If you have a retirement account, you’ve probably heard about the wide variety of potential investments available for it — everything from conventional IRAs to alternative investments like real estate investment trusts, digital currencies, antiques, and more.
So what about buying IRA-approved gold coins and rounds along with other precious metals? If you’ve been wondering about adding this alternative asset to your retirement planning, join the club — the growing number of people setting up Gold IRAs as part of their Precious Metals IRA.
- What Is a Gold IRA?
- How Do Gold IRAs Work?
- How Does an SDIRA Compare to Conventional IRAs?
- How Do You Move Assets to an SDIRA?
- How Do You Open a Gold IRA?
- What Are the Benefits of a Gold IRA?
- Frequently Asked Questions
What Is a Gold IRA?
A Gold IRA, which is a type of self-directed IRA (SDIRA), is an alternative investment method for retirement offered by some financial institutions where you get to choose the assets and investments included in your IRA. An SDIRA supports alternative investments, or the many options we listed above that aren’t part of the usual mix of assets. This could open up IRAs to potentially more successful or more nuanced performance.
Individuals wanting to select from this larger pool of assets get to pick what they buy for themselves instead of relying on the limited options directed by their financial institution.
How Do Gold IRAs Work?
A precious metals IRA, such as a Gold IRA, works similarly to other types of IRAs. As a self-directed IRA, Gold IRAs have a custodian, which is the financial institution that holds and manages your gold to keep it safe and ensure it abides by all IRS and governmental regulations. Because a Gold IRA is self-directed, account holders are able to tell their custodians what type of gold to invest in, such as bars, coins or rounds. Gold IRAs can be a great way for investors to diversify their portfolios, as gold can serve as a great hedge against inflation, resist the impact of economic and political instability, and retain its value as a tangible asset.
Account holders are able to make contributions to their Gold IRA throughout the year and choose the gold they invest in. However, like all IRAs, there are contribution limits. For 2023, account holders can contribute up to $6,500 into their Gold IRA, with those aged 50 and older being granted a catch-up contribution of $1,000, bringing their contribution total to $7,500 for 2023.
How Does an SDIRA Compare to Conventional IRAs?
A financial institution can help them organize their holdings, but the individual takes the central role in managing a self-directed IRA. In return for broader investment opportunities, SDIRA owners make investment decisions related to their accounts themselves.
So, to diversify retirement investments beyond traditional opportunities and into assets like gold and other precious metals, you’ll have to open a self-directed IRA. You can then start to build your SDIRA by moving eligible assets from existing retirement accounts.
When you open an SDIRA, you don’t have to move all of your retirement savings to alternative assets. You always have the option of leaving some funds invested as they currently are.
How Do You Move Assets to an SDIRA?
How does the average person go from their existing retirement accounts into a self-directed IRA? Your Birch Gold Precious Metals Specialist will help here, making the process as smooth as possible.
Most commonly, people resort to 401(k) rollovers and IRA transfers. There can also be rollovers from other employer-sponsored retirement accounts, such as a 403(b), TSP, 457, and so forth.
What is the difference between a transfer and a rollover?
A transfer moves funds between retirement accounts of the same type, like between two IRAs. On the other hand, a rollover takes funds from one retirement account type to another. You can roll over several accounts into another one, blending different types of accounts together, and with a rollover, the tax-deferred status of your assets can be preserved.
How Do You Open a Gold IRA?
We’ve made the process of opening a Gold IRA simple, with several easy-to-handle steps and a Precious Metals Specialist on hand to help answer any questions you might have along the way. (Click here to skip ahead to getting our info kit and connecting with a specialist.)
1. Open your account.
This part actually has two steps to it.
Step 1: Set up an account with your new custodian. A custodian is a fancy way of referring to the financial institution that is responsible for storing the assets in your account, although a custodian’s specific level of involvement depends on the asset being stored.
With Gold IRAs, the custodian holds the paperwork for your account while an approved depository physically stores the gold for you. The IRS actually requires all retirement plans to be managed by a custodian, with this being a necessary step to maintain tax-deferred status.
Here at Birch Gold Group, we work with custodians who specialize in Precious Metals IRAs — including Gold IRAs. We most frequently use Equity Trust Company and Goldstar Trust Company. All custodians with whom we work are held to Birch Gold’s highest standards, which includes a track record of excellence.
