Precious Metals IRA

Gold ingotWhat is a precious metals IRA and how does it work?

Before discussing what a precious metal IRA is, it is important to define it. An IRA is an investment tool used by people to earn as well as earmark retirement savings funds, many people like the gold IRA. It is important to note that there are many types of IRA’s. A precious metal IRA allows individuals to invest in precious metals as part of the individual retirement account. This leads us to a very important question;

How does a precious metals IRA work?

The investment will include a number of precious metals i.e. gold, platinum and silver coins. It is important to note that most people hold American eagle coins in their precious metals individual retirement account. It is however worth noting that you can include many other coins in precious metals IRA. This allows you to reap a variety of benefits when you utilize different unique investment strategies.

Your precious metals/coins are held by a 3rd party trust company, as seen in the Regal Assets review, which specializes in self directed retirement funds; you won’t be buying directly from the source. The company has to be licensed and regulated by state and federal agencies. It is advisable to do some background research before you choose a trust company. Once you fund your account and direct your trust company to acquire specific precious metals, your coins will be shipped to a very secure and fully insured depository that will hold the coins for a specified period of time i.e. until your IRA term expires. Your trust company will offer your all details regarding the policies and credentials of their partner/associated depository.

Eligibility

To be eligible for a precious metals individual retirement account, you need an income source i.e. from employment, self employment or alimony. It is important to note that income from investments, annuities or pension plans doesn’t qualify you. Because the amount of money required to fund an IRA A/C fully is relatively modest, many people can be able to participate in most individual retirement accounts. To qualify for a traditional setup, you must be aged 70.5 years and below. There are many other guidelines and rules that influence these investments. Your preferred trust company can advise you accordingly to help you make a more informed decision.

Advantages

There are very many advantages enjoyed by individuals who invest in precious metals, some of the most notable advantages revolving around tax benefits. For instance, you stand to enjoy tax-free withdrawals and tax-deductible contributions. You also stand to enjoy other benefits that may not be available with traditional investment and savings strategies.

For instance, investing in precious metals has been associated with high returns in the event of an economic downturn. This simply means that your retirement savings will be secure when the worst happens. Such advantages aren’t enjoyed by many investors i.e. stock market investors. It is also worth noting that this is a self-direct investment which means that investors have 100% control to re-direct or change assets in a fund unlike most paper-asset based investment strategies which put your money under the control of faceless fund managers.

Rolling over investments

It is important to note that most employer profit sharing plans, employer pension plans, existing IRA’s and 403(b) plans can be converted into a precious metals IRA. You just need to issue a transfer request to the trustee of your existing account. Alternatively, you can collect proceeds from the above accounts and reinvest them in your account. Provided you reinvest funds within 2 months, you can enjoy a rollover status similar to the one enjoyed with transfer requests i.e. a rollover with no taxes or IRS penalties.

This method is way faster and more convenient than issuing a transfer request since such requests take a lot of time to be processed. After rolling over, you can continue funding your IRA yearly up to a specified maximum amount. It is important to note that your new account can be part of other plans i.e. a SEP or (Simplified Employee Pension) plan with up to $30,000 annual contributions in addition to other contributions.

Types of precious metals that can be added

Gold-nest eggInitially, this type of option was only supposed to include American eagle gold & silver coins. This however changed in 1998. New laws allowed other coins to be included i.e. the American eagle platinum coin as well as a number of platinum, silver, gold and palladium coins which meet specified standards. It is however important to note that American eagle coins are still the most popular in precious metals IRA, and there are firms emphasizing investing in these coins. Bullion is also accepted, as shown in our Bullion Direct review.

Managing

As mentioned above, this is a self direct IRA account which gives unmatched flexibility and convenience. For instance, it is possible to direct changes in your account via fax or telephone if you like. You also get regular statements on your account that shows up-to-date estimates on the market value of your assets. These estimates are calculated on a bullion value basis as opposed to a numismatic value basis which serves to hold down some fees. Your trust service handles all the necessary IRS reporting promptly. It doesn’t get simpler than that when talking about managing your money.

Fees

These attract setup fees which vary depending on the trust company you choose; for example Rosland Capital. In most cases, you will be required to pay approximately $100 in the first year. Subsequent annual fees are based on the value of individual retirement account holdings. The fees can range from $50 to $500. It is however important to note that there are many financial institutions which don’t charge annual fees. It is also worth noting that trust companies don’t earn commission on your investment actions.

Conclusion

In summary, the above information summaries everything you need to know about investing in a precious metals individual retirement account. Although there may be more to this type of investing than what is discussed above, there above information is adequate enough to guide you on the right path.

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