Gold and Silver IRAs are also referred to as precious metals IRAs and are often used as a hedge against currency flatters, inflation/deflation, and other market volatilities. One of the main challenges we face today is finding a reliable investment opportunity that guarantees a return on investment.
Conventional investments such as treasury notes, hedge funds, and stocks are often affected by political stability and inflation, which interfere with the value of our initial capital. In recent years we have also witnessed the declining purchasing power of fiat currency, something that is likely to affect your ability to handle your bills when your cash out your retirement savings.
A gold and silver IRA is intended to secure your retirement funds since precious metals but using an IRA are immune to market forces and will give you maximum value for your money. To invest in gold and silver IRAs, we need to know everything about these retirement accounts.
What is a Gold and Silver IRA?
A gold and silver IRA is a self-directed individual retirement account that allows you to invest in physical assets categorized as alternative investments. With this account, you have control over the amount invested, the assets, and gained profit and loss.
A gold and silver IRA works similarly to any IRA in terms of contribution limits, taxation, and guidelines for distribution. These IRAs are specific to precious metals and are used to purchase IRA-approved bullion in the form of coins, bars, and rare metals.
With a gold IRA, you can also purchase stocks in precious metals mining companies, invest in gold mutual funds that give you access to bullion, and access precious metals ETFs that track precious metals indexes.
You should note that precious metals are considered alternative investments, hence are subjected to more rules and regulations, unlike conventional IRAs. The government, through the IRS, issues guidelines on what metals you can invest in through your IRA. To ensure you remain compliant, it's advisable to open a gold and silver IRA with a reliable company specializing in precious metals IRAs.
Types of Gold and Silver IRA Accounts
There are three types of gold and silver IRAs, each offering varied benefits. With the help of your custodian or account administrator, you can pick one that best suits your financial needs and capabilities. Here are the top choices:
Traditional Gold and Silver IRA
A traditional precious metals IRA is the most common option among investors. This account offers eligibility for tax deductibles; you can file for a tax deduction on the contributions you make for your traditional IRA.
This account allows you to reduce the amount paid the year you contribute; however, you will have to pay taxes when you withdraw your distributions. You are likely to pay income tax when you withdraw your funds at 60 years of age.
Roth Gold and Silver IRA
Roth IRAs are popular for their tax benefits since they work in the reverse of traditional IRAs. With these accounts, you are taxed for every amount you contribute to your account. The advantage is your investment grows tax-free since the initial capital has already been taxed. When you withdraw, you get the maximum benefits of your account without worrying about paying taxes.
Another advantage of getting this account is that there is no limit to the amount of distributions you can withdraw. As long you are above 60 years old, you can withdraw any amount, unlike other IRAs with government-regulated withdrawal limits.
SEP Gold and Silver IRA
SEP gold and silver IRAs are specialized for self-employed individuals and small business owners. These accounts are similar to traditional IRAs, with a degree of freedom as it allows business owners to contribute to themselves and their employees. Like traditional IRAs, your contributions are eligible for tax deductions, while your withdrawals are subject to income taxation.
How Do I Open a Gold and Silver IRA?
Opening a gold and silver IRA is slightly different from a conventional IRA due to the sensitive nature of procuring precious metals. Below is a short guide to help you open a gold and silver IRA.
Select a Self-Direct IRA Custodian
This is probably the most important step in setting up a self-directed IRA. Your account needs to be held by a reputable firm, preferably a bank, a brokerage firm, or an IRS-approved entity. A self-directed custodian will help you find the best alternative investments to invest in, including real estate and precious metals.
When choosing a custodian for your gold and silver IRA, I recommend working with a gold IRA company since they are more conversant with the rules and regulations.
Choose a Precious Metals Dealer
The next step is to find a precious metals dealer. Research a reliable dealer with a proven record before directing your custodian to purchase in your stead. In most cases, working with a reliable custodian or gold IRA company eliminates the need to source for a precious metals dealer.
Doing your research help, you ascertain the quality of precious metals you buy and the dealer's trustworthiness.
Choose What to Buy
Most people have limited information on what to invest in when buying precious metals, especially when choosing IRA-approved precious metals. Your dealer will give you their product catalog, but your custodian will guide you on which metals to buy based on weight, purity, and IRS approval.
Choose a Depository
One of the rules of buying precious physical metals using your gold and Silver IRA company is that you can't hold the metals at home. All precious metals purchased through an IRA need to be held in a government depository, bank, or IRS-approved depository.
Some gold and silver IRA companies claim to offer storage. However, it's best to research if they meet the Internal Revenue Code's requirements to avoid penalties.
Complete the Transaction?
Once you have an account with a custodian, find a dealer, and settle on a depository, the final step is to complete the transaction. Your IRA custodian will handle all the payments and paperwork and ensure the metals are shipped to the depository.
How to Fund a Gold and Silver IRA
Once you open a self-directed gold and silver IRA, you need to fund it to buy gold and silver coins and bars. There are several ways to fund a gold and silver IRA, including:
It’s worth noting that despite opening a gold and silver IRA, you can’t directly fund the account with precious metals you own. This is because of government regulations on the types of coins and bars you can buy.
What Type of Precious Metals Can Be Held in a Gold and Silver IRA?
There isn’t any difference between a gold and silver IRA and a precious metals IRA. Both IRAs are designed to hold more than gold and silver coins and bars. You can purchase other IRA-approved metals, such as platinum and palladium.
