Investing In Silver With Your 401(k) or IRA
In turbulent economic times throughout history, precious metals like silver have tended to maintain their value—rendering them an interesting choice for saving for retirement. While stocks, bonds, and mutual funds are frequently placed directly into retirement accounts like 401(k)s, other options do exist—like gold and silver, its cousin rich with industrial applications.
By including precious metals in your retirement savings, you spread your risk by diversifying away from paper assets, which can take a sharp hit when the stock market crashes. Diversifying your savings could also provide you with a hedge in case of economic downturn or inflation.
Here’s how to take advantage of the enduring value of silver in your retirement savings.
Why rollover my 401(k) into silver? Why put silver in my IRA?
Given the choice of assets available to place into retirement accounts, you might want some additional clarity on why rolling over a 401(k) to silver makes sense.
Silver has intrinsic value. Silver has many industrial applications, which means there should be continuing strong demand for this metal. Silver has many properties—including physical strength, ductility, malleability, electrical and thermal conductivity, and the ability to withstand extreme temperatures—that make it attractive to industry in ways that cannot be replaced by cheaper alternatives.
Silver has become vital to technology. Three-quarters of the world’s silver stock is used to make medical devices, solar panels, microwaves, batteries, film, flat screen televisions, and other popular products. And yet, the limited ability to mine silver keeps its value high; although silver is more abundant than gold, it is still far more rare than other metals with industrial applications, including copper and aluminum.
The fact that there is more demand than there is supply of silver means it will likely remain valuable in the long run.
Silver is part of the global market. Silver’s strong industrial demand has resulted in the metal being a popular investment vehicle globally, particularly in China and India. Both countries have collected unprecedented amounts of silver, with investors keeping a close eye on the market.
In late 2019, China launched its Shanghai Silver Benchmark and continues to be the largest consumer of silver in the world, forming 18% of the world’s demand for silver. This high ongoing global need bodes well for the limited supply of silver continuing to be in demand, which could even result in future gains for individuals holding silver.
Silver can maintain value when fiat currency does not. Silver is an excellent hedge against depreciation of paper assets and a hedge against inflation. Because silver is not tied to any particular type of money, central banks or governments are not able to alter its price.
As the graph above shows, as inflation diminishes the value of fiat currency, silver has proven to maintain its value and purchasing power over many years. The addition of silver to your savings can serve as a safeguard against depreciation of other assets. When the value of many investments denominated in fiat currency is in decline, precious metals like gold and silver tend to persist.
Placing silver into your retirement account is simple. Rolling over your 401(k) into a self-directed IRA (SDIRA) gives you the ability to directly purchase precious metals like silver, as does transferring your funds from a conventional IRA. It takes just a few steps to move your funds over into an SDIRA and gain access to precious metals.
Your Birch Gold Precious Metals Specialist can walk you through the steps needed to set up a Precious Metals IRA, so you can include silver in your retirement savings.
How do I buy silver with my 401(k), conventional IRA, or other retirement account?
Your existing conventional IRA or employer-sponsored 401(k) account won’t let you buy physical precious metals directly; they’re limited to paper assets like stocks, bonds, and mutual funds. To place silver in your retirement account, you will need to roll funds over from your 401(k) into a self-directed IRA, or transfer your funds from a conventional IRA into a self-directed IRA.
Your Birch Gold Specialist will walk you through these steps, but there are effectively three steps needed to roll over your 401(k) into an SDIRA.
- Review your existing accounts for rollover/transfer eligibility. Our IRA Specialists have years of experience working with precious metals and retirement accounts. They can help you identify which of your existing accounts are eligible for rollover or transfer, and then walk you through the paperwork needed to set up your self-directed IRA.
- Open a Precious Metals IRA and move the funds over. Once we’ve reviewed eligibility and you’ve decided how much you’d like to invest, you’ll sign the paperwork and open your SDIRA with an IRS-approved custodian. As long as your 401(k) is eligible for a rollover (or your IRA is eligible for transfer), you won’t incur any taxes or penalties as a result of this rollover process. Your custodian will make sure that all of your paperwork is properly cared for.
- Buy silver—and other precious metals. Once the funds are available in your SDIRA, you can then purchase silver as well as other precious metals like gold, platinum, and palladium. You decide how you would like to allocate the various precious metals in your account, although your Birch Gold Specialist will be on-hand to help walk you through your options. They will also work with you to help you pick the depository where your precious metals will be stored.
Once your account is set up and your precious metals have been bought and stored, you can continue to reach out to your Precious Metals Specialist with any questions you might have or any changes you’d like to make your account. Your Specialist can then coordinate with your custodian to meet your needs and document everything per IRS guidelines.
What silver qualifies for a Precious Metals IRA?
The IRS decides which silver is eligible to be placed in a Precious Metals IRA. They permit the ownership of physical silver bars and non-collectible coins that are at least 99.9 percent pure.
The following list of silver coins is currently approved by the IRS for a Precious Metals IRA: American Silver Eagle (bullion and proof), Canadian Silver Maple Leaf, silver bars and rounds, and Silver Twin Maples.
If you have any questions about what silver you can place in your SDIRA, ask your Precious Metals Specialist and they will walk you through your options.
Future outlook for silver
A Silver IRA functions in the same manner as your existing IRA, except that you hold tangible silver coins and bars instead of paper assets.
Silver can serve as a long-term hedge against inflation, and so you may want to add it to your assets for retirement. The fact that it is likely to continue to grow in popularity and demand gives it an advantage over conventional investment options. Its proven track record of value spans thousands of years and has even persisted through recent economic hard times.
Our Precious Metals Specialists can help you open a Silver IRA. Call now to further your journey along the path to diversifying your retirement.