Platinum IRA: How to Purchase IRA-Eligible Platinum


 

Precious metals can be a great way to safeguard your wealth and add an extra layer of security to your retirement portfolio. A platinum, gold, palladium, or silver IRA can offer protection against inflation, ensuring your assets are protected in different circumstances, such as periods of inflation or global events that impact the economy.

Adding a precious metals IRA to your retirement planning allows you to invest in alternative assets, one of them being platinum. In this guide, we’ll walk through all the information you need to know about Platinum IRAs, including how they work, their benefits, and more.

What Is a Platinum IRA?

If you’re interested in investing in precious metals, you may be looking to purchase platinum to place in a Platinum IRA. A Platinum IRA, also known as a self-directed IRA (SDIRA) or precious metals IRA, is a retirement account that allows you to invest in various alternative assets. Through an SDIRA, you can decide how you want to allocate your money and what assets you want to purchase, which may include precious metals like platinum and gold. There are different types of Platinum IRAs you can open, including:

platinum roth IRA vs platinum traditional IRA

  • Traditional Platinum IRA: Contributions to a Traditional Platinum IRA are made with pre-tax earnings, which means you can deduct those taxes from your tax liability during the year they were made, but any withdrawals during retirement will be taxed as ordinary income.
  • Roth Platinum IRA: Roth IRA contributions are made with post-tax earnings, meaning your contributions can’t be deducted from your taxes for the year they were made, but withdrawals made during retirement are tax-free.
  • SEP Platinum IRA: A Simplified Employee Pension (SEP) allows employers to set up an IRA for employees, where employers make contributions on behalf of their employees up to a certain percentage of their salary.
  • SIMPLE Platinum IRA: A Savings Incentive Match Plan for Employees (SIMPLE) IRA is used by small businesses that don’t offer a full retirement plan. Both employees and employers can contribute to a SIMPLE IRA.

Why Is Platinum So Valuable?

Like gold and silver, platinum is classified as a precious metal, or a rare metal that is found in nature and economically valuable.

With an occurrence rate of 0.005 parts per million on Earth, platinum’s rarity is on-par with that of gold—and it has certainly been esteemed similarly. Dating back to its first known use in the 7th century BC, platinum was found as a decoration, alongside gold and silver, on a casket in Thebes made for Queen Shapenapit. For about two millennia, platinum work was centered on the Pacific-facing coast of South America.

It wasn’t until the 1820s that platinum gained usage in currency applications, with Russia as the first to mint coinage with it. Much more recently, sovereign mints around the world started issuing platinum collectible coins and bars. Over the last 20 years, platinum began to be seen as a vital investment commodity; from its placement in a Precious Metals IRA through the introduction of platinum ETFs like the Aberdeen Standard Platinum Shares ETF (PPLT), it has gained a strong reputation among investors.

Adding depth to platinum’s high value is the fact that not only is it esteemed in jewelry and decoration, but it also has proven to be extremely useful in industrial applications. Platinum is a fantastic catalyst for industrial purposes such as oil refining and catalytic converters in automobiles. Such critical industrial applications will promote ongoing demand for this metal and maintain its value.

In fact, platinum grew so valued that in the early 2000s, it became more expensive than gold on the open market. Today, it is viewed as a solid alternative choice to gold and silver in a precious metals portfolio. A recent Forbes article even points out that while its sister metal, palladium, had become more-often used in catalytic converters, platinum is making a comeback.

Since the Taxpayer Relief Act of 1997 went into effect, the IRS has allowed eligible platinum products to be purchased inside of IRAs—and they have been gaining in popularity.

What Are the Benefits of Platinum IRAs?

In IRS Publication 590-B, platinum gained official retirement asset status alongside palladium, gold, and silver coins and bullion. It is worth noting that the IRS still places strict limits on which exact precious metals pieces qualify for purchase and placement into IRAs. However, individuals have been successfully navigating these rules and buying platinum for their retirement savings.

Benefits of Platinum IRAs

Potential hedge against inflation

When traders and investors are panicky, they rely on assets seen more for their rarity and long-term value stability, and they like to branch out beyond assets based on fiat currency. Precious metals like platinum certainly qualify, behaving independently from fiat currency—in fact, as we have seen historically, metals like gold and platinum have some of their best moments when the dollar is at its worst. During periods of inflation when the value of fiat currency declines, precious metals like platinum can hold or increase in value.

Diversification

Precious metals like gold and silver are well-known for their potential to help savers diversify their retirement nest eggs, increasing the likelihood they will be able to weather financial storms and economic panics that might send other asset classes—like fiat currency—onto turbulent paths. It wasn’t so long ago we saw this exact thing happen; in fact, it was only a little more than a decade earlier, during the financial collapse of 2008. While the dollar was plunging, the value of precious metals like platinum skyrocketed to all-time highs.

While platinum can come with its own volatility and periods of price movement, it can complement other precious metals well. Diversification of precious metals can be just as important as diversification into precious metals. This can decrease the risks associated with single-metal portfolios, like disruptions in mining or market flooding. For any precious metals holder, diversifying into precious metals like platinum and palladium can serve to shore up positions in gold and silver.

