First, what is a Gold IRA?
As most people know, an Individual Retirement account is a method of saving money for their retirement. An IRA has particular tax advantages that make it very advantageous to take advantage of.
With a traditional IRA, you get to reduce your taxes now and pay the tax later during your retirement period when you make presumably less money.
The second kind of IRA is known as a Roth IRA. The main difference between a traditional IRA and a Roth IRA is that you fund a Roth IRA with money that has already been taxed.
Consequently, there is no immediate tax advantage with a Roth IRA; however, when it comes time to collect the money for your retirement, a Roth IRA’s profits are not taxable as long as you are 59.5 years and older.
Typically, IRAs, both traditional and Roth IRA, deal primarily with municipal funds and individual stock shares.
While the vast majority of IRAs are funded with stocks and bonds, the Taxpayer Relief Act of 1997 gave future retirees another option to invest in Gold.
Actually, it’s not merely Gold, although Gold is the most common. The Tax Payer Relief act also allows investors to invest in silver, platinum, and palladium.
Therefore, a Gold IRA, whether it is a traditional IRA or a Roth IRA, is thus an IRA backed by Gold.
Decidedly so. All IRAs require a custodian to send reports to the IRS, but with a Gold IRA, the asset is treated differently because the investment is physical.
Gold (together with silver, platinum, and palladium) are the only type of physical asset that can back an IRA) You can’t, for example, fund an IRA with Stamps, furniture, porcelain, antique silverware, baseball cards, comics, works of art, gems and jewelry, or fine wine.
As a result, custodians treat the asset of Gold and precious metals differently.
First, under no circumstances can the account holder of an IRA backed by precious metals keep them at home. The holder, of course, is allowed to own as much Gold or silver as he likes and bury it in his back yard or keep it locked away in an old freezer in the garage, but the minute someone creates a metals IRA, he is not allowed to have physical possession of the metals.
Nor, if he already has a gold brick or two in his possession, he can transfer that Gold to his new IRA account.
It involves three entities, the custodian, responsible for all the records the IRS needs and who oversees the account. Secondly, the gold or metals buyer buys the Gold or metals to see the account. And third is the gold depository.
To be trusted by the IRS to set up a Gold or precious metals account, it must be officially recognized as a custodian by the IRS.
This means your local bank member or somebody in your lodge can’t act as a custodian just because they offer to do so. As we said, they must be officially recognized by the IRS.
Once an officially recognized custodian sets up an IRA account, the next step is to obtain the precious metals.
Unlike the former, there is no official list of recognized buyers. Theoretically, you could fly to North Korea and buy from Kim Jong Un.
Of course, this is tongue in cheek, but the IRS leaves it up to the private enterprise to supply the Gold or precious metals for your account.
Generally, most sellers will be happy to recommend a custodian to deal with, and likewise, most custodians will be glad to suggest a good source for buying your Gold. Still, the custodian can in no way insist that you buy from an articular source. The custodian is an administrator, not a metals advisor.
Once the Gold or precious metals have been bought from the buyer, the buyer will transfer the Gold, silver, platinum, or palladium to a safekeeping depository.
Here, the IRS has a list of approved depositories, and these places are almost as safe as the Federal Fort Knox. They have armed guards and, like Fort Knox, have never been robbed.
Also, if such a robbery ever did take place, all the approved depositories are heavily insured.
There are two kinds of accounts within the various gold and metal depositories. Some metals are co-mingled together with metals from other accounts, and there are separate rooms, much like bank safety vaults, that keep your metals tucked privately and away.
Co-mingled accounts are cheaper, and frankly, there is very little reason to have a private storage area for your precious metals.
The answer is no. Gold and other precious metals must be of 99.9 percent purity to be included in an IRA precious metals account.
Naturally, Gold and precious metal ingots are acceptable. Still, if a seller has a bunch of 12, 14, or 18-carat Gold in the form of a massive pile of gold chains or rings, that’s not acceptable because the metal does not have the necessary purity.