The IRS has established strict guidelines as to which coins and bars we can buy through our gold and silver IRA. These guidelines are designed to ensure we invest in high-quality coins and bars for long-term value and a high return on investment.
For example, you can only buy gold coins and bars with a 99.95% purity. This rule applies to the American Buffalo Coins, Chinese Panda Coins, and Credit Suisse bars. The only exception is the American Eagle coin, with a 91.67% purity mark. Silver, on the other hand, needs to be 99.9%, while platinum and palladium must be 99.95%.
Working with a reliable gold IRA company help ensure you buy the correct coins and bars. They also connect you with a custodian who is in charge of all the paperwork and procurement; this way, you can meet all the requirements needed to hold precious metals using a gold and silver IRA.
Where Do I Store the Precious Metals?
Going through your gold and silver IRA guide, you will realize you can’t store gold and silver bought using a precious metals IRA at home. Storage should be carefully considered when setting up a gold and silver IRA.
You must choose a depository where you can safely store your precious metals. Most gold IRA companies will help you find a company offering safe storage with easy access. There are two primary types of storage for your gold and silver coins and bars including:
Aside from the type of storage options, you need to focus on the depository’s security, insurance, and cost of keeping your coins and bars.
When to Withdraw From Your Gold and Silver IRA
A gold and silver IRA works similarly to any IRA and is designed for long-term investments. This IRA is a good way to invest and secure your retirement benefits. Keep in mind that the government also offers tax benefits for investments made through your retirement account.
To answer the question of when to withdraw, a gold and silver IRA has the same withdrawal limits as a conventional IRA. You are allowed to withdraw when you are above 60years; withdrawing your distributions when you are below 59.5 exposes you to a penalty of 10% on the withdrawn funds.
Customers with traditional IRAs are exposed to more restrictions as they are allowed a specific minimum of distributions for those over 70.5 years. These guidelines require the account holder to withdraw a minimum amount annually based on a pre-determined formula. Customers who fail to make the withdrawals are eligible for penalties.
If you choose a Roth IRA, you enjoy some freedom as you can withdraw your distributions at any time without penalty, provided you are above 59.5 years old. The best part is that you won't pay any taxes for the withdrawals. However, you will have to pay a penalty of 10% and income tax if you withdraw early.
Top Recommended Gold and Silver IRAs
When setting up a self-directed precious metals IRA, I suggested choosing a reliable company specializing in gold IRAs. Several companies currently offer gold and silver IRAs, each promising more benefits than the other. Below are some of the top companies I would recommend.
Goldco is one of the country's leading precious metals IRA providers, with over a decade of experience It was founded by the CEO, Trevor Gerszt in 2006 by and is headquartered in California. Despite majoring in gold IRAs, the firm offers other services, including direct purchase of precious metals such as gold and silver.
Its main demerit is its high minimum deposit. Customers are required to deposit at least $25,000 in their IRA before they can start purchasing precious metals. You also need a minimum of $100,000 in an existing IRA accounts to qualify for a rollover.
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Augusta is one of the top Gold IRA companies based in Casper, Wyoming. The family-owned business was founded by Isaac Nuriani who is also the current CEO. His goal was to help families and investors diversify their portfolio though owning physical precious metals.
The company has grown its scope to offer non-IRA accounts, storage services in an IRS-approved depository, lifetime customer support, and IRA-approved precious metals. The company is built on three pillars simplicity, transparency, and high-quality service.
Its main demerit is the $50,000 minimum deposit you are required to have, which is beyond the reach of some potential investors. I would recommend Augusta to people who are undecided on their investment opportunities and are looking to learn more about gold and silver IRAs.
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American Hartford Gold is recognized for its broad product catalog that claims to offer precious metals as well as rare coins. The Los Angeles-based company offers several IRA investment plans focused on purchases such as gold, silver, platinum, and palladium.
The company is one of the best options for investors looking to diversify their investment portfolio and hedge it against market flatters. American Hartford boasts a team of experts with experience in gold and silver IRAs to guarantee customer satisfaction.
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#4. Birch Gold Group
Birch Gold Group has a solid reputation as one of the best gold IRA companies with twenty years of experience in the market. The Burbank, California-based company specializes in precious metals IRA while offering other gold IRA services.
Here, you need a minimum deposit of $10,000 which is relatively low compared to what other gold IRA companies require. The firm helps customers roll over their existing IRAs to fund their gold IRAs and purchase IRA-approved precious metals.
Aside from IRA-approved precious metals purchases, you can buy non-IRA precious metals through Birch group with insured shipping and discreet packaging for optimal safety. The company also offers a buyback program where they purchase your metals if you decide to sell.
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#5. Noble Gold
Noble Gold was founded in 2017 by Coin Plume and Charles Thorngren and is still relatively new to the industry. However, it makes it to my list for its simplicity. The company offers gold and silver IRAs you can use to buy IRA-approved gold, silver, platinum, and palladium.
If you are new to investing in precious metals, the company provides educational tools to understand what you are putting your money in. Noble Gold has partnered with Equity Trust as its sole custodian and International Depository Services as its depository.
Aside from IRA-approved metals, you can buy precious metals directly through a non-IRA account and enjoy free and insured delivery. You are also guaranteed buyback if you decided to liquidate your metals.
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