Want to skip over the basics of IRAs and head straight into the logistics of opening an IRA, including the fees, security, and precious metals eligibility? Click here to jump ahead.
You’ve likely heard about investing in a gold IRA.
As people look for ways to diversify their retirement investments, gold IRAs continue to grow in popularity. But gold is only one of the several different precious metal assets available to retirement account owners.
If you are curious to know why people are turning to a precious metals IRA to secure their retirement, be sure to bookmark this page.
Before jumping in, we’re going to do a deep dive into frequently asked questions that come up when someone first considers opening a precious metals IRA.
Let’s begin with something called a self-directed IRA.
What is a self-directed IRA?
A self-directed IRA is a type of retirement account where the account holder makes the investment decisions, specifically where to invest and how much.
The biggest difference from a conventional IRA is in who makes the calls: with an SDIRA, you have much more control of your investment decisions.
Along with this greater amount of control, a self-directed IRA also provides flexibility with your investments. You are not restricted to the most common of assets.
Your self-directed IRA enables you to also invest in the following (and more):
- Precious metals, including gold
- Real estate
- Debt
- Businesses
- Cryptocurrencies
As you can see, a self-directed IRA takes your ability to diversify your retirement savings to a whole new level.
What Are the Different Types of Precious Metals IRAs?
Similar to conventional IRAs, there are four different types of precious metal IRAs to choose from: a traditional precious metals IRA, a Roth precious metals IRA, a SEP precious metals IRA and a SIMPLE precious metals IRA. Here’s a quick breakdown of the four options:
- Traditional precious metals IRA: With a traditional precious metal IRA, the contributions you make are with pre-tax dollars, allowing you to deduct those taxes from your tax liability for the year they were made. From there, your assets grow tax-deferred until you withdraw them during retirement, which are then taxed as ordinary income.
- Roth precious metals IRA: With a Roth precious metal IRA, you pay taxes on contributions as you make them. Because contributions are made with after-tax dollars, they are not tax deductible for the year they were made. However, they grow tax-free and are not subject to taxes when they are withdrawn during retirement.
- SEP precious metals IRA: A SEP (Simplified Employee Pension) precious metal IRA allows employers to make contributions for themselves and their employees up to a certain percentage of their salary. It’s important to note employers make contributions directly on behalf of their employees.
- SIMPLE precious metals IRA: A Savings Incentive Match Plan for Employees (SIMPLE) precious metals IRA is available to companies with 100 or fewer employees that allows employees to contribute to their own individual retirement accounts. SIMPLE IRAs allows both employers and employees to make contributions.
What Precious Metals Can be Placed in a Precious Metals IRA?
The precious metals eligible for placement within an IRA, such as a gold Roth IRA or similar IRA, have proven track records over thousands of years. These are the metals that transcend government influence — they are tangible and cannot be printed like paper money or stored as a number on a computer file.
Gold, silver, platinum, and palladium — these precious metals are popular for use in self-directed IRAs because of their long-term investment track record:
- Gold — a highly prized symbol of wealth since the earliest records of history.
- Silver — used for thousands of years in coinage, jewelry, tableware, and more.
- Platinum & Palladium — similar histories to gold and silver, these two precious metals are known for their catalytic properties and are still heavily used in industrial processes.
Here is a detailed look at each metal’s current eligibility rules on what you can specifically invest in, along with some examples of products that meet those requirements:
Gold (.995 minimum fineness, except for the American Eagle) |
Silver (.999 minimum fineness) |
Platinum (.9995 minimum fineness) |
Palladium (.9995 minimum fineness) |
What are the benefits of placing precious metals in an IRA?
Investing in precious metals can be a great way to diversify your savings. By placing precious metals in a precious metals IRA, you can also enjoy unique benefits, including:
- Diversify your retirement savings — This is worth repeating: don’t put all your eggs in one basket. Diversification will help to safeguard your savings.
- Limited supplies could result in future gains — Precious metals are finite; that’s what makes them precious. And as silver and gold continue to be used in medical and industrial sectors, there will be sustained demand for them.
- Secure your purchasing power — Longtime investors in gold and silver have seen their holdings maintain their purchasing power. As the U.S. dollar declines, the value of precious metals usually goes up.
- Hedge against inflation: The value of precious metals isn’t dependent on government policies, which means metals like gold and silver tend to hold value better and protect you from inflation. Precious metals have intrinsic value, meaning their price is based as much on their inherent utility as on their popularity.
- Tax benefits: Placing your precious metals in a precious metals IRA can offer unique tax benefits, depending on the type of IRA. Traditional precious metal IRAs offer tax-deferred growth, while Roth precious metal IRAs offer tax-free growth.
