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Investor Insights Blog|What to Know About Precious Metals in an IRA
Precious Metals Investing
Planning for retirement can be challenging, particularly in times of unstable economic conditions and a volatile stock market. Traditional retirement portfolios consist of stocks, bonds, and mutual funds. Many people choose to diversify their retirement portfolios with investments in gold and other precious metals, which may help guard against high inflation and economic uncertainty.
Providing diversification and liquidity with no credit risk, gold can be especially attractive during periods of increased market volatility. Many investors choose to diversify retirement portfolios with alternative assets that are not correlated to the stock market.
You can buy gold coins and gold bullion bars, silver, palladium, and other precious metals that meet certain fineness requirements with your IRA.
Metals must be produced by manufacturers accredited by NYMEX/COMEX, LME, BMA, NYSE/LIFFE/ CBOT, and ISO-9000, or a national mint to be held in a retirement account. The minimum fineness requirement for bullion is:
Gold .995+
Silver .999+
Platinum .9995+
Palladium .9995+
No, you cannot keep your purchased metals at home or store them in any location you choose if they are held in an IRA. The IRS mandates that precious metals in an IRA must be stored by a qualified custodian in a secure, IRS-approved depository. These depositories may offer segregated or non-segregated storage, with segregated storage meaning your metals are separately identified and stored under your name.
Video: Precious Metals in an IRA
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The IRS requires that any IRA be administered by a qualified custodian. Self-directed account custodians do not provide investment advice, but they do provide administrative and reporting services and will purchase precious metals on your behalf per your direction through your IRA account.
The first step is to open and fund your self-directed IRA account. This can be completed through a traditional paper application, but many people choose to use our simple application process that can be completed entirely online. Equity Trust can initiate the transfer of funds if you’re rolling over from an existing account. The timing of this process is dictated by the custodian currently holding the funds.
After your account has been funded, you are ready to purchase precious metals within your IRA. After you choose a precious metals dealer or platform, you or your precious metals dealer will instruct your custodian to purchase your desired coin or bullion products.
If you want to take physical possession of your precious metals from an IRA, it is treated as a distribution by the IRS. This means the value of the metals will be subject to taxes, and if you are under the age of 59½, you may incur early withdrawal penalties.
Alternatively, you can liquidate your precious metals at any time by retrieving them from the depository as a full or partial distribution, which also may result in taxes and penalties unless rolled over to another qualified custodian. Another option is to sell your metals back to an authorized dealer, with the proceeds returning to your IRA, maintaining the tax-advantaged status of your account.
Generally, your IRA may purchase coins minted by the U.S. government as legal tender, such as American Gold Eagles and American Silver Eagles (1 oz, ½ oz, ¼ oz, and ⅒ oz). It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion, per IRS Publication 590.
Yes. An investor may have multiple IRAs, but no matter how many you have, your total annual contribution limits remain the same.
Yes. If you have an existing IRA or 401(k), you may fund an IRA by transferring either the full or a partial amount. Because the funds are being directed into another tax-advantaged account there will be no tax penalties. Equity Trust will facilitate this process at your direction.
If you have earned income, you’re eligible for an IRA, including one that holds precious metals.
No. An IRA rollover is a tax-free process with no fees or penalties, if done according to IRS guidelines. Funds received from an IRA are not subject to penalties or taxation as long as they are deposited into your new IRA account within 60 days.
You may receive distributions from your IRA in the form of physical gold, silver, platinum or palladium, depending on what metals are in your account. You may also convert your metals into cash.
At the age of 59½, the beneficiary of an IRA may begin receiving penalty-free distributions from their account.
A precious metals IRA offers protection against inflation and helps diversify your retirement portfolio. Unlike traditional investments, precious metals like gold and silver may retain value even when the market is volatile, providing a stable asset to safeguard your retirement savings.
The tax implications of owning precious metals in an IRA are no different than those of having other investments in an IRA. Whether you hold precious metals or traditional assets like stocks and bonds, the tax rules are the same.
Call us today to discuss investing in precious metals in an IRA: 888-382-4727.
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