Second, collectibles are not acceptable. You may think your memorial gold coins from the 2016 Rio Olympics are the cat’s meow and cannot help but go up in value, but apparently, the bean counters at the IRS do not share your view.
Any coinage that is not legal tender, as well as any coinage that is not 99.9 percent pure, is not acceptable for your IRA portfolio.
According to one source, good gold coins include:
•American Gold Eagle bullion coins
• American Gold Eagle proof coins
• British Gold Britannia coins (from 2013)
• British The Queen’s Beasts (coin)
• British gold Shēngxiào Lunar Series (British coin)
• Canadian Gold Maple Leaf coins
• Austrian Gold Philharmonic coins
• Australian Kangaroo/Nugget coins
• Chinese Gold Panda coins
• American Gold Buffalo uncirculated coins (proofs not allowed)
Acceptable silver coins include:
• American Silver Eagle proof coins
• British Silver Britannia coins (from 2013)
• British The Queen’s Beasts (coin)
• British silver Shēngxiào Lunar Series (British coin)
• Canadian Silver Maple Leaf coins
• Austrian Silver Philharmonic coins
• Australian Silver Kookaburra coins
• Chinese Silver Panda coins
• Mexican Libertad coins
Acceptable Platinum coins include:
• American Platinum Eagle coins
• American Platinum Eagle proof coins
• British The Queen’s Beasts (coin)
• Canadian Platinum Maple Leaf coins
• Isle of Man Noble coins
• Australian Platinum Koala coins
Acceptable Palladium coins include:
• American Palladium Eagle bullion coins
• Canadian Palladium Maple Leaf coins
It should be noted that all of these coins are of recent vintage, and their value is based upon their gold value, not for numismatic purposes. For example, you cannot buy original Gold Eagle coins and add them to your IRA portfolio. They are considered collectibles.
And in case you were wondering, the answer is no to adding any other type of collectibles such as works of art, antiques, rugs, gemstones, metals, coins, stamps, rare wines, first edition books, comic books, and baseball cards.
The only thing allowed in an IRA metals account is Gold, Silver, Platinum, or Palladium of the required purity.
While any adult can have an IRA metals account, that does not mean it’s a Gold Ira is appropriate for everyone.
Remember that at age 72, you will be required to begin taking minimum disbursements on your IRA if you have a traditional IRA/
Therefore, a man or woman in their late 60s, for example, may be required to take a minimum disbursement just a few years later and why to save for retirement in an entity that requires you to sell off some of your holdings or to pay taxes on them.
As a result, relatively few older citizens decide to create an IRA gold or precious metals account.
It makes much more sense to have an IRA account in your 30s, 40s, and 50s than it does to create an account later in life
There are actually two kinds of IRA accounts, the traditional and a Roth IRA, and the fundamental difference is how the taxes are treated.
In a traditional IRA, the contribution you add to your IRA portfolio can lower your overall Adjusted Gross Income on your taxes. Not only does this mean that you will pay fewer income taxes and possibly qualify for tax credits that you previously may have been excluded from, but so the theory goes, when you pay taxes on your IRA, your overall income will be less.
When you have a Roth IRA, your IRA’s contributions are made with income that has essentially already been taxed. Providing that you do not take a disbursement before the age of 59.5, your account’s proceeds are entirely non-taxable.
Which is more common, a traditional or a Roth IRA gold account?
First, be aware that most traditional IRA’s or Traditional Roth IRA accounts do not allow for the purchase and storage of the Gold.
Such IRA’s are strictly stocks, municipal funds, bonds, and similar financial investments.
In order to establish a Gold or metals IRA, you need a self-directed– account, which for most people, means doing a Gold IRA Rollover and finding a new place to park your IRA.
Doing a Gold rollover is no different from doing any other type of IRA rollover. Many custodial IRA companies can do it within a few hours.
Another option many people are faced with is to do a 401K to Gold Rollover.
Many people transferring jobs have a 401 K from their old job. It’s entirely possible that this 401k offered limited options but that your new employer does not even offer a 401K at all.
