There are many questions in the mind of most folks when the topic of precious metals and gold IRA is raised. Having known this, we have compiled this article to answer some of the frequently asked questions about this interesting investment. We hope that the answers provided in this article will be enough to quell your curiosity and confusion.
Therefore, without further ado, let’s get started…
What is Precious Metals IRA?
This refers to a traditional, SEP, ROTH, Rollover, Inherited, or SIMPLE investment retirement account whereby the account holder can own precious metals such as gold, silver, palladium, or platinum. Although these items are owned by the account holder, the items are not stored with the owners but kept in a depository approved by the Internal Revenue Service.
This form of investment has been in existence since 1998 thanks to the Taxpayer Relief Act of 1997. The act granted individuals the opportunity to use the account’s funds to purchase precious metals that have been approved. Visit https://www.taxpolicycenter.org/ to learn more about the act.
What Commodities Can Be Held In A Precious Metal IRA?
The commodities you can hold in this type of investment are gold, silver, palladium, and platinum. You can keep 1/10 ounce of Gold American Eagles or ¼ ounce, ½ ounce, and 1 ounce of other gold bars or coins in this account. The products however must be approved by the IRS and have a .995% minimum purity.
As for silver, the product must be a minimum of .999% pure to be accepted. Palladium and Platinum must be .9995% pure at the barest minimum.
Why Must I Rollover MY Traditional IRA Before I Can Purchase Aurum?
If you want to include gold in your traditional investment retirement account, then it is compulsory that your account is rolled over. This is in compliance with the IRS regulation that prevents traditional investment retirement accounts from doing so. Such accounts can only store paper assets as well as other such regular investments.
What Are the Fees Attached to Opening a Precious Metals IRA?
The following standard fees you will be expected to pay when you open this investment account include account opening fee, maintenance fee, storage fee, and sometimes transaction fees.
You need to know that each custodian charges unique fees that vary from others; hence, what you are charged by one won’t be the same when you contact another.
Are Traditional IRA Fees Lower Than the Fees of Precious Metals IRA?
Traditional IRAs don’t cost much; hence the fees are nominal. In some cases, the fees are non-existent. The reason it is so is that the custodians make their money from the investments. For instance, if you have money in your account, the custodian can lend out the money and get profit from the interest.
On the other hand, custodians of precious metals cannot do this since they store physical commodities. As a result, they charge higher fees to ensure that they keep the business afloat. Also, storing the items must be paid for; hence, the reason behind the storage fee.
Can I Purchase Gold Using ROTH IRA?
With a ROTH IRA, you can purchase gold as well as other precious metals. Click here to learn more about ROTH IRA. This is also possible if you own a traditional, SIMPLE, Rollover, Spousal, SEP, or Inherited investment retirement account.
What is Gold IRA?
This refers to an investment retirement account that allows you to own gold bars or coins that are approved by the IRS.
Can I Store Silver in a Gold IRA?
You can since most of these accounts allow the storage of other approved metals.
What is Silver IRA?
This refers to an investment retirement account that allows you to own silver bars or coins that are approved by the IRS. Some custodians allow you to also own gold and other approved metals.
What is Platinum IRA?
This refers to an investment retirement account that allows you to own platinum bullion that is approved by the IRS.
What is Palladium IRA?
This refers to an investment retirement account that allows you to own palladium bullions or coins that are approved by the IRS.
Is Rhodium an Accepted IRA Commodity?
No, Rhodium isn’t acceptable as an investment retirement account precious metal.
Can I Keep My Valuable Metals?
Owning this kind of retirement account does not permit you to store your items. Instead, as required by the Internal Revenue Service, you are to hire a custodian who will keep these in trust for you.
The institutions that could function as a custodian include a bank, a credit union, or a loan and savings association. For these institutions to qualify to function in this capacity, they must be IRS-approved.
Some custodians however use a “loophole” found in the US Tax Code to allow their clients to store these metals themselves. Therefore, they tell their customers to use a bank’s safety deposit box to store these items.
We do not recommend this structure as it could lead to penalties from the IRS. You can go to Metal Resources to get help with choosing the right custodian.
What Method Can I Employ to Pay the Fees?
You can make payment either with your credit card or check. However, you can choose to make a payment using the funds in the account. But note that such cash payments are subject to a tax deduction of about 100%.
There are several questions that folks ask about precious metals IRA. As a result, the article above has discussed some of these questions and provided the answers to them.