Discover How to Add Another Precious Metal Beyond Gold and Silver To Your IRA
The word “gold” is often used to describe exclusive or privileged status, with “gold tiers” trending as signifiers of high esteem within a club or organization. Often in these very same places you’ll find one level higher: “platinum tiers.” Platinum is often viewed as a more elite and precious metal than even gold; its value as a very precious metal has persisted over time.
Buying platinum within your self-directed individual retirement account (SDIRA) allows you to further diversify your precious metals holdings and potentially safeguard your retirement savings. Let’s explore why platinum is so val
Invest Beyond Gold Coins and Bars with Palladium
Palladium may not be quite the same household name as “gold,” but its long-term price performance shows that it might have similar potential to maintain value over time, independently of what happens with fiat currency.
Many people choose to diversify their retirement savings with the purchase of palladium within their Precious Metals IRA.
Why Is Palladium A Valuable Metal?
Like gold and silver, palladium has a range of applications. Palladium has been used in jewelry, electronics, and even dentistry, although currently its usage in the automotive industry—combined with its limited supply—is the key factor driving its high value.
Approximately 85% of mined and extracted palladium is used in catalytic converters in gasoline cars and trucks, where it helps to remove harmful pollutants from exhaust fumes by turning them into carbon dioxide and vapor.
As reducing vehicle emissions becomes more of a global priority, the demand for palladium only continues to grow. Most of the world’s palladium is mined only as a byproduct to other metals like platinum. And with profitability declining at South Africa’s platinum mines over the past handful of years, the supply shortage of palladium has been an ongoing concern.
Because this demand outpaces supply by such a large margin, palladium prices continue to increase. Through 2020, palladium continues to be priced above gold as the demand for palladium continues to grow while the shortage persists.
Palladium’s price performance over the last decade has also garnered it more attention as a precious metal worth holding for investment and hedging purposes. In 2017, the U.S. Mint introduced the American Eagle One Ounce Palladium Bullion coin for the first time; now, we’re seeing demand from long-term savers seeking to add it to their retirement portfolios.
Why Own Palladium Inside an IRA?
Two decades ago, the federal government saw the long-term performance potential of assets like precious metals and acted on it. In the Taxpayer Relief Act of 1997, Congress opened up precious metals as a potential asset that could be purchased and held inside of an IRA.
While the IRS places strict rules on exactly which precious metals and which kinds of coins and bars can be held in an IRA, individuals continue to purchase metals like palladium within these accounts. So how do these metals fit in with their retirement strategy?
Protection from market volatility
Similar to other precious metals like gold and silver, palladium is seen as both a hedge against market volatility and as a potential way to maintain retirement savings if other asset classes like stocks and bonds fall.
Someone might choose to hold palladium alongside more common metals like gold and silver in order to diversify their retirement savings further. Diversification can help provide hedges against market volatility and price fluctuations. The ongoing utility of palladium in the automotive industry combined with its limited supply bodes well for its long-term price outcomes.
Hedge against inflation
But it’s not just volatility in the stock and bond markets that make precious metals like palladium so valued. With the large liquidity protection programs at central banks around the world, as well as historically low interest rates—including some negative rates—fears of inflation can easily creep back into financial markets. While major currencies like the U.S. Dollar haven’t seen massive inflation in decades, fears of it are not very far off. That makes metal assets like palladium, gold and silver even more precious.
How to Buy Palladium in an IRA
You cannot buy palladium or any other precious metals within a conventional IRA. Instead, you will need to open a self-directed IRA (SDIRA).
The asset options available for purchase in conventional IRAs are tightly controlled by the financial institution offering them, and are generally limited to things like bonds, mutual funds, and stocks. An SDIRA gives the account holder total control to select from the widest possible range of assets, which effectively includes anything not explicitly excluded by the IRS.
