Palladium IRA Investments For Retirement

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Purchasing precious metals can be a great way to diversify your savings and safeguard your retirement portfolio. Through a self-directed IRA, such as a Gold IRA or Palladium IRA, you can purchase eligible precious metals in various forms, including coins, bars, and rounds. Opening a Palladium IRA can serve as a level of protection during various scenarios, such as periods of inflation or events that impact the global economy. In this guide, we’ll take an in-depth look at how to purchase IRA-eligible palladium to start a Precious Metals IRA.

What Is a Palladium IRA?

A Palladium IRA — or Precious Metals IRA — is a type of self-directed IRA that holds palladium bars, rounds, and coins as a contribution. Palladium IRAs are different from conventional retirement accounts because they allow you to invest in alternative assets, such as precious metals. However, they share some similarities, such as contribution limits. The contribution limit is $6,500 for most and $7,500 for workers above the age of 50 in 2023. In 2024, each limit will increase by $500 to $7,000 and $8,000, respectively. There are also different Palladium IRA structures, as outlined below:

Types of Palladium IRAs

  • Traditional Palladium IRA: Contributions to a Traditional Palladium IRA are made with pre-tax dollars, giving you access to tax deductions. However, withdrawals during retirement from a Traditional IRA are taxable.
  • Roth Palladium IRA: Contributions to a Roth Palladium IRA are made using after-tax dollars, which means you can’t take any tax deductions on your contributions during the year they’re made. Unlike Traditional Palladium IRAs, you can make tax-free withdrawals after the retirement age of 59 ½.
  • SEP Palladium IRA: Simplified Employee Pension (SEP) Palladium IRAs allow business owners to set up and contribute to their employees’ retirement. Employers have a contribution limit for each employee, which is based on a percentage of each respective employee’s salary.
  • SIMPLE Palladium IRA: Savings Incentive Match Plan for Employees (SIMPLE) Palladium IRAs allow both employers and employees to contribute to retirement accounts that are set up for individual employees. This option allows employees to have more control over how much they contribute to their retirement accounts.

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 of 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.

Overall, the supply and demand of palladium is one of the driving factors influencing its value. With an increase in demand from the auto industry and a limited supply compared to other precious metals like gold and silver, palladium is growing in popularity as a safe haven asset.

Palladium Supply and Demand

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.

What Are the Benefits of Palladium IRAs?

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? Below are some of the top benefits of Palladium IRAs.

Benefits of Palladium IRAs

Protection from economic volatility

Similar to other precious metals like gold and silver, palladium is seen as both a hedge against economic volatility and as a potential way to maintain retirement savings if other asset classes decrease in value. Palladium can serve as a safe haven asset, with individuals turning to valuable precious metals to preserve their capital when other assets underperform.

Diversification

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 economic 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

Similar to gold and silver, palladium serves as a hedge against inflation. For Palladium IRA account holders, this can help protect savings from inflation and other economic events that impact the economy. Historically, palladium and other precious metals tend to increase in value during inflationary periods. Several factors help make this happen, such as limited supply, industrial demand, and investor sentiment.

For example, palladium’s scarcity limits the amount that can be brought to the market. If central banks decide to print more paper currency, it can exacerbate inflation. However, palladium’s limited supply makes it more resilient to the devaluation that inflation causes, making palladium a strong safe haven asset.

Tax benefits

Depending on the type of self-directed IRA you open, you may be able to enjoy certain tax benefits. If you decide to make contributions to a Traditional Palladium IRA, you’re able to deduct your contributions from your tax return for that given year. That being said, your earnings will be taxable when you decide to withdraw them after the age of 59 ½.

If you buy palladium to contribute to a Roth IRA, you’re contributing after-tax dollars. That means you’re not eligible for tax deductions on the contributions you’re making for that year, but it also means your withdrawals are tax-free in retirement. Keep in mind that there are still penalties for early withdrawals with a Roth Palladium IRA.

Growth potential

Because palladium is a rare metal that’s in high demand, the price can increase as the market changes. Palladium is used in catalytic converters, fuel cells, and electronic components, which means the demand for palladium is constantly growing. As demand increases, prices may increase as well. This is one of the biggest benefits of investing in precious metals — especially palladium.