Tax benefits

The tax benefits of a Platinum or Gold IRA depend on the type of retirement account you contribute to.

Contributing to a Roth Platinum IRA allows you to make pre-tax contributions. While you aren’t eligible for tax deductions when you make these contributions, you can make tax-free withdrawals from your IRA during retirement. Roth IRAs also allow you to make withdrawals at any time with no taxes or penalties, giving you easier access to your assets.

With a Traditional Platinum IRA, you make after-tax contributions and pay taxes when you make a withdrawal. These after-tax contributions can potentially lead to tax deductions, but it depends on your employer-sponsored retirement plan. There’s a 10% penalty if you make early withdrawals from a Traditional Platinum IRA.

Growth potential

Platinum tends to be more volatile than gold because of its industrial applications. However, while gold is often regarded as a more stable investment, platinum has the potential to offer higher returns because it’s more volatile, allowing you to buy in at a lower price and wait for higher returns. It’s important to note that historically, platinum has a higher cost than silver or gold, but its short-term price fluctuations can offer higher growth potential if timed carefully. Regardless, by purchasing precious metals like platinum, you can diversify your savings to protect yourself and your future finances.

Platinum IRA Rules and Restrictions

As noted, platinum was included onto the list of IRA-eligible assets shortly after the passage of the 1997 Taxpayer Relief Act. But conventional IRAs are limited in their holdings, based primarily on the options favored by the financial institution offering the IRA.

To receive the full range of IRA asset options—and to also be fully in charge of choosing what to buy—you will need to open a self-directed IRA (SDIRA). In this type of IRA, you can choose to purchase any type of asset within your retirement account as long as it is not excluded by the IRS.

  • Purity requirements: Similar to how only certain gold and silver products are eligible for placement into IRAs, platinum too is restricted. The specific rule is that only platinum coins or bars with a purity level of .9995, or 99.95%, can be bought inside of IRAs, limiting the number of minted coins to just a handful. The main IRA-eligible platinum coin is the American Platinum Eagle bullion coin, although other assorted platinum bullion coins, rounds, and bars may also be eligible. The exact platinum products that are IRA-approved vary somewhat from year to year. The .9995 purity criterion is the only real rule on eligibility the IRS requires for platinum inside of an IRA.
  • Contribution limits: SDIRAs have the same contribution limits as any other type of IRA. In 2023, the limit is $6,500 — or $7,500 for individuals 50 and older.
  • Withdrawal restrictions: Additionally, in order to leverage the tax benefits of an IRA, you’ll need to follow the same best practices regarding withdrawals as you would with any other assets: until you are 59 ½ years of age you should avoid taking physical possession of your precious metals. This is why an IRS-approved IRA custodian (paperwork) and a reputable depository (secure storage) are needed.
  • Required minimum distributions (RMDs): Traditional Platinum IRAs do require RMDs if the account holder is aged 72 or older. Any account holder aged 72 or older must make minimum annual withdrawals.

What Is a Platinum IRA Rollover and Transfer?

Precious Metal IRAs allow you to purchase alternative assets to safeguard your wealth and protect your retirement savings. As a retirement vehicle, you can make IRA transfers and rollovers from other types of retirement accounts, such as a 401(k).

A Platinum IRA rollover is when you transfer funds from one type of retirement account, such as a 401(k), 403(b), 457, or other retirement plan, to your Platinum IRA. On the other hand, an IRA transfer is the process of transferring funds from one type of IRA to the same type of IRA, just with a different custodian. At Birch Gold group, our precious metals specialists can work with you to ensure you make a successful transfer or rollover.

Are Platinum IRA Rollovers and Transfers Subject to Penalties?

Each 401(k) plan sets out rules for making withdrawals and also defines distributable events and eligibility criteria for rollovers. It is always best to check the terms of your specific plan as you consider a rollover. For example, most 401(k) plans do not allow rollovers while you are still working with the employer, but there are a select few that do.

Generally speaking, there are two ways to move funds from a 401(k) into an IRA: one does not have a penalty, and one may have a penalty if you do not meet certain conditions.

  • No penalty (direct transfer/rollover) – If you transfer eligible 401(k) funds to your IRA directly from one custodian to another, you never take direct possession of the funds. As a result, you are exempt from the 10% penalty and you may continue to defer taxes.
  • Possible penalty (indirect transfer/rollover) – If you release eligible 401(k) funds directly to yourself, you have sixty days to place that entire distribution into an IRA. If you do not do this within 60 days, you will face the IRS-imposed 10% penalty in addition to paying income taxes on your withdrawal. Some people choose this option because it effectively gives them a very short-term loan; however, the penalties are high if you miss the 60-day deadline.
  • Withdrawal: You can also make a withdrawal and use that money to contribute to an IRA. If you decide to make a withdrawal instead of rolling over your 401(k), you have to pay taxes on your withdrawal. You may also be subject to a 10% penalty if you’re withdrawing from a 401(k) before the age of 59 ½, which is why paying attention to your age is crucial. However, there are certain scenarios where you can avoid an early withdrawal penalty, such as becoming permanently disabled, leaving your employer after turning 55, or passing away.

