Investing a part of your retirement funds in a precious metals IRA, gold and silver being the most popular choice, can be one of the best decisions to diversify your portfolio. Having this account allows you to purchase physical gold, silver, and other precious metals with your retirement funds and have your bullion stored in a secured facility with an IRA custodian. Although this type of asset could be your shield against the effects of inflation, you have to be aware that this account comes with fees, rules and regulations, eligibility criteria to comply with the IRS, and even potential tax penalties.
If you don't know which precious metals IRA company to choose, I recommend Augusta Precious Metals since it has an A+ rating on the Better Business Bureau (BBB), offers free shipping on all qualifying orders, and is transparent with the precious metals it sells on its website.
If you're looking to invest your IRA in gold and silver without disregarding the rules and regulations of the IRS, then a precious metals IRA is the solution you need! Buying actual or paper metal assets can be a smart way to diversify your retirement portfolio but, let's be honest, any investment can be challenging, especially for beginners. That's why we've put together everything you need to know about IRA gold and silver, commonly known as a precious metals IRA.
We'll discuss what a precious metals IRA is, how it works, examples of IRA-eligible metals, its benefits, contribution limits, steps to get started, and the best precious metals IRA companies you can work with.
What Is A Precious Metals IRA, A.K.A. IRA Gold And Silver?
A precious metals IRA is an individual retirement account that allows you to invest in real, physical precious metals like gold, silver, palladium, and platinum. Having precious metals in your retirement portfolio can help you diversify your investments away from stocks and bonds, helping protect your assets whenever the stock market goes down.
Investing in an IRA that holds gold and silver means you have to consider a few things, including eligibility requirements, contribution limits, allowed precious metals, fees, custodians, and tax penalties. And if you want to learn more about it, we'll explain more in the post below.
Gold IRA Vs. Silver IRA
Gold IRAs and silver IRAs are two types of individual retirement accounts that allow you to invest in precious metals, i.e., they’re both different types of precious metals IRAs. These accounts provide tax advantages to encourage you to save for retirement.
The only key difference between the two is that a gold IRA offers more gold products than a silver IRA, while a silver IRA focuses more on various silver products than a gold IRA, but you can usually invest in both metals in both types of accounts. Thus, choosing one or the other depends on your retirement goals and preferences and on which precious metals you’ll likely invest in.
How Do Precious Metals IRAs Work?
A precious metals IRA works like a regular IRA where you can take advantage of its tax benefits either tax-deductible to help lower your taxable income (for traditional precious metals IRAs), or tax-free withdrawals to enjoy your distributions when you retire (for precious metals IRA).
These accounts also have the same contribution limits, Required Minimum Distributions (RMDs), and early withdrawal tax penalties like the former IRAs do.
In case you didn't know, IRA custodians offer these accounts to ensure that you comply with the rules of the IRS. Most of them work as a dealer and as a broker by offering IRA-eligible precious metals at competitive rates while maintaining your records clean by reporting your sales and transactions to the IRS. Their services aren't for free, thus, it comes with high annual maintenance fees to settle your account and track your financial activities to verify that you follow the tax laws within the country.
IRA-Eligible Gold And Silver Coins And Bars
When investing in precious metals, you can't purchase anything that is gold or silver. The IRS has specific requirements for the metals you purchase in your account. Thus, you need to consider the purity standards or minimum fineness to make your gold or silver be eligible for a Precious Metals IRA.
- Coins – only government-minted gold and silver coins, such as those from the U.S. Mint and those that meet purity standards from the IRS can are eligible. For example, a gold coin should be at least 99.5% pure, like Canadian Gold Leaf Coins, while a silver coin, like Mexican Silver Libertad, should have a purity standard of at least 99.9%. The American Gold Eagle Coin is an exception to this rule. Even though it's only 91.6% pure, it has given a historical symbol to the U.S. that it has been an official coin of the country.
- Bars – like coins, you must buy gold and silver bars that meet the specific purity standard of 99.9%. A reputable refiner like United Precious Metals Refining, Inc. must produce the bars to ensure your purchases are legitimate. Some top gold and silver bars include PAMP Suisse gold bar and the John Matthey silver bar.
Aside from investing in gold and silver bullion, you can purchase palladium and platinum for your IRA. For them to be eligible by the IRS, these metals should have a minimum fineness of at least .9995 or 99.95% pure. You can verify this by searching for the specification section of your custodian's website.
