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. Opening a self-directed IRA and investing in precious metals is a bit more complicated than opening a traditional IRA or Roth IRA. To comply with the many regulations surrounding gold IRAs, you can’t store your gold at home or in a safe deposit box.
Many of the leading Gold IRA companies have similar fee structures but may vary by a few hundred dollars a year. However, instead of holding paper assets such as stocks and bonds, the Gold IRA is intended for holding physical precious metal, i.e. coins or bars of gold and other eligible precious metals, including silver, platinum, and palladium. One key selling point that gold IRA companies like to promote in their marketing is that when you own a Gold IRA, you own the physical precious metals. Others say they won’t, but be aware that the price they’ll pay you when they buy back gold is likely lower than the price they set for gold they’re selling.
By setting strict parameters for defining IRA gold, the IRS can ensure that people hold investment-grade assets in their self-directed gold IRA, as opposed to collectibles, which are not eligible for any preferential tax treatment. 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. Before you initiate the transfer, it’s important to calculate how much of the value of your existing retirement plan you’d like to invest in your new Gold IRA. Most gold IRA companies recommend or require that you work with a specific custodian and custodian, although some give you the choice of two or more.
The Gold IRA Company also sells you the gold bars and coins (or other precious metals) that you want to invest in your Gold IRA. A self-directed IRA offers the same tax benefits as a traditional IRA, but allows you to hold precious metals and other alternative assets in accordance with IRS rules. 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 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.
When you talk to a Gold IRA company for the first time, make sure you know whether you’re extending or transferring an existing IRA or 401 (k), or whether you’re setting up a new IRA with cash. Given that you can also hold silver coins or bars, platinum, and palladium in a gold IRA, a more correct term is technically “precious metal IRA.”
