Choosing your Gold IRA company is the first step to opening your IRA. If you decide to invest in a precious metal IRA, you should do so conservatively. Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your pension funds in precious metals. Acceptable products that meet these criteria include Canadian Maple Leaf coins, Australian koala investment coins and bars from PAMP Suisse.
The IRS also allows American Eagle coins, although they don’t meet the 99.5% purity standard for gold. Currently, you can’t hold rare coins or collector coins, Swiss francs, British government bonds, and Deutsche marks in a self-directed IRA. Keep in mind that not every self-managed IRA custodian offers the same investment options. So make sure physical gold is among their offerings before you open an account. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as paper currency and stocks.
A common way to fund a new Gold IRA account is to use funds that are already held in another retirement account, such as another IRA, 401 (k), 403 (b), 457 (b), or Thrift savings plan, in accordance with IRS rules. You can extend all or part of the balance to fund a Gold IRA without incurring any tax liability, provided you complete the rollover within 60 days. To comply with the many regulations surrounding gold IRAs, you can’t store your gold at home or in a safe deposit box. To avoid the option of having to pay taxes and penalties, your Gold IRA company can handle the transfer on your behalf.
As with other retirement accounts, if you take gold out of your IRA before age 59½, you must pay income tax on the value of the gold, plus a 10% upfront penalty. In addition to the account custodian, the Gold IRA coordinates the duties of the depositary, the institution where the precious metals are physically stored in your IRA. You can set up the SDIRA either as a traditional IRA (tax-deductible contributions) or as a Roth IRA (tax-free distributions). If you want to hold physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA), which you manage directly with a custodian bank.
In fact, Augusta Precious Metals, one of the best Gold IRA companies, specializes in helping people make exactly that choice. You’ll also need to choose a precious metals dealer to make the actual gold purchases for your IRA (your custodian may be able to recommend one). To set up a Gold IRA, you’ll need to work with a Gold IRA company to set up an account and buy precious metals of your choice to fund it. A gold IRA consists of a single asset class, and if you avoid the diversity you get with a traditional investment portfolio, you’re more exposed to risk and deprive you of the opportunity to generate income.
With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks of mining companies or mutual funds that hold those stocks.