Step 2: Transfer funds from an existing account. Just as with a conventional IRA, you can move the funds from your retirement account to a Gold IRA with no tax penalties. With Birch Gold Group, you will have an IRA Specialist assigned to you to help you through the entire process of transfer or rollover.
The following accounts are eligible to be rolled over into a Gold IRA:
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Eligible 401(k), 403(b), 457, TSP, and more
This process generally takes anywhere from one to three weeks to complete. This timing is mostly dependent on the custodian of your prior account(s) and how quickly they process their paperwork. Also, please remember that the minimum amount to start a Gold IRA account with Birch Gold Group is $10,000.
2. Select your precious metals.
This particular article is focused on gold. Many people hear about Gold IRAs first, even though other options exist for Precious Metals IRAs — including silver, platinum, and palladium.
After all, gold is one of the oldest precious metals in use, with a long history of maintaining value. This metal has been used in everything from currency to jewelry, from ancient times through to the present. This enduring legacy makes it a very popular option and potential starting point for a Precious Metals IRA — after all, no one is surprised to hear that gold is regarded as valuable.
However, there are actually four precious metals (gold, silver, platinum, and palladium) that are eligible to become a part of your IRA, although you will need to be mindful of the IRS’ criteria for what types of products can be placed in your retirement account. Your designated Precious Metals Specialist will review your options with you so that you can make the best decision for your retirement account.
3. Purchase your gold.
This is the easiest part. Say the word (to your Precious Metals Specialist), and they will set the process in motion.
First, your Specialist will take you through a consultation on all of the products available to you, including the pros and cons of each. Once you have had a chance to ask any questions that you have and are comfortable with your level of knowledge, you can confirm the gold — and any other metals — that you wish to buy. Finally, your Precious Metals Specialist will handle the process of confirming the purchase.
But now that you own gold in an IRA, there are two more “steps” to take into consideration.
4. Store your gold.
Your precious metals — including your gold — will be held safely and securely at an approved depository.
Birch Gold usually works with Delaware Depository, the nation’s largest precious metals depository, and Brinks Global Services, a leading world provider of secure logistics and storage solutions.
5. Keep an eye on things.
You can always feel free to reach out to your Specialist with any questions you might have about your Gold IRA.
In fact, the best way to know what’s going on with your IRA – and find peace of mind in your retirement account — is to connect directly with your Precious Metals Specialist. They will always be able to get back to you with an up-to-date buyback quote, which will be both more detailed and more accurate than the statements sent by your custodian.
What Are the Benefits of a Gold IRA?
Now that you’ve seen some of the nuts and bolts behind SDIRAs, let’s look at placing some of your funds into a Gold IRA. Why might you want to do this?
Historically, gold has shown a remarkable ability to retain its value, and so many people turn to the metal in times of inflation, recession, and other types of uncertainty. There are a few specific points to consider that can make gold a compelling choice:
- Gold prices often rise when other assets fall – Since gold is historically seen as a safe haven store of value, its price generally rises during times of economic uncertainty and volatility. For this reason, gold may be a strong choice for diversifying retirement funds and protecting your purchasing power from inflation. Even when the sky is falling, gold is usually faring well. This lack of correlation helps individuals to protect from losses, even during the most trying times.
- Portfolio diversification absorbs market fluctuation – Portfolio risk management is a hot topic, as every individual hopes to maximize the value of their retirement savings. One key tool many investors use for lowering risk is diversification since it reduces the overall negative impact of any single asset’s decline in performance. Purchasing gold in your IRA can help diversify, particularly if done alongside other precious metals.
- Tax advantages: One of the primary benefits of Gold IRAs is the tax benefits that come with them. Depending on the type of Gold IRA you open, you can enjoy different tax advantages. For example, a Traditional Gold IRA offers tax-deferred growth until it’s withdrawn during retirement, while a Roth Gold IRA offers tax-free withdrawals during retirement.
- Appreciation potential: Many investors add gold to diversify their portfolios due to its history. Historically, gold prices have tended to increase in value over time, meaning investors may see great returns on their gold investments.
Frequently Asked Questions
Can you invest in other precious metals in a gold IRA?
Gold isn’t the only precious metal you can invest in with a Gold IRA. Gold IRAs allow you to invest in other precious metals, including silver, palladium, and platinum. Similar to gold, silver, palladium, and platinum need to meet certain criteria in order for them to be placed in a precious metals IRA. However, investing in a wide range of precious metals can help you further diversify your portfolio.
