A Guide to help you with your gold IRA investing plans
Are you interested in starting a gold IRA (individual retirement account), or using a gold IRA company to add precious metals to your existing account, in order to expand your investment strategy or rollover your 401k?
Individual Retirement Account Background
Individual Retirement Accounts – commonly referred to as IRAs – were created by the IRS as a particularly good way to save and plan for your retirement. They also offer deferred taxation.
Gold has always been a good long-term, stable investment, and has so many uses for different industries, with demand always on the increase. January ’98 marked the beginning of physical gold first being added to IRAs.
If you’re happy enough to use paper-based gold investments, you can most likely set this up in a regular IRA. However, if you decide to own physical gold, you will have to set up what’s known as a self-directed IRA.
Standard, or regular IRA?
If you opt for investments tied to gold, you can quite easily add the precious metal to your IRA. The most direct approach would be via a gold-backed exchange-traded fund. When buying shared in this type of fund, you’re really purchasing a portion of its gold holdings. As an alternative option, you could also invest in mining company stock as their values constantly track the value of gold.
What is a self-directed IRA?
The only way to hold physical gold in an IRA is to set up a self-directed account, which will also involve acquiring a third-party custodian, who will give you a wide leeway to purchase just about anything for your particular IRA – as long as this is approved by the Internal Revenue Service. Self-directed IRAs can be used to purchase anything from physical holdings of gold or other precious metals, to real estate, business interests or private loans.
What are the rules relating to IRAs?
The IRS does have some rules regarding gold IRAs, perhaps most prominently the fact that your IRA has to contain investments rather than collectibles. This will limit the type of metal you are allowing to hold.
According to the current rules, you must hold gold bullion bars that are 99.9 per cent pure at the very minimum, or gold bullion coins such as the Canadian Maple leaf or American Eagle. Under these rules, you are not allowed to own other types of gold coins and bars that could be considered to have collectible value.
How to purchase gold for your IRA?
Purchasing and storing physical gold in your self-directed IRA account can be a bit trickier than simply just investment in a regular IRA. You have to begin by funding your account, and you can do this one of two ways; by either making a direct contribution or taking funds out of a separate IRA.
You have to then go through a dealer to select the type of gold you want to purchase, before giving your custodian directions to use the funds in your IRA to purchase the gold. The gold (in bars or coins) is then shipped from your dealer to your custodian’s depository (which must be IRS approved). You are not allowed to physically store the gold yourself.
If you’re looking to for a Gold IRA company to handle your investment in a transparent and professional manner, or are just looking for some further information, then we highly recommend speaking to APM in the first instance.