Palladium IRA Rules and Restrictions

Whether you’re opening a Palladium IRA or a Silver IRA, there are rules you have to follow to avoid potential penalties and fees. You can learn more about these rules below:

  • Contribution limits: Individual retirement accounts of any kind have contribution limits, and that includes Palladium IRAs. The annual contribution limit in 2023 is $6,500, or $7,500 for people over the age of 50. In many cases, these limits increase each year, with the 2024 limits being $7,000 and $8,000.
  • Purity requirements: The palladium you purchase for a Palladium IRA must meet certain purity standards. In particular, palladium has to be 99.95% pure to be eligible for a Palladium IRA.
  • Withdrawal restrictions: You have to wait at least five years to make a withdrawal, and withdrawals before the age of 59 ½ can incur a 10% early withdrawal penalty.
  • Required minimum distributions: Once you reach a certain age, you may be required to withdraw a certain amount from your Palladium IRA annually. Required minimum distributions (RMDs) are a requirement for Traditional Platinum IRAs, with account holders being required to begin making minimum annual withdrawals once they reach the age of 72. As an account holder, you have the option to liquidate your assets or make an in-kind distribution, where you take physical possession of your metals.

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 traditional assets. 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.

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.

  1. 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.
  2. 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.

  1. 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.
  2. 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
  3. 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.
  4. Store Your Palladium (And Other Precious Metals): Physical precious metals need to be securely transported and stored at an approved depository.
  5. Maintain Your Account: You can regularly check in and keep track of your IRA’s performance, keeping an eye on 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 IRA FAQs

What coins and bars are eligible for Palladium IRAs?

You have a few options when it comes to using IRA funds to buy palladium. It’s important to choose palladium coins and bars that meet the purity standards, which a Birch Gold Precious Metals Specialist can help with. Here are a few Palladium IRA-eligible coins and bars:

  • American Eagle Palladium Coin: The American Eagle Palladium Coin was first issued in 2017, weighing 1 Troy ounce with a composition of 99.95% palladium, making it an IRA-eligible coin. Additionally, Congress regards American Eagle Palladium Coins as legal tender.
  • Canadian Palladium Maple LeafThe Canadian Palladium Maple Leaf coin was originally produced in 2005, and it’s made of 99.95% pure palladium. Each coin weighs 1 Troy ounce and is eligible for your Palladium IRA.
  • Palladium Bars and RoundsYou can purchase various sizes and styles of palladium bars and rounds, but 1 Troy ounce is the most common weight. Some bars may weigh several ounces or as much as a kilogram.

What are the risks and considerations associated with Palladium IRAs?

There are a few risks to consider before you buy palladium and contribute to a Precious Metals IRA. You have to pay fees for a custodian to manage your Palladium IRA, which includes storage and management fees. Additionally, only certain types of bars, coins, and rounds are eligible for palladium IRAs.

Another important consideration is market volatility. While palladium is rare and in high demand, there are several factors that can affect its price. Before using your IRA funds to buy palladium, consider your risk tolerance.

Can you place other precious metals in a Palladium IRA?

Palladium IRAs aren’t the only type of precious metals retirement account you can open. You can also open other Precious Metal IRAs, including gold, silver, and platinum. Different types of metals offer different pros and cons and have varying purity standards, so do your research or consult a Birch Gold Precious Metals Specialist before deciding which precious metal suits your goals.

How do you withdraw from a Palladium IRA?

In order to make a withdrawal from your Palladium IRA, you need to reach the age of 59 ½ years old. Once you reach retirement age, there are two ways you can make a withdrawal:

  • Liquidation: Liquidation involves converting your precious metals to cash and withdrawing that cash. This may be an easier option since you don’t have to worry about storing your precious metals, and you can quickly start receiving cash distributions.
  • In-kind distributions: An in-kind distribution allows you to take physical possession of your precious metals. Physical possession of precious metals has its benefits, but keep in mind that you’re responsible for storing and managing those assets once you receive an in-kind distribution.

If you make a withdrawal from a Palladium IRA before the age of 59 ½, you may face a 10% penalty. There may be certain exceptions to this penalty depending on why you’re making an early withdrawal, such as if you’re paying for a medical insurance premium after losing your job.

Wrapping Up: Palladium IRAs

A Palladium IRA can be a smart way to safeguard your wealth and purchase precious metals. Assessing your risk tolerance and familiarizing yourself with the rules and restrictions of Palladium IRAs can help you decide which IRA structure is best for your goals.

Palladium is just one example of the approved metals available through a Precious Metals IRA. If you have 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.

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