A gold IRA, also known as precious metals IRA, gold-backed IRA, or Roth gold IRA, is a specialized type of Individual Retirement Account (IRA) that allows investors to hold physical gold bullion or coins and other precious metals as qualified retirement investments.
Specifically, these special forms of IRA retirement vehicles are actually self-directed IRAs that are meant to hold physical gold coins and gold bars of high purity, as well as silver, platinum, and palladium if you so choose.
And thanks to the new IRS rules and regulations, you are now able to own high-purity (IRA-approved) and investment-grade gold bullion and the other precious metals in their tangible form in such accounts.
Best of all, this provides a safe way to protect your retirement savings, while also reaping the same tax advantages as a conventional IRA.
Let us look at more reasons why you should invest in a gold IRA.
You should invest in a gold IRA to protect your retirement savings account and make sure your assets are safe and secure, while also ensuring that your wealth will appreciate.
By investing in gold and other precious metals through a gold IRA, you do not have to worry about a possible stock market crash or inflation, where your paper assets would lose their value.
Gold tends to move in the opposite direction of paper assets and increases in value when the dollar is debasing. That is why it is important to diversify your investment portfolio and hold a tangible, physical asset in your retirement account.
In addition, a gold IRA is the better choice since traditional IRA accounts may not be enough to provide for you and your loved ones post-retirement.
Especially not if the economy continues spiraling out of control at this magnitude.
Protection Against Government Confiscation
Not only does a gold IRA permit individuals to diversify any portion of their retirement portfolio — including pre-existing IRAs and former 401k(s) with previous employers — but it also allows investors to own physical metals within that retirement plan.
With that, investors can securely possess physical precious metals in a tax-deferred account.However, many investors do not know how easy and safe it can be to invest in gold and particularly through a gold IRA.For instance, a gold IRA is subject to the same rules as a traditional IRA, which allows investors with existing retirement assets to easily invest in gold.
There are two types of gold IRAs available:
1. Traditional-Based Gold IRA
Gold IRA Guide – What is a gold IRA? Why invest in a precious metals IRA? Best gold IRA companiesWith a traditional-based IRA (Self-Directed-IRA or SDIRA), you do not pay tax on the contributions you make to your gold IRA from your income until much later in retirement when you take distributions. And you can start taking distributions without penalty when you are age 59½.
To give you an example, if you make $60,000 one year and decide to contribute $5,000 into your gold IRA, you will only pay the tax that year on $55,000.
In addition, by the time you pay tax on that $5,000, the gold you have spent it on could well be worth a lot more. And this possible rise in asset value could mean that you will end up getting some of your tax bills effectively paid for free.
Also, a traditional IRA comes with a ‘Required Minimum Distribution (RMD)’, starting at the age of 72, meaning that you must withdraw a certain amount from your IRA each calendar year. Accordingly, this RMD also applies to a gold IRA.
2. Roth-Based Gold IRA
In contrast to a traditional IRA, with a Roth-based gold IRA, the contributions you make are NOT tax-deductible.
But on a positive note, when you make withdrawals from your gold IRA, you do not have to pay taxes on your investment gains. So, if the price of gold has increased significantly, this tax advantage may be a huge benefit.
Additionally, with a Roth-based gold IRA, the Required Minimum Distribution does not apply.
Instead, an upper-income limit applies to Roth IRAs. And as of 2022, your modified annual income must be less than $144,000.
Now, let us look at more reasons why you should invest in a gold IRA.
1. Inflation Hedge/Protection
First of all, the stability offered by gold is unmatched.
But the major single reason to invest in a physical gold IRA is that precious metals are the smartest and easiest means of protecting your retirement account against the ravages of inflation and other manifestations of economic chaos.
Like the ones, we are in right now!
The deal is that as money gets inflated away by the meddling government, it decreases in value.
Fortunately, precious metals do not suffer at the hands of inflation.
Quite the opposite… This asset class actually increases in value as the economy suffers and the American dollar declines over time.
2. Tax Advantages
Like any other IRA, a gold IRA offers the ability to accrue gains tax-free, while also allowing you the benefit of owning physical gold coins or gold bars.
Besides, there are no unfortunate tax consequences or hard requirements of declaring precious metals from the IRA to the IRS (since they are already aware of it).
