Frequently Asked Questions About Gold IRA Investing
A gold IRA is a way of investing in gold that works for a lot of people, and is pretty easy to do.
Naturally though most people have a lot of questions about Gold IRA investing when they first start looking into it, and so I have created this page to hopefully answer any questions you may have. The message over on the right explains the background to me being able to offer you this information.
Should you have any questions that I have not covered however please feel free to drop me a line using the Contact link above.
Why a Gold IRA?
Historically the value of gold has always risen over the long term making it a reliable hedge against inflation, and at the same time adding a nice diversification to your retirement funds.
With a gold IRA, you are placing the physical commodity gold into your IRA account, unlike some other investments such as gold mutual funds or stocks.
Gold balances investment risk, and physical gold has an edge over paper investments in gold such as stocks during turbulent and uncertain times in the markets. With the physical metal you are not at the mercy of external factors such as Company management and structure, local mining conditions and geo-political factors, all of which can impact your investment irrespective of the gold price.
Therefore placing physical precious metals such as gold and silver into your IRA account helps the overall health of your long term retirement planning.
Historically gold has proven to be a solid, reliable investment. Over recent years, while seeing the economic climate crumbling and real estate markets struggling, you may have noticed that the price of gold has escalated. In fact it has more than tripled over the past decade and it went up in value for 12 years consecutively between 2001 and 2012.
This is partly as a result of the demand for gold going up, with certain governments, many institutions and many savvy investors continually adding to their gold reserves. It is also due to the fact that gold has what is known as a ‘negative correlation’ with stocks, shares and bonds, as well as the value of the dollar. When they all struggle, gold strengthens. This is why it is recognised as a ‘hedge’ which protects your investments from catastrophies and uncertainties.
2013 has seen a pullback in the price and many are seeing this as it gathering momentum for its next upward surge and therefore an excellent buying opportunity. Gold is best considered as a long term investment, which makes it particularly well suited for inclusion in a retirement plan.
What Types of Physical Gold and Other Precious Metals are Permissible in an IRA Account?
You can add various forms of gold, silver, palladium and platinum into your IRA. This is thanks to the Tax Payer Relief Act, which was passed in 1997, allowing certain precious metals of a particular standard to be included within IRAs.
The permissible physical gold, silver, palladium and platinum for your IRA are in the form of bars or coins, and need to meet certain standards* – see below:
Examples of permissible IRA physical precious metals are as follows:
American Eagle Gold Coins
Australian Kangaroo Gold Coins
Australian Nugget Gold Coins
Austrian Philharmonic Gold Coins
Canadian Maple Leaf Gold Coins
Credit Suisse Gold Bars
PAMP Suisse Gold Bars
Uncirculated U.S. Buffalo Gold Coins
American Eagle Silver Coins
Australian Kookaburra Silver Coins
Austrian Philharmonic Silver Coins
Canadian Maple Leaf Silver Coins
Mexican Libertad Silver Coins
American Eagle Platinum Coins
Australian Koala Platinum Coins
Canadian Maple Leaf Platinum Coins
Isle Of Man Noble Platinum Coins
*All the approved metals must meet certain standards which you need to be aware of prior to the purchase of any that are intended as an IRA investment. For this reason, when investing in gold via an IRA it is important to only buy from a reliable and reputable dealer that fully understands retirement investing as well as the precious metals themselves. This is the one that I recommend.
**Note: What many people are not aware of is that you are not restricted to include only precious metals in this type of IRA – you can include other investment types too. It’s simply that you need this specific type of IRA to enable physical precious metals to be included.
What Are The Steps Involved In Setting Up a Gold IRA?
It’s actually easier than you might expect! Click on this link for a step by step walk through of how I set my own one up.
What Can I Do With My Existing Retirement Plan?
Depending on the type of plan you have, e.g 401k, IRA etc. you are eligible for either a Rollover or a Transfer into your newly set up physical gold backed IRA account. Depending upon which option applies in your particular circumstances it’s a pretty painless transaction either way, following a few basic guidelines that are neither complicated nor onerous.
A self-directed IRA is a convenient and common account which many opt for who are looking to shield their portfolio from the fluctuations in the economy and today’s markets. It enables a hands on aspect in which you can direct where your investments are placed.
What Does a Gold IRA Transfer Consist Of?
In order to execute a gold IRA transfer, you simply need an existing IRA account and you in essence transfer the funds from your existing IRA to your new gold IRA.
The transaction takes place between IRA custodians directly, via the distribution check. There is no cap on the amount of transfers you can request.
This transaction between custodians into your new account remains tax exempt, and must transpire directly from one custodian to the other for this to apply.
What Does a Gold IRA Rollover Consist Of?
In order to execute a gold IRA rollover, you take the distribution from your retirement account directly, rather than your IRA custodian doing so on your behalf as in the case of a transfer. You then deposit this into your new gold IRA.