- Converting to a precious metals IRA is simple — Jumping through a bunch of hoops is not required. All it takes is an eligible 401(k) or an IRA (or other less common retirement accounts) to easily transfer to an IRA backed by gold, silver or other precious metal assets.
Why Should You Diversify Your Retirement Account?
There is an old proverb (from Spanish or Italian origins): “Don’t put all your eggs in one basket.” No matter the context, this phrase means don’t risk losing everything by only having one plan or idea and then depending on that one thing entirely for your success.
This is particularly true when it comes to saving for retirement.
Leverage a safe-haven approach.
According to Forbes, “buying metals represents a safe-haven approach to diversification.” These additional investment “baskets” provide diversity and act as a shield against an unpredictable economy, the decline in the U.S. dollar’s purchasing power, and other political and economic uncertainties.
Gold can be used to diversify your savings.
Gold’s performance endures when the dollar doesn’t.
Time and time again, gold’s performance has been demonstrated to correlate inversely with economically-sensitive assets. When the value or purchasing power of the dollar goes down, the price of gold tends to increase. Because of this, diversifying a portfolio by investing a portion of it into precious metals such as gold can help stabilize a portfolio’s value over time.
The fact that gold is a tangible asset — as opposed to an IOU or a printed promise of future value — adds another layer of diversification and security to your savings. Since precious metals have tangible value and have historically enjoyed demand based on their utility, they’re historically guaranteed to have lasting value over the long-term, even though prices fluctuate day-to-day.
Precious metals retain value.
Historically, gold, silver, and other precious metals tend to have stable value despite inflation. If your retirement savings include precious metals, this can provide some peace of mind that your purchasing power could be preserved (without having to keep working long past your ideal retirement date).
If you need more convincing, take a look at some statistics demonstrating the endurance and consistency of precious metals.
From 2007 to 2009, the U.S. economy faced one of its worst crashes ever, dealing a massive blow to Americans’ savings. But while the economy cratered, gold’s price rose — and effectively rewarded everyone who owned gold.
Of course, gold is not the only precious metal that you can place in your precious metals IRA; diversification of the precious metal types held in the IRA can help diversify your savings and support their long-term value.
Diversity extends through the metals in your portfolio.
This diversification has played out positively in previous periods of economic difficulty. For example, during the 2008-2012 recession, not just gold but also silver showed off its ability to endure through economic crisis; even in the most harrowing conditions, it continued jumping up in value by almost 450%.
And more recently, a scientific study showed that diversification in precious metals helped investors endure the economic volatility in 2020 during the early days of the Covid-19 pandemic.
You get the idea here. Generally, all metals deemed “precious” generally make great hedges against economic downturns.
So if you want to move some of your retirement into a precious metals IRA, the gold or silver that you select will provide many of the same benefits.
How to Open a Precious Metals IRA
Let’s take a look at how simple it is to get started.
Step 1: Open the account — starting with your funding source
To start a precious metals IRA, you will first need to consider how you will fund this account… will you transfer an existing IRA or perhaps roll over a 401(k) from an old employer? Whichever way you begin, given the support that Birch Gold Group provides during the process, we require that you start with an account value of at least $10,000.
Like a conventional IRA, you can move your retirement account to a precious metals IRA with no tax penalties. With Birch Gold, you will have a Precious Metals Specialist assigned to help you through the entire process.
You will begin by transferring your funds to a custodian who specializes in precious metals IRAs, such as Equity Trust Company and STRATA Trust Company. All custodians are held to the highest standards by Birch Gold and only those with A+ ratings from the Better Business Bureau are selected.
The following accounts are eligible to be rolled over into a precious metals IRA:
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Eligible 401(k), 403(b), 457, TSP, and more
Step 2: Choose your precious metals
The good news is you don’t have to make this decision on your own. Your Precious Metals Specialist at Birch Gold Group can provide you with information and answer questions based on your current situation and goals.
For example, what are your choices? Your Specialist can go over the metals choices in more detail with you. There are four precious metals that are approved to become a part of your IRA. The IRS has determined some specific criteria you will need to follow to make sure they are eligible.
- Gold: Gold must be 99.95% pure for use in your IRA, with the exception of the American Eagle coin, which has a purity requirement of 91.67%.
- Silver: Silver has the highest purity standard with a required purity of 99.99%.
- Platinum: Platinum has to be 99.95% pure to be eligible for a precious metals IRA.
- Palladium: Palladium, like platinum and gold, must be 99.95% pure to qualify for precious metals IRA inclusion.
Step 3: Make your purchase
Having determined what you want in your portfolio, you are now ready to purchase precious metals.
Your Specialist will confirm this with you before walking you through the necessary paperwork.
Once the purchase is made, your metals will be sent on your behalf to a depository.
