While previously IRAs were limited to storing American Eagle gold and silver coins, today IRAs can invest in gold, silver, palladium and platinum ingots and coins allowed by the IRS. Next, select a precious metals dealer. You'll tell the IRA depositary to send money to the dealer to buy gold, silver, platinum, or palladium. You can keep coins or ingots in a precious metals IRA.
Despite the colloquial term “IRA gold”, you can have silver, platinum and palladium in this account. For many, that means opening a Roth IRA, a type of account that offers tax-free withdrawals once you reach retirement age. You might even consider a Roth Gold IRA, which allows you to invest your funds in precious metals such as gold, silver, platinum and palladium. These investments can be smart ways to hedge against inflation, grow your retirement account, and diversify your overall portfolio.
The main advantages of investing in precious metals through an IRA are tax benefits. By using an IRA to buy precious metals, the investor saves taxes now or in the future. The specific tax benefits depend on whether you choose a traditional IRA or a ROTH IRA. A Roth Gold IRA is a type of self-directed IRA that you can use to invest in various tangible assets, such as art, antiques, collectibles, and even real estate.
Even with a long time horizon, gold investors have no guarantee of making money with their investment, especially if they plan to rely on a gold IRA company's repurchase program to sell their gold when they have to accept distributions from that IRA. Read more about what to look for when selecting a gold IRA company in Money's guide to the best gold IRA companies. While most IRA companies buy back gold, keep in mind that the price at which they buy gold is lower than the price at which they sell gold. They sell gold coins, bullion and the like, but they don't offer advice on investing in an IRA (despite what their websites or other marketing materials suggest).
Gold and other precious metals are considered a hedge against inflation and can rise in value during periods of stock market volatility. Many gold IRA companies have preferred custodians who recommend or require customers to use them, or you can search for a custodian on the RITA website. If you're wondering what “IRS-approved gold” is, keep in mind that there are minimum metal fineness requirements, along with specifications on type, size and weight. The IRS rules allow funding a gold IRA with money extracted from another IRA, the 401 (k), 403 (b), 457 (b) or the Thrift Savings Plan.
If you only want to buy gold or silver, here's what you need to know about buying gold outside of an IRA. Orion Metal Exchange is a California-based company that offers IRA accounts for gold and a variety of precious metals, coins and ingots. Precious metal IRAs usually only make sense if you have a strong portfolio and want to diversify your investments by setting aside a small portion for physical gold, silver, platinum, or palladium. If you withdraw gold from your IRA before you turn 59 and a half years old, you'll be taxed on the value of that gold, as well as a 10% penalty for withdrawing money early from a retirement account.
You should not finance a gold IRA with cash because you have already paid taxes on that money, and the purpose of using an IRA as an investment vehicle is to take advantage of the tax advantage that comes with using pre-tax dollars.