SDIRAs aren’t exactly new, but they saw a significant boost to their power in the early 1990s. Investors were demanding more control and options for diversification in their IRAs. When the 1997 Taxpayer Relief Act was passed, Congress and the IRS expanded the options for precious metals holdings that were allowed in IRAs—and expanded the power of SDIRAs as retirement vehicles.
More palladium options may emerge in years ahead, especially with prices now gaining the attention of more of the precious metals market.
Can I Buy Palladium With My 401(k)?
In almost all cases, you cannot buy and hold assets like precious metals in your 401(k), which can only hold a selection of assets as defined by the plan. These assets usually include things like stocks, mutual funds, and bonds, much like a conventional IRA. And since 401(k)s are employer-sponsored plans, companies will often push employees to buy their stock.
If you want to diversify your retirement savings beyond the limited range of assets permitted by your 401(k), you will first need to check if your 401(k) is eligible for a rollover. If it is, you can then rollover eligible funds into a new self-directed IRA (SDIRA), which the IRS allows to hold precious metals like palladium, gold and silver.
Will I Face a Penalty for a Palladium 401(k) Rollover?
Every 401(k) has its own plan terms, which define the conditions under which distributions may occur as well as the eligibility criteria for rollovers. Your Precious Metals Specialist can help you review the terms of your existing retirement plans and accounts to determine which ones are eligible for rollover.
There are two ways that individuals tend to roll over funds from an eligible 401(k) into an IRA.
- Direct transfer/rollover – With this method, funds are transferred directly from the 401(k) custodian to the IRA custodian. Since you never take direct possession of the funds, you are exempt from any penalties and may continue to defer taxes on the entire amount.
- Indirect transfer/rollover – With this method, you first release the funds from the eligible 401(k) directly to yourself; from here, you have 60 days to place that entire amount into an IRA. This is a tempting option for individuals who could benefit from a 60-day loan. As long as the funds are placed into an IRA within 60 days, there is no penalty or taxation.
Again, your Precious Metals Specialist is available to answer any questions you may have as well as go through any required paperwork.
How to Open a Palladium IRA
We’ve streamlined the process of opening a Precious Metals IRA into five easy steps, making it easy to diversify your retirement savings.
- Set Up Your Account – There are two things that happen as part of this step.First of all, you will work with your designated Precious Metals Specialist to review your account options—choosing from Traditional, Roth, SEP, or SIMPLE IRA options—and you will choose the one that most closely aligns with your path to retirement. Then, you will open the new account with a new custodian.Your Specialist will also help you review any existing retirement accounts that you already have in place, from existing IRAs through other plans such as 401(k)s, to determine which ones are eligible for a rollover or transfer. From here, they will also help you coordinate with any previous custodians and the custodian of your new IRA so that the funds can move smoothly, and all the necessary paperwork is completed.
- Choose Your Assets – How do you want to allocate the funds in your new IRA between the different types of available precious metals? You’ll get to choose between gold, silver, platinum, and palladium. Additionally, there are specific coins, rounds, and bars available in each type of metal that are approved by the IRS for placement into an IRA. Your Specialist will walk you through your options, and you’ll get to choose
- Purchase Your Assets – Your Precious Metals Specialist will review your order to make sure it is accurate. Upon receiving your confirmation, your Specialist will carry out your order—and your Precious Metals IRA will be live.
- Store Your Palladium (And Other Precious Metals) – Unlike paper assets like stocks, bonds, and funds, physical precious metals need to be securely transported and stored at an approved depository.
- Maintain Your Account – You can regularly check in and keep track of your IRA’s performance, keeping an eye your asset allocation and initiating any transactions you would like to make to adjust your account. Your Precious Metals Specialist will continue to be there for you, ready with up-to-date quotes and available to help get answers to any questions that may arise.
Remember, at each and every one of these steps, your Birch Gold Precious Metals Specialist is on-hand to review your options and help you navigate the process.
Palladium is just one example of the approved metals available through a Precious Metals IRA. If you’ve got any questions about opening one or if you’re ready to open an account, call and speak to a Specialist today at (800) 355-2116.