Okay, so then what is the role of the custodian?
While you will not have a lot of direct contact with your precious metals IRA custodian, they still play an integral role in managing your retirement account.
Custodians are not individuals, but rather financial institutions that are responsible for managing the storage assets in your account. The custodian also helps complete transactions, execute withdrawals, and handle the paperwork. In a nutshell, they keep track of your account and ensure your assets are where they should be.
Step 4: Your precious metals are stored at a depository
Your Precious Metals Specialist will give you a list of options to store your gold and silver and walk you through each of them.
This list includes the Delaware Depository, where your metals are insured up to $1 billion. Another option available for storage is with Brink’s Global Service — the largest non-bank, non-government holder of precious metals in the world — located in New York, Los Angeles and Salt Lake City.
Step 5: Keep an eye on things
The best way for you to have peace of mind is to connect directly with a Birch Gold Specialist, who will always be there to provide you with an up-to-date buy-back quote. These quotes tend to be more detailed and accurate than the statements you will receive from your custodian.
You will continue to work with the same Specialist who walked you through setting up your precious metals IRA, and who knows your situation and goals.
How much does it cost to set up and maintain a precious metals IRA?
We recommend you start with a minimum of $10,000 in a retirement account to set up a Birch Gold precious metals IRA.
Below is a list of fees for the custodian and depository that most customers of Birch Gold Group use.
One-Time Fees:
Account Set Up Fee: $50
Wire Transfer Fee: $30
Annual Fees:
Storage/Insurance: $100
Management Fees: $125
Please speak to your Precious Metals Specialist to learn more. Additionally, on transfers over $50,000, Birch Gold will pay your first year’s fees.
Please note: When you set up an IRA with the custodian that most customers of Birch Gold use, you will NOT be charged annually as a percentage of assets under the custodian. In other words, no matter how large your account, you will pay the same $200 annual fee.
How safe are your physical precious metals when stored in an IRA?
To protect your savings, Birch Gold helps you create an account with a reputable, qualified custodian who will facilitate tax compliance (keeping up with law changes) so your investments remain legal over the long term.
Additionally, your metals are protected by one of the approved depositories listed above.
If you have any additional questions about storage, please contact your Birch Gold Specialist.
Precious Metal IRA FAQs
What is the contribution limit for a precious metals IRA?
The contribution limit for a precious metals IRA is $6,000 for 2022 and $6,500 for 2023. However, the IRS allows individuals 50 and older to make a catch-up contribution of $7,000 in 2022 and $7,500 in 2023.
What is the difference between a precious metals IRA and a conventional IRA?
A precious metals IRA is a type of retirement account that you fund with precious metals like gold, silver, platinum, and palladium. These metals are held in a secure storage facility by the IRA custodian, with the performance of the IRA dependent on the current market value of the precious metals. A conventional IRA is similar but offers different investment choices (not including physical precious metals). With a conventional IRA, you have a more limited set of options.
How do you make withdrawals from a precious metals IRA?
You typically have to wait until you’re 59 ½ years old to withdraw from any type of IRA, including a precious metals IRA, but you do have the option of withdrawing sooner and incurring penalties and tax implications. Once you reach withdrawal age, you have the option of liquidating your precious metals or receiving your precious metals in their physical form. (This is known as an “in-kind distribution.”)
What is the difference between an IRA transfer and IRA rollover?
An IRA transfer is often used to move money from one IRA to another, allowing you to combine your retirement accounts to simplify the management of your investments and make larger investments. IRA rollovers, on the other hand, are used to move funds from one account to a different type of account. For example, you’d typically use an IRA rollover to roll a 401(k) into an IRA.
What are the risks and considerations of precious metal IRAs?
While precious metals are fairly stable as an investment over long periods of time, there are risks with precious metal IRAs worth considering before opening a precious metals IRA. One consideration is fees. No matter the type of retirement account, you will have to pay for management fees, which means most IRA custodians will charge storage and maintenance fees to keep your precious metals protected, which can cut into your earnings. Another consideration when investing in precious metals is that not all precious metals are IRA-eligible. Working with a reputable precious metals dealer, such as Birch Gold Group, can help ensure you’re investing in precious metals that meet purity requirements and are IRA-eligible.
Key Takeaways: Precious Metal IRAs
Investing in a precious metal IRA can be a great way to diversify your savings and make a stable long-term investment. Now that you know how to open a precious metals IRA account, you can check out our precious metal IRA guide to learn more and get in touch with Birch Gold Group to get started today. As a leading precious metals dealer, we make it easy to get started with precious metal investing.
Learn more about how a precious metals IRA can help you reach your individual retirement goals with a free information kit, or call us and speak to one of our Specialists at (800) 355-2116.