What gold is IRA approved?
(.995 minimum fineness, except for the American Eagle)
– American Eagle Coins (Bullion & Proof)
– American Buffalo Uncirculated Coins
– Canadian Maple Leaf Coins
– Austrian Philharmonic Coins
– Australian Nugget / Kangaroo Coins
– Gold Twin Maples Coins
– Australian Gold Florin
– Gold Rose Crown Guinea
– Valcambi CombiBars
– Gold bars and rounds from approved mints & refiners
What gold isn’t allowed in a gold IRA?
While you can invest in a wide range of different types of gold in your Gold IRA, certain types of gold are ineligible. First, there are purity requirements. All gold, besides the American Eagle, must have a .995 minimum fineness. Examples of coins that do not meet the minimum fineness requirement include:
- United Kingdom Sovereign Coins
- Austrian Corona Gold Coin
- Belgian Francs
- Swiss Francs
- French Francs
- South African Krugerrand
- Dutch Guilders
- German Marks
Lastly, gold collectible items and rare coins aren’t eligible for Gold IRAs. A Birch Gold Group precious metals specialist can walk you through what types of gold are IRA-approved if you have further questions.
What are the costs of starting a Gold IRA?
With our team’s collective background in finance and precious metals, we’ve seen many IRAs. We find that a minimum of $10,000 is needed to really get started with your retirement savings through a Precious Metals IRA with Birch Gold.
This is the best way to enjoy the complete flexibility in the choice of assets while also receiving direct, one-on-one service from a Precious Metals Specialist throughout the entire process.
There are some specific fees that are associated with custodians and depositories, and so you can usually expect the following:
- Account Set Up Fee: $50
- Wire Transfer Fee: $30
- Storage/Insurance: $100
- Management Fees: $125
On new accounts of more than $50,000, Birch Gold will pay your first year’s fees.
With a Gold IRA, do you own the physical precious metals?
Yes! You own the gold and other precious metals in your Gold IRA.
Working with us will also mean working in conjunction with a custodian (who will handle paperwork) and a depository, where the gold will be stored securely and insured. The depository recognizes you as the sole owner and titleholder of the metals you store with them.
If you choose to close out your precious metals retirement account, you can even opt for an in-kind distribution, which will give you the actual precious metal straight from your account.
What are the rules around withdrawing from a gold IRA?
All IRAs have their own rules that dictate how they can be used. With a Gold IRA, one of the most important rules is the withdrawal rule, which states account holders can’t make withdrawals until the retirement age of 59 ½. If an account holder withdraws money before they reach this age, they can face an early withdrawal penalty tax of 10%, which can cut into their retirement savings. Additionally, Traditional Gold IRAs are subject to required minimum distributions (RMDs), where account holders aged 72 and older are required to make minimum withdrawals once they reach this age. On the other hand, withdrawal rules for Roth Gold IRAs state that the account must be opened for at least 5 years before withdrawals can take place.
What are the tax benefits of investing in a gold IRA?
The best source for a complete picture of the tax benefits behind your individual retirement account is a tax professional.
However, you might want to go in with the general knowledge that tax benefits vary based on the retirement account type.
Generally, either contributions are tax-deferred (such as with a Traditional IRA, SEP-IRA, SIMPLE IRA, etc.), or the distributions are tax-free (such as with a Roth IRA or Roth 401k).
Additionally, in either case, any earnings are tax-deferred as long as assets are held within the umbrella of the IRA.
It is always best to confirm these details directly with a tax professional, particularly since they can examine your specific situation.
Is there a good time to roll over your retirement account?
Do you wonder if you should time your rollover based on trends like the price of gold or even fluctuations in the value of the dollar?
When it comes to questions about retirement account rollovers, choosing investment approaches, or predicting likely outcomes, everyone’s account situation is different. Only you can decide when is the best time to buy, sell, or change your Precious Metals IRA assets. To get financial counseling, you’ll have to ask your accountant, tax lawyer, or tax advisor.
However, for answers to standard questions about your investment options and procedures, remember that you have an ace up your sleeve. When you sign up for a Precious Metals IRA with Birch Gold Group, a Precious Metals Specialist is assigned to you. He or she is trained — and motivated — to walk you through your options and give you information that’s clear and easy to understand and use.
When you want to build your retirement savings or ask a question about your IRA, call 800-355-2116 to get in touch with your Precious Metals Specialist.