A gold IRA or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are stored for the benefit of the IRA account holder. It works in the same way as a regular IRA, except that it holds physical investment coins or bars instead of paper assets. Precious metals IRAs are usually self-managed IRAs, a type of IRA in which the custodian bank allows you to manage a more diverse range of investments in the account. Gold IRAs are a type of self-managed individual retirement account.
You can use them to invest in precious metals such as gold, silver, platinum, and palladium. That’s when you can enjoy the tax benefits of an IRA. With multiple Gold IRA providers to choose from, it’s helpful to know what factors to consider when choosing one. Luckily, most Gold IRA providers will help you comply with these regulations and make your precious metals retirement plans as easy as possible.
After doing this research, you’ll likely come to the conclusion that the gold or gold bars and coins shouldn’t belong in your IRA. To own gold, whether in the form of coins or precious metals, you need a genuine, self-directed IRA in an IRA, which is offered by a few custodian banks. A gold IRA must be kept separate from a traditional retirement account, although the rules surrounding things like contribution limits and distributions remain the same. While you can technically set up an LLC and control your IRA purchases yourself (as long as you meet some strict requirements), you still can’t store the gold in your home.
After you’ve funded your account, you can let your IRA custodian know which gold bars you’d like to buy (and how much). The Internal Revenue Service (IRS) allows holders of self-managed IRA accounts to purchase bars and coins minted from gold or other approved precious metals such as silver, platinum, or palladium. As a result, gold IRAs require the use of a custodian bank, usually a bank or brokerage firm, to manage the account. Gold may be the only precious metal you’ll find in all gold IRAs, but many also allow you to invest in other precious metals.
Although investors can undoubtedly buy physical gold and store it in a home safe, the IRS strictly prohibits this in the case of gold (and other precious metals) purchased by the IRA. While it’s legal to own gold or silver through an IRA or other retirement account with some restrictions, it’s not the best or most efficient way to own the precious metals. If you’re interested in setting up such an account, you’ll need to look for a specialized custodian or firm that is able to handle all the documentation and reporting for tax purposes required to maintain a Gold IRA. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian bank.