You have 60 days to do this to avoid tax penalties. This can be carried out once annually to retain the tax exemption status of this retirement account.
You need to qualify for distribution for this, from an account such as a 401k. This would generally be upon retiring from your occupation or when changing employers.
What About a Gold Roth IRA?
You can opt for a gold Roth IRA as well. Here are some great tips about a Roth IRA for you to take into consideration. This is Jeff Rose from Good Financial Cents, and I think you will find this pretty informative. There are valid reasons for different types of IRAs and he presents some great points about a Roth IRA in just under four minutes.
What is a Self Directed IRA?
A self directed IRA is an arrangement in which you, the owner of the account, makes the decisions about which assets to invest in.
The assets are required to be held by an accredited custodian.
The trustee who manages the account on your behalf will take care of the paperwork, inform you of the regulations and laws you need to be aware of, and the rules to abide by to retain tax deferment status.
What Types of Investments are Allowed in a Self Directed IRA?
The precious metals gold, silver, palladium and platinum are some of the investment options that are allowed in a self directed IRA. You may also invest in certain assets such as mutual funds, stocks and bonds etc.
Certain restrictions do apply, for example specific collectibles and life insurance, so you will need to check out the permissible investments with your selected IRA trustee.
Other Simple Gold IRA Investing Options
There are other ways of investing in gold through an IRA than with physical gold and which still give you diversification, and the ability to ride on the tails of the performance of gold.
Some of these may be done without the need to open a gold IRA account, if you’re not ready for investing in physical gold quite yet. Three basic options that you may wish to consider are gold stocks, ETFs and mutual funds. How these perform will not be linked only to the price of gold since other factors such as Company management, local mining conditions and geo-political considerations will apply.
You’ll need to speak with the trustee of your IRA account to see which options are allowed. If you have these sorts of investments available, then it may well be a very simple process to put into motion.
Many experienced investors are in favor of diversification, and this is one more way of doing that, whether or not you also invest in physical gold or other precious metals.
These are a few options for your consideration as well for investing in physical gold in an IRA.
Why Invest in Gold?
As already mentioned above, gold is well known for serving as a viable hedge against inflation, and as a protection against market volatility. This is because it has what is known as a ‘negative correlation’ with stocks, bonds and the value of the dollar. As they go in one direction, gold tends to go in the other.
Naturally there are fluctuations in the value of gold, but when looking at historical trends it is evident how gold has continued to be an asset that continues to rise in value, in spite of the rest of the surrounding market sectors and various unpredictable happenings in global economies.
Gold is best looked at as a long term investment, which is why it is ideal to include in a retirement plan.
What is Being Said About Investing in Gold?
Can You Recommend a Gold IRA Company?
The gold IRA company that I recommend and who I used to set up my own Gold IRA is Regal Assets. In fact I’ve been using them for all my precious metals dealings for quite a while. I’ve always been very impressed with their customer service and others whom I’ve recommended them to have all said that they’ve found all of their representatives to be extremely knowledgeable and helpful.
What gives me further comfort is that they’ve received a 5 Star rating with Top Consumer Reviews, a Treble A rating with Business Consumer Alliance (BCA), a preferred membership with Trustlink, and an Accreditation with the Better Business Bureau (BBB), all of which are respected, reliable and trustworthy barometers of a Company’s performance. Plus all precious metals of Regal Assets are held in one of the nation’s safest depositories in Delaware which is reassuring.
Regal have an excellent reputation as you will see from some of the independent reviews at the Trustlink website. Furthermore they were featured recently in the Forbes Investment Guide and they have made it into the top 20 companies in the Financial Services Section of the prestigious Inc 500, the only precious metals company to be included.
They have a specialized retirement department which I consider important when setting up a precious metals IRA because it means that they are a precious metals dealer with expertize in the area of retirement planning and funding as well as in the metals themselves. If you transfer or rollover more than $10,000 from an existing retirement account they will absorb all the set up fees and the first year’s storage charges themselves.
Here is an example of a Regal Assets Gold IRA account performance which I have taken from their website.
How About a Gold IRA Custodian?
If you don’t already have one simply ask the trustee that you choose to appoint to set up your gold IRA and from whom you purchase your precious metals to recommend one to you.
What Gold IRA Rules Have To Be Followed?
If you want to delve into the rules governing adding gold to an IRA yourself you can look through publication 590 on the IRS site. That could be an onerous process though as there are a lot of different aspects and you may want to simply leave all that to your appointed trustee, who will be familiar with all the IRS rules and regulations!
It is very important that all these rules are followed and complied with precisely however, which is why I recommend working with a precious metals Company such as Regal Assets who have a dedicated retirement department to assist you in the specialist areas of both precious metals and retirement plans.