributions) or as a Roth IRA (tax-free distributions).
A gold IRA company will help you set up your account and sell you the gold (or silver) coins or bars that fund it. In addition to the account depository, the Gold IRA Company coordinates the tasks of the custodian, the facility where the precious metals in your IRA are physically stored. A self-managed IRA offers the same tax benefits as a traditional IRA, but allows you to hold precious metals and other alternative assets in accordance with IRS regulations. Opening a self-directed IRA and investing in precious metals is a bit more complicated than opening a traditional IRA or Roth IRA.
Given that you can also hold silver coins or gold bars, platinum, and palladium in a gold IRA, the correct term is technically “precious metal IRA.”