Benefits of Having A Precious Metal IRA
Precious metal IRAs are an alternative way to invest in your retirement. Learn about opening a precious metal IRA and some of the top brokerages.
It is never too early to think about your retirement. There are several ways to invest in a retirement account, with one of the popular options being an individual retirement account (IRA). There are several types of IRA available. With most IRAs, you take a portion of your earnings and place it into your account. There are a few different ways to contribute your money depending on the account. With a traditional IRA, you can deduct the income from your tax return. With a Roth IRA, you pay taxes on your funds, but your money earns interest tax-free.
Another option is to invest in a precious metal IRA. Like with normal IRAs there are a few variants available. With a precious metal IRA, instead of investing your direct income, you are putting your investment towards precious metals. Gold is the most common choice, but silver, platinum and palladium are options as well.
Types of Precious Metal IRAs
Outside of investing in different precious metals, there are only two choices for precious metal IRA accounts. The first is a traditional account. With a traditional account, your investment is tax-deductible. Your investment growth is tax-deferred, but you are taxed when you make an early withdrawal. Anything withdrawn before you are 59.5 years of age is subjected to a 10 percent tax penalty. Once you turn 72, you are required to make minimum withdrawals from the account.
The other type of precious metal IRA is a Roth account. Roth’s do not provide immediate tax deductions. Your investment grows without taxes, and when you make a withdrawal, there are no tax fees. The 10 percent early withdrawal penalty still applies if you withdraw from the account before the age of 59 ½.
No matter what your account or precious metal, there are limitations on how much you can invest each year into your IRA. As of writing, if you are under the age of 50, the most you can contribute into a precious metal IRA is $6,000. If you are older than 50, the maximum amount increases to $7,000 each year.
Special Rules for Precious Metal IRAs
There are a few special rules for precious metal IRAs. In order to count as an IRA investment, your precious metal must be a certain purity. You can invest either in coins, bars or rounds for each type of metal, with each option using the same purity requirement. Gold, platinum and palladium must be at least 99.95 percent pure, while silver must be 99.9 percent.
Additionally, collectible and rare coins cannot be used in your precious metal IRAs. If you want to invest in coins, it must be an accepted currency, as dictated by the IRS. Your precious metal investment must also be purchased directly through your IRA. If you already own precious metals, you cannot put these into your account. All coins, bars and rounds must be sold through an accredited manufacturer if it is not minted directly by a government. Finally, your investments must be kept in an approved depository. This will be chosen by whoever managers your IRA.
Opening a Precious Metal IRA
The steps to opening a precious metal IRA are almost identical to a normal retirement account. The main difference is you must go through a precious metal brokerage instead. Compared to normal IRA accounts, there are fewer options to choose from. Even with limited options, it is important to compile a list of possible candidates and do your research before making a decision.
Once you pick a brokerage, the next step is to open your account. You must first select how much you want to invest in your account, up to the maximum limit determined by your age. Some brokerages will place a minimum limit on how much you invest as well. If you are transitioning from a previous IRA account, check with the brokerage to see if you can roll over your existing investment into the new precious metals account.
After your initial investment, the next step is to choose your precious metals dealer. Your brokerage will help you with this process. While you can search for your own dealer, it is better to go through your brokerage so you know the dealer meets all the IRS requirements. During this process, you also decide what type of precious metal you wish to invest in.
Making a Withdrawal
While it is possible to withdraw early from your precious metals IRA, it is strongly recommended to wait until you reach retirement age. If you are required to make a withdrawal, there are two options. You can either make a cash withdrawal by selling your precious metals or withdraw the metals themselves. Withdrawing the metals is known as an in-kind withdrawal.
Patriot Gold Group
Patriot has a long history of hosting precious metal IRA accounts. They are one of the most direct brokerages, with no hidden fees on your investment. Patriot prides itself on superior customer service. If you are interested in an account, you meet directly with an agent who will explain the entire process and lay out all your options. Despite the name, Patriot also has options for investing in silver.
Orion Metal Exchange
Orion is another brokerage that works closely with their clients. It only takes a short period to establish an account and begin your investment. There are no setup or annual fees, and you can freely transfer your existing IRA into your precious metals account. There are also no storage fees for the first three years. They also have a wide range of investment options, including multiple currencies and bars.