And if you would decide to transfer your gold IRA assets to another approved investment or retirement plan down the road, you will not suffer any tax problems or penalties.
When deciding to liquidate, both our recommended gold IRA companie Goldco and Augusta Precious Metals have buy-back programs and will offer you a much better price than a regular coin dealer or broker.
As mentioned, diversifying your assets with physical gold and silver can protect against inflation, currency risk, default risk, geographic risk, financial crisis, and government confiscation of your hard-earned money.
In addition, because the beta or correlation between stocks and bonds, compared to gold is extremely low, you can rest assured that falling stocks and bonds prices generally translate to rising precious metals bullion prices.
Typically, when financial conditions show signs of deterioration, as they do now, investors flock to gold to protect their assets.
That is a proven fact!
Furthermore, it is also important to know that gold IRA accounts are not only restricted to precious metals bullion.
They can also hold franchises, businesses, stocks, bonds, mutual funds, commodities and futures, mortgages, cash instruments, and other non-collectible forms of investments.
In fact, there is no other form of IRA investment or retirement vehicle, which can hold a larger variety of investments than the self-directed gold IRA.
4. Wealth Appreciation
Did you know that ever since President Nixon closed the gold window in 1971, gold has actually outperformed both the S&P 500 and the Dow Jones Industrial Average?
And this, despite the amazing stock market bull run of 1982-2000.
Gold’s performance in the 21st century has been even more amazing, with gold making more than double the gains of both the S&P and the Dow, which is a strong indicator you can put your trust in this yellow metal.
The bottom line is that including gold within an existing retirement account could improve investment performance by increasing returns, without increasing risk. Or by reducing risk, without adversely affecting returns.
5. Rollover Ease
Starting a gold IRA is as easy as 1-2-3!
You can simply roll over or transfer parts or all of any existing retirement account over to a gold IRA. The process is easy and painless and takes about 10 business days.
All you need to do is sell assets in your existing accounts, roll over these funds over to your gold IRA, and use them to buy gold.
And you don’t have to front extra cash.
Besides, the gold IRA specialists will help you navigate the process without a hitch.
6. Gold Stands The Test Of Time
From the traders of antiquity to today’s most savvy investors, accumulating gold stands the test of time.
Gold is accumulated for a myriad of reasons, including to hedge volatile stock markets, to offset fluctuating commodities prices, and as a safe haven against falling home prices.
With that said, if you want to capitalize on consistent growth in value, gold has always proven the safest investment.
1. The Price Of Gold Fluctuates
Like any other investment, the price of gold has volatility and can go up or down.
That is why it is recommended to diversify your investment portfolio into several asset classes. And you can easily do that by combining, for example, gold and bitcoin (or other cryptocurrencies) in a crypto IRA.
2. Safeguard Against Unethical Companies
Additionally, it is important to only be dealing with a gold IRA company that has all the appropriate and required licenses, registrations, insurance, and bonds to protect your investment.
This means that you should ask for verification of these licenses and other information before you invest any of your savings.
Also, look for a gold IRA company with an outstanding reputation from objective third parties, such as the Better Business Bureau or the Business Consumer Alliance.
Once your new precious metals have been purchased, they must be stored according to IRS guidelines for gold or precious metals IRAs. Your choice of gold IRA company will have IRA specialists that will help you adhere to the IRS guidelines and hold your hand throughout the setup process.
Also, your precious metals investment will be stored with a custodian, just like any other IRA asset.
And the good news is that gold IRA custodians specialize in storing precious metals and have secure vaults set up to keep your precious metals safe.
More importantly, they also carry insurance to ensure that, in the very unlikely event that some metals get stolen or destroyed, your investments will be made whole.
With that, let us take a look at how to start a gold IRA next.
To begin the process of opening a gold or precious metals IRA is simple, especially when you partner with precious metals experts who know the ins and outs of this type of IRA.
Let us show you the easy 4 steps when opening a gold IRA next:
For starters, to invest in precious metals you have to start with a self-directed IRA. As an investor, you can begin a new IRA account, or roll over from an existing retirement account. It is key to speak with a tax advisor and precious metals expert to make sure that you follow regulations and that any retirement accounts you currently hold are eligible for a gold IRA transfer or rollover, or other precious metals IRA.
