Key things you should know before you turn to gold IRAs
Recently, gold has become a source of stable and steady growth compared to the volatile stock market. As a result, many investors are now turning to gold IRAs to diversify as well as hedge their portfolios against inflation and market volatility. There are many IRA investors out there who invest in traditional assets like bonds, stocks, and funds.
But you should remember that the tax code allows you to invest in precious metals like silver and gold utilizing specialized IRA accounts. You can easily set up and maintain a traditional IRA account through a custodian. But there are a few more things when it comes to setting up and maintaining gold IRAs like finding a custodian and depository. This article explains the key things you should know before you turn to gold IRAs.
A gold IRA
A gold IRA refers to a specialized and self-directed individual retirement account that is designed to hold precious metals. With a gold IRA, there are pre-tax contributions to allow your investment earnings to accumulate tax-deferred. The income and contribution limits for a traditional IRA and a gold IRA are the same.
Unlike traditional IRAs that usually hold paper assets like bonds, funds, and stocks, gold IRAs are set up to hold only physical gold and even other approved metals. Remember that with gold IRAs, you don’t have to hold the gold yourself. Instead, you need to find a secure depository to store it.
It’s worth noting that there are guidelines that the IRS has established for precious metals fineness standards to find out whether silver or gold coins or bullion is acceptable for gold IRAs. Besides, the IRS allows only specific gold coins like the Canadian Maple Leaf or American Gold Eagle. A good IRA company needs to know the gold coins that are acceptable for gold IRAs.
A gold IRA can attract a one-time account setup fee, but some companies may not charge this fee for larger initial deposits. There is also a custodial fee or an annual administration fee. The depository charges storage fees that depend on the amount of gold you intend to store. In some cases, gold IRAs can come with higher fees than a Roth or traditional IRA that focuses only on mutual funds, bonds, and stocks. See Gold IRA companies here to own gold.
Why you should purchase gold coins or gold bullion
When buying gold for your gold IRA, you can choose between sovereign coins and bullion. Both are usually valued in the same way which is per ounce, but it’s based on the price of gold.
In this case, it’s usually safer to choose sovereign coins. You can easily recognize some of the sovereign coins like the Canadian Maple Leaf and American Eagle and they are easier to trade. These coins also usually sell at good premiums compared to bullion bars. Large bullion bars are usually ideal for institutions while small bullion bars are suitable for individual investors and they give higher markups.
