Investing in gold is a popular way to diversify your retirement portfolio, but it's not always easy. Most IRA custodians don't allow you to have gold in your IRAs, and the IRS has strict rules about what types of gold coins and bullion are allowed. To own gold in an IRA, you need a true self-directed IRA offered by some custodians. There are many ways to invest in gold, and a gold rage is one of them.
But is this the best way? It depends on several factors. Investors can buy gold bars and coins outside of an IRA, and there are no restrictions from the IRS on what they can own and how they should store their gold. Investors can choose to store their gold at home, avoiding storage expenses. In addition, there are no custody charges.
Investors who hold their gold for more than a year are subject to tax rates favorable to capital gains rather than ordinary tax rates, which is what you pay when you sell gold and withdraw funds from an IRA. There are alternative methods for including gold in your IRA. Gold ETFs allow you to buy and sell stocks and hold them in a conventional or 401 (k) IRA. Another benefit is that there are no minimums or special accounts needed. In general, alternative asset classes should not exceed 5 to 10 percent of your entire retirement investment portfolio. The tax code prohibits IRA holders from investing in life insurance, stock of an S corporation, or collectibles.
Some types of gold coins are classified as collectible and would violate the rules. What's confusing and frustrating is that some gold coins and types of bullion are allowed, while others are not. Augusta's two major drawbacks are its limited selection of metals and its high minimum investment requirement to establish a gold IRA. As with a traditional IRA, a gold IRA allows for pre-tax contributions, and investment gains can be accrued tax-deferred. To properly set up an individual retirement account (IRA), you need to find a custodian that allows you to keep precious metals such as gold within the IRA. In addition, the IRS only allows specific gold coins, such as the American gold eagle or the Canadian maple leaf.
For a gold IRA, you need a broker to buy the gold and a custodian to create and manage the account. Once you turn 72, you will be required to accept the Minimum Required Distributions (RMD) of a traditional Gold IRA (though not a Roth). The best way to leverage a gold IRA is to use it as an accumulation vehicle as part of a broader and more diversified investment strategy. I think the idea behind storing gold or silver in a Roth IRA is to create a tax haven against such an egregious government measure. During his tenure as director of the Mint, Moy says there was little demand for gold IRAs because they involved a very complicated transaction that only the most persistent investor was willing to pursue. If you suddenly needed gold to barter for food, you would first need to call your custodian and complete the necessary paperwork to gain access to your own gold. However, if you work with a reliable, customer-focused gold IRA company, it's likely that they have favorable coin or bullion buyback policies, although their transaction costs may be higher for bullion. A quality IRA Gold company will only work with accredited third party storage firms or secured depositories.