Benefits Of Investing In Gold And Silver
There are several benefits of investing in gold and silver other than bragging about them with your fellow investors. Here are the top 5 benefits of adding gold and silver to your investment strategy.
If you have already invested in paper assets such as stocks and bonds, holding gold and silver can help diversify your portfolio. Since these precious metals are less likely to be affected by stocks and bonds, these can help reduce your overall risk and volatility when the stock market is down, potentially leading to more long-term returns.
#2 Tax Benefits
A precious metals IRA is the only way to invest in physical gold and silver while enjoying the same tax benefits as with your typical IRA. Depending on the type of IRA you choose, you could benefit from reduced taxable income or tax-free withdrawals during retirement.
#3 Potential For Capital Appreciation
Due to their limited supply, gold and silver investments can appreciate over time. This makes them a potentially profitable investment you can hold until retirement, even during economic uncertainty or inflation.
#4 Hedge Against Inflation
Whenever the value of the U.S. dollar decreases due to inflation, the value of gold and silver tends to increase, making them a good way to hedge against inflation. The value of precious metals isn't tied to any particular currency or government. This is the opposite of fiat currency, over which central banks have total control.
#4 Currency Alternative
Besides their use as a store of value, you can use gold and silver can as an alternative forms of currency. These precious metals have an intrinsic value that you can trade easily worldwide. So if there's an emergency like a war or a natural disaster, you can bring your gold and silver anywhere and use them as a currency to buy goods or services.
Contribution Limits And Tax Implications
The contribution limits for a precious metals IRA are the same as those for a Traditional or Roth IRA. For the tax year 2023, the contribution limit is $6,500 if you're under 50 or $7,500 if you're 50 or older. On the other hand, there's no age minimum to open an account as long as you earn income.
How To Open A Precious Metals IRA With Gold And Silver
There are the 3 basic steps to open your own precious metals IRA.
#1 Choose A Reputable Custodian
The first step that you have to take is to choose a reputable custodian that offers a self-directed gold and silver ira.
You can choose from hundreds of IRA custodians, so it's best to do your research online and compare the best ones with their features, precious metals offered, reputation, and customer service. We did this work for you and shortlisted the best gold or precious metals IRA companies ahead of time. You can read that post to get a head start, but the gist of it is that Augusta Precious Metals is the best gold IRA company you will find.
Once you've picked your custodian, you'll need to open a precious metals IRA with them by providing any necessary information and documentation to verify your identity.
#2 Fund Your Precious Metals IRA
Once you've opened a new account, you must fund it with your existing retirement savings or with new contributions. The former is done through a direct or an indirect 401(k) or IRA rollover. If you choose a direct rollover, you won't need to worry about getting penalties since the transfer is done directly from your existing retirement account or retirement savings plan to your precious metals IRA.
Take note that opening and owning a precious metals IRA may involve both upfront and recurring costs, such as a one-time setup fee, transaction fees, and annual maintenance and storage fees.
#3 Purchase Your Precious Metals
After you've funded your account, you can purchase any precious metals you want to invest in. You can select your investment from the list of IRA-approved metals on your custodian's website to ensure that what you're buying meets the purity standards of the IRS.
Depending on the custodian, its customer support can also help you choose the best metals for your portfolio based on your risk tolerance and investment goals.
After purchasing your metals, your custodian will store them in an IRS-approved depository like Brink's Security Company to protect them from damage or theft.
5 Best Precious Metals IRA Companies
With hundreds of gold IRA companies to choose from, finding the best one that suits your retirement goals can be tricky. That's why we've worked hard and created a list of the 5 best gold IRA companies to invest in gold, silver, and other precious metals. So grab a coffee, and let's jump into the following table!
|Augusta Precious Metals||Best overall gold IRA company||Free shipping on all eligible orders.|
Full access to educational resources and to a skilled Harvard-educated analytics team.
Offers a gold buyback program and lifetime customer support.
Has 5 main product categories, including common gold and silver bullion, premium gold and silver, and IRA-eligible coins.
|APMEX||Best for free club membership||Free shipping on orders above $199.|
Offers a free membership to its Bullion Club, where you can enjoy early access to new products, exclusive flash sales, special offers, and anniversary gifts.
Its Quickship program guarantees that your orders will be shipped within 1 business day and offers a $10 credit if your order is delayed.
|Goldco||Best for free silver bonus||Offers a 10% silver bonus and free shipping on deliveries.|
Has free secured storage for up to 3 years on qualifying purchases.
|Red Rock Secured||Best for price protection||Free shipping and insurance on qualifying purchases.|
Offers a free 1-on-1 consultation to see if investing in precious metals is right for you.