Second, gold IRA assets need to be stored with a custodian per IRS regulations. So, working with precious metals investing experts, like those at Goldco or Augusta Precious Metals, will help you find a custodian experienced with gold IRA investing. That way, you’ll ensure that your self-directed IRA is set-up correctly
When choosing precious metals, it is important to remember that they need to meet certain IRS rules and regulations to avoid retirement mistakes when investing. Working with a precious metals specialist will ensure that you are choosing the right types of gold, other precious metals or crypto.
Once you have chosen your desired metals as an investment, you can purchase them and work with your custodian regarding storage. The custodian will keep your assets safe and secure at a bullion depository so that they will be available when you need them.
IRA-approved precious metals bullion must meet certain standards.
Additionally, specific pieces must be approved by the IRS in order to effectively be included.
The standard of gold bullion is a minimum purity of 99.5%, while with silver it is 99.9% minimum purity.
Here are examples of IRA approved bullion:
– Gold or Silver American Eagles
– Gold or Silver American Eagles (Proof coins)
– Gold or Silver American Buffalos
– Gold or Silver Canadian Maple Leafs
– Gold or Silver Austrian Philharmonics
– Silver America the Beautiful Coins
– Gold or silver bullion Bars
– American Silver Eagles
You can find out more in IRA-approved gold and silver bullion.
As we have touched on earlier, investing in precious metals through an IRA has to be done in accordance with the IRS rules and regulations.
That is why it is crucial to work with a company that has a good track record working with these types of accounts.
Gold 401(k) Rollover
A rollover happens when you receive the distribution from your existing retirement account, and then turn around and deposit it in another retirement account.
In this case, you would need to re-deposit the funds into the new retirement plan account within 60 days. The reason for this is that after the 60-day limit, you would be liable for taxes and other penalties on the money withdrawn.
You can also only roll over the same money once every 12 months to preserve the tax-deferred status of your retirement savings.
Gold IRA Transfer
A transfer you can do at any time with your existing IRA, as long as the assets go from custodian to custodian.
In a direct transfer, the money flows directly from one IRA custodian to another.
This means that the distribution check from the old IRA custodian must be made out in the name of the trustee or custodian of the new IRA account that receives the funds.
In contrast to a 401(k) rollover, transfers may be made as often as you want.
You can find out more about the rules and regulations in Gold IRA Rollover & Transfer Explained.
If you so choose, you can include other precious metals in your IRA:
Platinum: Primarily used in automotive applications for catalytic converters to help reduce harmful emissions.
It is also used in jewelry and other refining catalysts along with some computer applications.
Platinum is rarer than gold or silver and has historically been as expensive as gold.
Palladium: Palladium is 15 times rarer than platinum and 30 times rarer than gold.
It is used in automobile manufacturing, electronics, dentistry, and fuel cell production.
Just like platinum, palladium is primarily used in automotive catalytic converters.
You can find a complete list of what gold and silver bars, rounds, and coins that are IRA-approved here.
Gold IRA & Alternative Assets Companies We Recommend
There has never been a better time to invest in gold, silver, and alternative assets (cryptocurrency like Bitcoin or Ethereum) than today. With the ease of setting up a gold IRA , you can go from worrying about your retirement savings to complete confidence in the security of your wealth. But choosing the right company to invest with can be extremely difficult unless you know what to look out for.
When reviewing gold IRA and crypto IRA companies it’s critical to compare the ratings and reviews by looking at independent authority sources. We look at the scores given by using 5 independent rating sources that include the Better Business Bureau, Business Consumer Alliance, TrustLink, TrustPilot, and Ripoff Report.
We have looked into Goldco Precious Metals, and Augusta Precious Metals, both top-rated gold IRA and alternative assets companies.
Because gold serves as a hedge against inflation, deflation, currency risk, stock market volatility, etc. Gold is a store of value and should be seen as financial insurance. Historically, gold moves in the opposite direction of traditional securities like stocks, bonds, and mutual funds. When the stock market goes down, the price of gold and silver tends to rise. So, if you are looking to minimize risk, diversify your portfolio, and safeguard your wealth during times of heightened volatility, you should hold physical gold.