Therefore, if you elect to do so, it’s a relatively straightforward manner to contact your previous company’s 401k administrator and have some of all of the fund transferred into a 401K to Gold IRA rollover.
A rollover from either a Traditional or Roth IRA or a 401K has zero tax penalties providing it is done within the typical 60-day time limit for the rollover.
Although we could find no actual sources to factually support it, we are guessing that the majority of Gold and precious metal IRA’s are Roth IRA’s for the simple reason that most people don’t want to have to worry about taxes in the future.
In addition, a Roth IRA has no minimum distribution requirements, so if you want to keep your money parked for a long time, then then a Gold Roth IRA is probably the best option.
Incidentally, it is possible to roll over a traditional IRA into a Roth Gold IRA, but realize that this action will come with a sizeable tax bill to recoup the tax benefits you have been reaping for many years with a traditional IRA.
However, a rollover from a traditional Roth IRA to a Gold IRA is a virtual tax-free Gold IRA rollover.
Yes, you can use as many as you choose. However, realize that the number of contributions you may contribute in one year is spread across the board for all your IRAs.
However, particularly for homemakers who make little or no income, you can have an IRA for yourself and another for your spouse and double the amount you can contribute each year.
In 2021, the total amount you can contribute is $6,000 ($7,000 if you are over 50.)
Therefore, a couple with two separate IRAs could theoretically contribute up to $14,000 per year.
That depends a lot on who you ask. The spot price of Gold in 1999 was roughly $205 an ounce. By 2020, Gold had risen to $2000 per ounce. Today the spot price of Gold is $1739, according to JM bullion.
According to Bullion Vault, a London Gold Seller, 12 out of 32 gold analysts predict that Gold will average $1974 per ounce by the end of 2021.
Meanwhile, Analysts at Goldman Sachs predict the price of Gold will go up roughly 22 percent to $2,300 per ounce.
The analysts base their estimates on likely post-Covid-19 impact spending around the world.
Meanwhile, analysts for the Bank of America predict that Gold will rise to $3,000 an ounce within the next 18 months.
Analysts note that they are vitally worried about the pandemic costs and note that the recent $1.9 trillion economic package pushed by the Democratic president, Senate, and House of Representatives, together with the infrastructure bill targeted at $3 trillion, doesn’t exactly help.
The COVID-19 pandemic has created great upheaval in world economies. While some analysts predict great things for the stock market, which could prove disastrous for Gold, many analysts such as those at Fortune magazine expect a significant correction in the market.
Physically, the cheapest place to buy Gold is in Hong Kong, where banks sell gold bars for as low as $5 over the spot. But of course, you can’t take a vacation to Hong Kong, stop into a bank and buy a bar of Gold and then transfer it to your account.
As we said earlier, any existing gold you have cannot be added to an account. You will most likely go online to buy your Gold, silver, platinum, or palladium, and not always, but the more significant the establishment, the cheaper the Gold.
Also, realize that the more gold you buy at one time, the cheaper, although you still have to keep the maximum contribution rates into account.
Also, gold coins tend to have more of a premium than gold nuggets.
The cheaper you can buy your Gold, the better for your IRA.
We also believe that gold bars (to roll over an account) or ingots are far better than coins. Even though the gold coins allowed are not technically collectibles, we find that most speculators treat them as such.
Buying Gold with IRA funds
Purchasing Gold is easy. Once you have an IRA gold account, you research dealers, get your best price, and then instruct your account custodian to buy the Gold on your behalf.
Are there fees involved in an IRA account
Yes, though they are not unreasonable. Typically the account custodian charges you around $50 to set up the IRA, and they charge another $80 to $100 per year for the account. Another $100 to $200 per year will be charged for the gold depository fees.
An IRA Gold account may make great sense to you as governments spend trillions of dollars trying to bring the economy back into control.
These efforts may lead to rampant inflation and a sharp turn on the stock market.
Gold looks like a definite winner for at least the next 18 months, and most people should look into a gold-backed IRA.