If you’re looking for a way to invest in precious metals and get the tax advantages of an IRA, then this is the blog post for you! In this post, we will walk you through the step-by-step process of setting up a precious metals IRA. We’ll talk about what type of metals you can invest in, how to fund your account, and more!
Tax Advantaged Investing
The individual retirement account, or IRA, was created by Congress in 1974 as a way to encourage Americans to save for retirement. There are two main types of IRA: the traditional IRA and the Roth IRA. Both have their own unique benefits and tax advantages. With a traditional IRA, you can deduct your contributions from your taxes. This means that you will pay less in taxes now and more when you withdraw the money in retirement. With a Roth IRA, you do not get a tax deduction for your contributions, but you can withdraw the money tax-free in retirement. This is because you have already paid taxes on the money when you contributed it. Investing in an IRA is a great way to save for retirement and take advantage of IRS-approved benefits.
The Basics of Precious Metals Investing
For centuries, physical precious metals have been prized for their beauty and rarity. Today, they continue to be a popular investment choice for those looking to diversify their portfolio. But what are the benefits of tax advantaged precious metal investing?
The most common precious metals include physical gold, silver, platinum, and palladium. Gold is often considered the safest precious metals investment, as it is the most abundant metal and has a long history of being used as a currency. Silver is less abundant than gold but is still a popular choice for investors. Platinum and palladium are rarer than gold and silver, making them more expensive but also potentially more profitable if prices rise.
When investing in precious metals, there are two main options: buying physical metals or investing in mining companies or other stocks related to the industry. For those looking to purchase physical metal, coins and bars are the most common choices. Gold coins come in a variety of weights and purity levels, making them a versatile net investment income option. Silver coins and bars are also popular choices. Platinum and palladium coins are less common but offer investors the potential for higher returns. Those looking to invest in stocks related to the precious metals industry can buy shares of passive foreign investment companies or exchange-traded funds that track the price of metals.
How To Set Up a Precious Metals IRA Account
A precious metals IRA account can be a great way to invest in Gold, Silver, and other precious metals. But how do you set one up? The process is actually pretty simple.
First, you’ll need to choose a custodian for your account. A custodian is a financial institution that will hold your precious metals and manage your individual retirement account. There are many reputable custodians out there, so do your research to find one that best fits your needs.
Once you’ve chosen a custodian, you’ll need to open an account with them and fund it with cash or other assets. Once your account is funded, you can then begin purchasing precious metals. You can purchase metals directly from a dealer or through a broker.
And that’s it! Now you have a precious metal IRA account that can provide you with many benefits, including the potential for long-term growth and the ability to diversify your investment portfolio.
Many individuals who are interested in investing in precious metals through their IRA’s were easily discouraged because in the past the tax code was rather complicated in this regard. What makes this process straightforward and foolproof is that the custodian that you select to safeguard your precious metals is there every step of the way to answer all of your questions related to all procedures, administration, expenses and reporting requirements. Our suggestion is to take advantage of the expertise of your custodian and have them answer all of your questions before you proceed with a gold IRA rollover transaction.
The Tax Code supplies important statutory exceptions: IRAs can invest in 1) gold, silver and platinum coins and 2) IRA’s can also invest in gold, silver, platinum and palladium bullion that meets applicable purity standards. However, what is important to make note of is that the coins or bullion must be held by the IRA trustee or custodian rather than by the IRA owner. These rules apply equally to traditional IRAs, Roth IRAs, SEP accounts and SIMPLE-IRAs.
Under these statutory exceptions in the statutory code, IRAs can own certain precious metal coins and bullion, including:
- American Gold Eagle coins,
Canadian Gold Maple Leaf coins,
American Silver Eagle coins,
American Platinum Eagle coins, and
- Gold, silver, platinum and palladium bars (bullion) that meet applicable purity standards.
Precious metals custodians are a requirement for investing in a gold IRA. A precious metals IRA trustee will usually charge:
- A one-time account set-up fee,
- An annual account administrative or maintenance fee for sending account statements, and
- An annual fee for storage and insurance.
There are many choices to choose from. The Internal Revenue Service now says that IRA’s can purchase precious metals ETF’s as well.
Private Letter Ruling 200732026 – In 2007, the IRS ruled that gold ETFs were not collectibles for IRA investment purposes (Letter Ruling 200732026). The one restriction that remains is that the IRA owner cannot have physical possession of the gold.
Private Letter Ruling 2007322027 – Individual Retirement accounts can purchase shares in a SILVER ETF.
Private Letter Ruling 201446030 – Individual Retirement Accounts can invest in trusts that own gold.
What is essential in all tax-advantaged precious metals investing is that the precious metals have to be held by an independent authorized trustee.
Precious metals can be a volatile investment, so it’s important to do your research before you jump in. But for those willing to take on some risk, investing in these rare and beautiful elements can be a rewarding experience.
Why Invest in Precious Metals Through An IRA
For many investors, retirement planning is a top priority. And one of the best ways to ensure a comfortable retirement is to diversify your portfolio with a mix of stocks, bonds, and other investments. However, some experts recommend adding another asset class to the mix: precious metals.
There are several reasons why investing in precious metals can be a smart move for retirement planning. First, precious metals tend to be less volatile than other investments, which means they can help to balance out the ups and downs of the stock market. Additionally, precious metals can provide insurance against inflation, as their value tends to go up when the cost-of-living increases. Finally, because precious metals are physical assets, they can provide peace of mind in the event of an economic collapse or another disaster.
For these reasons, many experts recommend including precious metals in your retirement portfolio. And one of the best ways to invest in precious metals is through a self-directed IRA. A self-directed IRA gives you more control over your investment choices, and it can offer income tax advantages as well.
What Metals Are Allowed in A Precious Metals IRA
You are allowed to have a variety of assets in a precious metals IRA including stocks, mutual funds, and even cryptocurrency. The real question is what kind of metal is allowed in a precious metals IRA. You are able to have gold, silver, platinum, and palladium in your account. All of these metals are measured in troy ounces. A troy ounce is heavier than a normal ounce that we use to measure other things. It is about 10% heavier which means that it takes more metal to fill up the same space. This makes it easier for buying and selling because you don’t have to worry about having too much or too little when you are dealing with other things that aren’t weighed out in troy ounces.
Gold is the most popular choice for precious metals IRAs. It doesn’t corrode and it keeps its value over time. Gold bullion is also easy to trade because it is so popular all over the world. Silver is another popular choice because it is less expensive than gold but still has many of the same benefits. Platinum and palladium are less common choices, but they can still be included in your account. These metals are more expensive than gold and silver, but they offer different benefits that some people find appealing.
You will need to talk to a Gold IRA specialist (by clicking on a button above and choosing one of the Gold IRA companies) to see if these metals are right for you and your goals before you make any decisions.