Adding precious metals to Individual Retirement Accounts (IRA) was made possible by the Tax Payer Relief Act in 1997. This now includes gold, platinum, and silver. As a method to achieve diversification of investment funds, some account holders place gold in their IRAs. As a general rule, when stock prices drop the price of gold rises. This can even out the value of your portfolio in a weak period for the stock market.
1. Inquire of your IRA custodian if you have the right type of account you can add gold too. Some plans do not allow this. In which case, you need to start a new silver-gold IRA.
2. Choose a custodian who has a lot of administration experience with gold-silver IRA plans. It is possible to add silver or gold to most types of IRAs, including Roth, traditional, simplified incentive match plans for employees (SIMPLE) and simplified employee pension (SEP) plans.
3. To open a silver-gold IRA account, send the signed paperwork to your new IRA custodian. Usually the charges will also include a storage fee for any silver or gold coins you keep in your account. Your gold has to be stored with an approved depository pursuant to current IRS rules, which has to be in a completely different location than your IRA custodian’s location.
4. To initially fund your gold account you just transfer funds from your bank account to your IRA account. If you desire to roll funds over from a 401(k) or company retirement account your custodian can instruct how to do this, it’s quite easy and they can accomplish it in one day.
5. You may want to determine if you desire to buy gold mining stocks or silver and gold coins and will have to inform your custodian to purchase them for you from the funds in your account.
Collectible coins are transactions prohibited via an IRA account according to the IRS. Purchasing any collectible coins with funds from your IRA is called a distribution of the same amount you used to purchase the coins. The distribution will then be added to your gross income on your tax form by the IRS and penalized 10 percent if you are under age 59 1/2.
The precious metals that are allowable with IRA investments are U.S. minted coins. The coins need to hold a minimum amount of platinum, silver, gold, or palladium metal to qualify. Gold coins need to contain either one-quarter, one-tenth, one-half or a whole one-ounce mixture of gold. Silver, minted as one-ounce coins, designated bullion, are acceptable. Any coins not designated qualified minted investments by IRA regulations need to be bought with funds outside your IRA and held outside of your IRA account to avoid a penalty.
3. The custodian of your account is the one responsible to the IRS to report the investments held in any IRA account including any distributions or contributions to or from the account. Which investments are allowed for investors by the account custodian is not regulated by the IRS. What the account can or cannot allow is up to each account custodian to decide. It remains extremely important to always remember coins designated precious metal must be bought through a precious metal IRA, frequently called a “gold IRA.” Any good account custodian should be able to assist anyone to buy the appropriate investments for their IRA to not get hit with a penalty. You should never buy any precious metal coins through an IRA account not authorized for precious metals. If you make that mistake, it could result in what’s called a distribution, which is then taxable & can cause you to lose the protection of your IRA. Be sure to study the IRA rules beforehand. Most investment counselors advocate the use of an IRA account which allows a person to accumulate profits tax-free over time.