A gold IRA or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are held in escrow for the benefit of the IRA account owner. It works the same way as a normal IRA, only instead of holding assets on paper, it contains physical coins or bullion. A precious metal IRA is an individual retirement account that allows you to invest in physical metals. They are sometimes called gold IRAs, but you can also buy silver, platinum and palladium within these accounts.
IRA holders must make mandatory minimum distributions (RMD) starting at age 70 ½. With a gold IRA, you can take your RMDs “in kind”, meaning physical precious metals are sent to you directly. Alternatively, you can sell the precious metals and make cash distributions. You can buy gold coins and bullion of gold, silver, palladium and other precious metals that meet certain purity requirements with your IRA.
Current law allows both IRA transfers and qualifying retirement plan transfers, such as 401 (k), 401 (a), 403 (b), 457, Thrift Savings Plan (TSP) and Annuities. As a general rule, an IRA investment in any metal or currency counts as the acquisition of a collectible item. As such, the transaction is characterized as a taxable distribution of the IRA followed by a purchase of the metal or currency by the IRA owner (you). Indeed, this general rule prohibits IRAs from investing in precious metals or coins made of precious metals.
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 ROTH or traditional IRA. Record gold sales, combined with the emergence of many more companies that manage and simplify transactions, have made investing in a gold IRA a one-stop shop.
A gold IRA can be a traditional IRA, a ROTH IRA, a SEP-IRA, a SIMPLE IRA, or an inherited IRA that is self-directed and that holds physical gold coins or gold bars eligible for IRA. Since precious metals are an alternative investment, opening an IRA for gold or precious metals is a more complicated process than starting a normal IRA. As with any retirement account, with your gold IRA or custom precious metals IRA, you will invest your retirement funds according to a specific tax treatment (before or after tax) and then make distributions in the future. According to the latest PLR, rules prohibiting direct IRA investments in gold do not apply when gold is held by an independent trustee.
ROTH IRAs allow investors to put money after tax into their IRA to invest in assets of their choice. Storing your IRA metals at home can expose the IRA account holder to significant risk of IRS penalties. Traditional IRAs allow investors to put pre-tax (tax-deductible) money into their IRA to invest in assets of their choice. If gold seems like a solid option to you, Sentell suggests you don't put more than a third of your retirement funds into a gold IRA.
Funds received from an IRA are not subject to penalties or taxes as long as they are deposited into your new IRA account within 60 days. Your self-directed IRA custodian can help you arrange for the transfer or transfer of your existing IRA to a precious metal IRA. Once you've set up your IRA Gold, you can transfer or transfer funds from an existing IRA or other retirement plans. To convert IRA funds into gold, you must establish a self-directed IRA, a type of IRA that is directly managed by the investor and that is allowed to own a wider range of investment products than other IRAs.
With a designated IRA specialist, Allegiance Gold staff members can help you determine if your account qualifies for transfer. For example, you might have an IRA that is invested in precious metal bullion and another IRA that is invested in liquid assets, such as publicly traded stocks and mutual funds. Custodians who offer a checkbook IRA structure primarily recommend that customers keep IRA metals in a bank safe deposit box. .