The IRS allows depositors to buy gold with IRAs for a diversified investment portfolio. Gold has been accepted as a form of Currency since 500 BC and is still used in many countries today. The appeal of gold is its innate purchasing power and immunity from hyperinflation. For example, during the Great Depression, stock prices fell 90%, but gold bullion bought goods at about 80% of their former value.
The idea of retirement is often seen as a destination, somewhere you go to be free from the daily grind. But what if we told you that you could use your IRA-eligible gold or silver assets to create a retirement income stream? How would that sound? You might want to hear it twice before signing up for an IRA.
What Is IRA Eligible Gold?
The most significant benefit to investing in gold and other high-paying assets is that you can grow your wealth tax-free. An IRA-eligible storage plan means no taxes on capital gain and dividends, plus it is shielded from creditors in bankruptcy. A person can donate all of his gold to their IRA-eligible account, but you can only donate gold that is kept in an IRA account, which is of high value and has been held for at least five years.
The Difference Between Buying IRA-Approved & Non-Approved Gold
Non-IRA Approved Gold
Non-IRA-approved gold is gold that is not stored at an IRA-approved depository. Local security companies or banks have held it. Many people think if you keep your gold in a bank, it is safe and secure. But the problem lies when something happens to the security company or bank where you are storing your gold. Your assets are not protected, and you will no longer have access to them.
IRA Approved Gold
The only way to ensure that your gold is genuinely safe and secure is to store it in an IRA-approved storage plan. This plan will ensure that your gold is of the highest value possible and stored with a third party with a hefty insurance policy backing the plan up. Many think their local bank or gold dealer will store their IRA-approved gold, which may be inaccurate.
4 Key Considerations When Buying IRA Eligible Gold
Many people are unaware that gold can be an excellent addition to their IRA. Doing this will allow the IRA owner to shelter some income and add value to their portfolio. However, it can get complicated quickly when figuring out what type of gold is eligible for an IRA.
Below are key considerations to make intelligent plans for your IRA gold purchase.
Minimum investment requirements
Some gold IRA providers require a particular minimum investment. For example, some might require a one-time deposit of $10,000, while others might ask for $10 monthly into the account. Some companies require a minimum amount of gold in their vault before you can purchase more gold. This is to ensure the company's buying power and trading volume are not overtaxed by too many people purchasing at once.
To contribute to your IRA, your contribution amount must not exceed the annual IRA contribution limit. The IRS allows you to make your IRA contributions in cash, stock, or property during a tax year. Your annual contribution is added to all contributions made during a tax year. If you are under age 50, for 2015 and 2016, you can contribute up to $5,500 each year. Once you turn 50 or older, you can increase this amount by an additional $1,000.
Costs & Fees
Most gold IRA plans should be free, although some charge small investment management fees. This may be a monthly or quarterly fee based on your account size. If you have more than $100,000 in your gold IRA, you may expect a higher price. You might also see an annual fee if you are the only one investing, as this would likely only affect someone who had a substantial account or was investing in high-end gold options.
Early withdrawal penalty
Since the IRS does not allow you to withdraw money from your IRA before age 59½, you may lose out on many potential gains if you are under 59½. The early withdrawal penalty for ROTH IRA depends upon the withdrawal amount and the period that has passed since the contribution was made.
For 2015 (age 50+):
Less than $100,000: 10% of the amount withdrawn
$100,000 or more: $50 per year withdrawn
Current List of IRA Approved Precious Metals
You get the best of both worlds when you merge your IRA with precious metals. You have an asset that does well when the economy is in turmoil and also has a long history of safe investments.
However, gold mining stocks are volatile, and insolvent mining companies are not good options for your IRA.
The following is a list of precious metals that the IRS has approved for IRAs; Gold. Silver, Platinum, Palladium, and Other Precious Metals (such as Diamonds, Rhenium, and Rhodium)
IRA Approved Gold Bullion
Gold bullion is a type of gold valued according to the price of gold. Some examples of gold bullion are gold bars and coins. This type of investment allows you to diversify your holdings and store them at a third-party depository you do not have direct control over.
IRA Approved Silver Bullion
Silver bullion is a type of silver valued according to the price of silver. Some examples of silver bullion are silver bars and coins. This type of investment allows you to diversify your holdings and store them at a third-party depository you do not have direct control over.
While gold does not hold its value similarly to fiat currency, it still allows faithful investors to diversify their holdings. However, the safest place to store your gold would be at a peace of mind vault-like those on vaultprice.com. You must keep minimums and regulatory requirements in mind when choosing an IRA-approved precious metal company to invest in. Many companies will charge fees based on the amount of metal stored with them as well as what type of investment they are offering