Your Precious Metals Specialist will review whether your accounts are eligible for rollover, and help you navigate any paperwork associated.

How Do You Open a Platinum IRA?

We’ve simplified the process of opening a Precious Metals IRA into five simple steps, so that you can focus solely on maximizing your savings for your retirement.

The five steps are:

  1. Open Your Account – There are two things to do as you open your account. First, you’ll need an SDIRA in place before you think about transferring funds or buying assets. Here, a Birch Gold Group Precious Metals Specialist can help with information on the different account types (Traditional IRA, Roth IRA, SEP IRA, or SIMPLE IRA), and provide more details on what to expect from the custodian and depository of your new Platinum IRA. Second, your Specialist will help you review your existing 401(k), IRA, and any other retirement accounts to determine which ones are eligible for rollover or transfer into your new ones. They will also help coordinate between the custodians of your old accounts and your new custodian, to make sure all of the required paperwork is completed and that the transfer of funds is seamless.
  2. Select Your Precious Metals – Next, you’ll select which precious metals you’d like to place in your Precious Metals IRA, selecting from gold, silver, platinum, and palladium. These may come as coins and rounds or even bars. Again, your Specialist will be on-hand to walk you through your options.
  3. Purchase Your Metals – Your dedicated Precious Metals Specialist will review your order with you for accuracy. Once you confirm the order, your Specialist will carry out your order.
  4. Store Your Platinum (And Other Precious Metals) – The precious metals you purchased within your IRA will be safely and securely transmitted and stored with an approved depository, like Delaware Depository or Brinks Global Services, and any necessary documentation will be handled by an approved custodian.
  5. Maintain Your Holdings – Keeping an eye on how much of each precious metal you purchase through IRA contributions and making sure you keep a good mix and balance can be important to properly protecting your retirement savings. Your Specialist is on-hand to answer any questions you may have, provide you with the most up-to-date quotes on the value of your metals, and initiate any transactions you would like to perform.

Again, with all of this, your Birch Gold Group Precious Metals Specialist will be on hand to help out and answer any questions.

Platinum IRA FAQs

What are popular coins and bars for Platinum IRAs?

There are a handful of ways to buy platinum to contribute to a Platinum IRA, including coins, bars, and rounds. Here are some of the coins and bars you can consider when buying platinum:

  • American Platinum Eagle Coins: The American Platinum Eagle coin is made of 1 Troy oz of 99.95% pure platinum, making it an IRA-eligible coin. This coin was first introduced in 1997 and is considered legal tender according to Congress.
  • Australian Platinum Florin: The Australian Platinum Florin is made of ¼ troy oz of 99.95% pure platinum, offering a smaller alternative to the American Platinum Eagle coin.
  • Platinum Bars and Rounds: Platinum bars and rounds that are at least 99.95% pure platinum can be used to contribute to a Platinum IRA. These bars and rounds are available in different weights, so you can choose an appropriate size for your SDIRA.

How do you withdraw from a Platinum IRA?

Generally speaking, you need to wait until you’re 59 ½ years old to withdraw from a Platinum IRA. Once you meet the retirement age, you have two common options to make a withdrawal. The first withdrawal option is liquidating your platinum and other precious metals. The other popular option is an in-kind distribution, which is where you can take physical possession of precious metals. In many cases, withdrawals before the age of 59 ½ are subject to a 10% penalty, except in certain scenarios, such as using the funds for qualified education expenses, certain medical expenses, or a first-time home purchase.

What are the risks and considerations of Platinum IRAs?

Platinum IRAs are typically considered an effective way to safeguard and preserve your wealth, but there are risks and other factors to consider. One of the first considerations to take into account when opening a Platinum IRA are management and storage fees, which are fees paid to your custodian to keep your precious metals protected. Additionally, only 99.95% pure platinum is eligible for a Platinum IRA, but working with a precious metals dealer like Birch Gold can help ensure you’re purchasing precious metals that meet the purity requirements. Lastly, because platinum can be volatile, there’s also the risk that economic and political factors may affect the value of platinum.

Can you invest in other precious metals with a Platinum IRA?

Many individuals might assume Platinum IRAs can only be used for purchasing platinum. However, Platinum IRAs can be used to invest in a wide range of other precious metals, including gold, silver, and palladium. Some examples of precious metals that are eligible for investment through a platinum SDIRA include:

Key Takeaways: Platinum IRAs

Diversification can be a smart move to protect your retirement savings. Aside from diversifying into precious metals, diversifying the types of precious metals you purchase may help further shield your savings from long-term hits due to economic volatility or even economic downturns.

If you have questions about opening a Precious Metals IRA, or if you’d like to go ahead and open one, call and speak to a Precious Metals Specialist at (800) 355-2116.