Has a Price Protection Plan to pay you back for your losses in case the price of your investments goes down.
|Birch Gold Group||Best for complimentary educational resources||Free gold and silver info kit.|
Has social media accounts and podcasts to keep you updated on the latest market trends.
Precious Metals IRA Fees
Gold and silver IRA companies charge different types of fees for their services. While they may not be huge, they add up over time and eat into your profits. These fees include:
- One-time setup fee – the setup fee is used to open your precious metals IRA to buy the metals of your choice. Depending on your custodian, this can cost between $50 to $200.
- Annual maintenance fee – this fee is usually charged to handle your account throughout the year. It covers overhead expenses on keeping your records, reporting your taxes, and complying with the regulations of the IRS. This fee can range from $75 to several hundred dollars per year.
- Transaction fees – you can see this fee whenever you buy or sell precious metals with your account. This is charged on every transaction you make and can cost at least $40 for every deal.
- Wire transfer fee – IRA custodians charge this fee when you pay a third-party dealer or broker for purchasing metals, especially using your bank account. You can also incur this fee when you transfer your existing IRA funds to your new account.
- Delivery fee – This fee covers shipping and transport of your metals to a secured depository and can cost as much as $5,000, depending on your custodian and depository. However, some custodians, such as Augusta Precious Metals, Goldco, and American Hartford Gold, offer free shipping on minimum purchases.
- Storage fees – you need to store your metals in an IRS-approved depository. These facilities need money to run, so you’ll have to pay an annual fee, which typically costs around $150 annually. Some depositories offer segregated or non-segregated storage options depending on how you want to secure your assets, the former being more expensive than the latter.
A Summary Of IRA Gold And Silver
A precious metals IRA is an individual retirement account that allows you to invest in gold, silver, and other precious metals like palladium and platinum. Investing in these assets can help protect your retirement savings from inflation while taking advantage of the same tax benefits of normal IRAs. A traditional precious metals IRA is tax-deferred and allows you to lower your taxable income, while a precious metals Roth IRA will let you pay taxes today and enjoy tax-free withdrawals during retirement.
A precious metals IRA custodian like Augusta Precious Metals can help you set up your IRA with Gold and Silver investments, choose IRS-approved gold and silver bullion for your account, and ship it to a safe, IRS-approved depository for safekeeping.
Aside from its advantages, there are still things that you have to consider regarding a self-directed gold and silver IRA, such as fees, contribution limits, and specific IRA requirements that must be met to avoid paying any tax penalties. Overall, a precious metals IRA can be a wise decision if you want to diversify your retirement portfolio away from stocks, bonds, and real estate.
IRA Gold And Silver FAQs
Are gold and silver IRAs a good idea?
Yes, gold and silver IRAs are a good idea, especially if you already have stocks, bonds, and other investments and you're looking for another asset to diversify your retirement portfolio. These accounts can also protect your funds from inflation or whenever the stock market's value is unstable. However, you must know that it can come with higher fees than traditional IRAs, including annual storage and maintenance fees.
What is the disadvantage of investing in precious metals?
The disadvantage of investing in precious metals is that they don't generate income or dividends like stocks. The price of these metals can also be volatile and must be monitored regularly to check if it's still worth keeping in your portfolio. Also, maintaining a precious metals IRA is more expensive than a traditional IRA, where you must pay storage, management, and transaction fees whenever you buy and sell assets.
What is the maximum contribution to a precious metals IRA?
The maximum contribution limit to a precious metals IRA is $6,500 if you’re under 50 or $7,500 if you're 50 or older. This limit applies to both traditional gold and silver IRAs and precious metals Roth IRAs.
Can you hold gold and silver in an IRA?
Yes, you can hold gold and silver in an IRA. You must open a self-directed IRA like a gold IRA or a precious metals IRA with a custodian and have them fund your account with your retirement funds. Once it’s been funded, you can invest in gold and silver and hold them in your IRA.
What is the minimum investment in a precious metals IRA?
The minimum investment in a precious metals IRA depends on your custodian and the type of precious metals you've purchased. For example, Birch Gold Group requires a minimum investment of $10,000 for your initial purchase of precious metals, while Augusta Precious Metals requires at least $50,000 to invest in a new account. Take note that this amount may change since the price of gold, silver, and other precious metals can fluctuate depending on the economy.