You should invest in a gold IRA to protect your retirement savings account and make sure your assets are safe and secure, while also ensuring that your wealth will appreciate. By investing in gold and other precious metals through a gold IRA, you do not have to worry about a possible stock market crash or inflation, where your paper assets would lose their value. It also allows you to take advantage of a simple and easy IRS loophole that allows you to hold physical gold and silver with the money you already have saved in your retirement accounts, completely tax and penalty-free.
Yes. Your precious metals investments are stored with a custodian, just like any other IRA asset. An IRA custodian is a financial institution that holds your account’s investments for safekeeping and sees to it that all IRS and government regulations are adhered to at all times. The custodian could be a bank, credit union, trust, or another company called a non-bank custodian.
Non-IRA precious metals, yes. Not metals in an actual gold IRA. IRS rules forbid keeping your IRA precious metals at home or in a standard safety security box. They must be held by an approved non-bank trustee or a bank within IRS guidelines that restricts access and keeps all precious metals segregated by the customer. This ensures exact metals purchased by a specific customer are returned to that same customer once legal distribution requirements are met.
In other words, just like a Traditional IRA, the access to the precious metals in your Precious Metals IRA must be restricted in specific ways to ensure deposit and disbursement laws are followed.
No. Like all investments, the future value of precious metals is not guaranteed and can rise or fall based on a variety of market influences. This is why it is good to diversify your portfolio with other asset classes such as cryptocurrencies, real estate, etc.
Indirect forms of investing in gold are much riskier than physical metal. You are relying on any third party individual or company to look after your wealth for you, and depending on the company’s success or failure, you risk losing your investment. With physical gold, you are in control of your wealth. Physical gold offers you that layer of protection and security which Gold Exchange Traded Funds (ETFs), gold mining stocks and funds do not.
It depends on your individual investment goals and situation. Gold bars are the largest and most efficient way to purchase and store large amounts of gold. They are usually also the most cost-efficient because they have the smallest premium over the gold spot price and the lowest markups for design and transportation. They are also easier to stack and more difficult to counterfeit.
Gold coins are smaller and more convenient than gold bars, but they are also harder to store because they are easier to lose. Gold coins are less efficient than bars for holding large amounts of metal and some of them may come with a higher premium over spot since they can be marked-up for design or rarity. Although, gold coins are more useful for people who intend to use their gold as money.
When it comes to gold IRAs, only certain coins are IRS approved for inclusion in IRAs. In fact, not all bars or bullion are IRS approved. The IRS or your gold IRA company maintains a list of acceptable forms of precious metals for IRAs.
At age 59½, you or the beneficiary of your gold IRA can start taking penalty-free distributions from the account, according to the IRS.
Augusta Precious Metals is a premium provider of precious metals products and services, with a specialty in gold and silver IRAs. The company’s reputation of a customer-first approach to sales, service and education is well-known throughout the retirement investing community. Augusta has received ZERO complaints at either the BBB or BCA since opening its doors in 2012 – and has received thousands of 5-star reviews across the most popular consumer rating platforms. And here’s a big reason for all the excitement: Augusta offers the most competitive, transparent pricing in the industry, underscored by its price-match guarantee on all coins.
Additionally, Augusta will waive fees up to 10 years for new customers (a special – ask how many years you qualify for). As much as all that is, Augusta Precious Metals offers much more to hard-working retirement savers, including a free one-on-one educational web conference designed by the company’s on-staff Harvard-trained economist. This is the same web conference attended anonymously by hall of fame quarterback Joe Montana that convinced him to become an Augusta customer. Mr. Montana’s personal financial advisors found the company for him after researching all the gold IRA companies in the U.S.! Read the full review of Augusta Precious Metals in section: Reviews.
Goldco is one of the leading providers of precious metals IRAs, and its IRA & 401(k) rollovers are easy and painless. They pride themselves in customer service and the ability to help individuals diversify their retirement accounts and skyrocket their wealth.
Goldco has an A+ rating by the BBB, and Inc. magazine ranked Goldco the 528 in its 35th annual Inc. 5000, a list of the nation’s fastest-growing private companies. With Goldco, any investor can buy precious metals outright, even if they specialize in precious metals IRAs.