With the growing popularity of precious metals, many investors ask, “Can I buy gold with my IRA?”
Compared to a traditional 401(k) or Roth IRA, a gold IRA offers exciting investment opportunities with reasonable flexibility.
Also, you will be investing in physical assets, which are protected against inflation and uncertain global economic strife.
It’s important to know everything there is to know about buying gold with an IRA before you get started.
To get you started on the right track, this guide will cover the most popular ways to get physical gold and the unique considerations to keep in mind.
Can I Legally Own Gold With My IRA?
The answer to this question is yes and no because it depends on the type of IRA you own.
Traditional IRAs, such as a 401(k) or Roth IRA, do not allow account owners to own gold bullion unless they go through a gold IRA transfer or rollover.
Currently, the IRS does not allow standard IRAs to be associated with collectibles, which precious metal coins are classified as.
It doesn’t matter whether it’s gold coins or silver bullions; any collectibles cannot be held in a traditional IRA.
However, opting for a gold IRA means you can own several types of precious metals, as long as they meet specific standards.
Can I Buy Gold With My IRA? How?
As mentioned, legally owning gold with your retirement savings requires a special account known as a gold IRA.
These unique investments are designed to help you diversify your portfolio with less risk while hedging against inflation.
That said, you will have to find the right place to go when it comes time to open your account.
Finding a Gold IRA Company
The first thing any account owner needs to find is a good gold IRA company to help streamline opening your new retirement savings.
Some of the top names in the industry, such as Augusta Precious Metals, will guide you throughout the entire process.
They assist with opening an account and offer ample education about what a gold IRA is and how it can help.
The upper echelon of gold IRA companies also helps set you up with a custodian.
Custodians are companies responsible for managing the paperwork and transactions associated with your gold IRA.
They also oversee the purchasing and selling of gold, often representing buyers and sellers alike.
Funding Your Account
After you open an account with your ideal gold IRA company, it’s time to consider how you want it to be funded.
Most individuals opt for a rollover or transfer, with the transfer being the more seamless option.
Alternatively, if this is your first retirement investment account, you can always fund it with cash.
When funding your gold IRA with cash, you will likely have to send a cheque or wire transfer to your custodian.
They will then allocate the funds to your account so that you can begin purchasing precious metals.
Transfers and rollovers require a few additional steps to make a note of.
Gold IRA Rollovers
When you opt to do a gold IRA rollover, you’ll be withdrawing money from your existing IRA, such as a 401(k) or Roth IRA.
From there, the distributed funds are deposited into another account.
The third step is to fund your new gold IRA using the money from your old retirement accounts.
Gold IRA rollovers have a ton of steps to be followed carefully, and you must ensure you transfer the funds within a reasonable timeframe.
The IRS requires gold IRA rollovers to be completed within 60 days, or you will be responsible for paying income tax on your assets.
Additionally, if you are under 59.5 years old and take longer than 60 days to transfer, you are subjected to a 10% early withdrawal fee.
Gold IRA Transfers
A better alternative that a retirement investor might prefer over the rollover process is to do a direct gold IRA transfer.
With this process, your existing retirement account custodian works with your new gold IRA custodian. Together, they will facilitate the transfer of funds from one account to the other.
Not only is this a more straightforward process, but it can also be more cost-effective.
That’s because there aren’t any taxes or penalties you will have to worry about with a gold IRA transfer.
Also, you won’t have to remember to move the money back into your new IRA within 60 days.
Choosing a Secure Depository
Another fundamental part of legally owning gold in your IRA is having a storage facility with reasonable storage fees.
Your chosen gold IRA company or custodian can help facilitate the transfer of your gold to a facility of your choosing.
However, it’s important to note that the storage must be IRS-approved when using an IRA to buy actual metals.
Without IRS-approved facilities, the IRS cannot verify the authenticity of your self-directed IRAs.
There is also the option to buy physical gold outside a gold IRA.
In these instances, you will purchase the metals with paper assets and store them as you please, whether at home or in a safety deposit box.
When choosing an IRS-approved depository, you will want to ensure it has top-of-the-line security.
Also, they must have a hefty insurance policy to protect their investments. Otherwise, there’s no way to guarantee your retirement portfolio will be kept secure.
Finding Top-Quality Precious Metals
The final thing every gold IRA owner needs to know is that their actual assets must meet specific standards.
Without near-100% pure quality, the IRS won’t recognize your gold, silver coin, platinum, and palladium.
As such, you won’t be able to hold it in your gold IRA legally. Fortunately, most quality gold IRA trust companies only deal with IRS-approved gold.
The regulations these baskets of commodities must meet include:
- Products from silver markets must be 99.9% pure
- Actual gold products must be 99.5% pure
- Platinum and palladium products must be 99.95% pure
- Precious metals must be in their original and complete packaging
- Precious metals must arrive with a certificate of authenticity
- All coin products must be damage-free and uncirculated
- All precious metal bars must meet their specified weights
- Manufacturers must be nationally accredited
Not only is it important that your gold IRA precious metals meet these standards but also directly purchased goods.
If the quality of your silver, gold, platinum, or palladium is below these requirements, it’s not worth investing in. You will find it far too hard to sell or get a good price if you find a buyer.
Other Notes About Buying Gold With an IRA
Before jumping headfirst into buying precious metals with your newly formed gold IRA, there are other considerations to note.
Previously Owned Precious Metals
If you think you can fund your IRA with previously owned precious metals, the IRS won’t allow it.
Regardless of the purity of the metals, your existing physical gold investments cannot be transferred to your IRA.
The reason for this is the fact that you cannot be your own custodian.
Fees and Extra Costs
Using a gold IRA seems simple enough and comes with many straightforward steps.
However, there are additional fees and costs that every account owner could be subjected to.
Depending on your gold IRA company, you could avoid some of these fees with larger accounts.
For example, companies may waive storage and transportation fees for accounts with over $50,000 in precious metal investments.
The most common fees and extra costs you might have with your gold IRA include:
Account Setup Fees
When starting an account with your custodian, you’ll find that they typically charge anywhere from $50 to $300 to open an account.
Often, these costs can be avoided with a minimum deposit.
Maintenance Fees
Custodians often require administrative costs to cover the expenses of handling the paperwork needed for your account.
Most will charge a flat rate between $75 and $300.
Storage Fees
When storing your bullion bars, you will need to pay for the space the bullion bars take up.
In most instances, this rate will increase depending on the amount of actual bullion you own.
Insurance Fees
Insurance could be lumped in with storage costs by your reputable gold company or charged separately. This total is also dependent on your total amount of retirement funds.
Most insurance fees can be counted as annual costs.
Seller Fees
The seller could charge a markup fee when buying physical gold. This can cause you to pay more than the market price for your gold.
You may also pay handling and commission fees on top of the spot price.
Cash-Out Fees
If you want to close your gold IRA completely, there could also be a cash-out fee charged by your financial institution. Around $250 is typically standard.
Other common fees you may experience include:
- Annual membership costs
- Fees for additional bullion services
- Higher prices for your choice of metals
- Added fees for a complicated transaction
- Additional transaction fees
- Extra management fees
Final Thoughts
If you’re wondering, “Can I buy gold with my IRA?” you can as long as it meets specifications.
Using a gold IRA can protect your retirement investments for a profitable and comfortable future.
Inquire with an IRA gold company today to see how you can get started.