How to Invest in Gold Using an IRA
In 1997, the Tax Payer Relief Act made it possible for precious metals to be added to Individual Retirement Accounts (IRA), which included silver, platinum and gold. As with all gold investors, IRA account holders put gold in IRAs as a way to achieve diversification of funds, hedge against inflation, and other financial crisis.
As a general rule, the price of gold rises when stock prices drop, however this isn’t always the case as we’ve seen in the recent market turmoil. Gold can, however, even out your portfolio’s volatility in a stock market weak period.
You may add gold to all types of IRAs, including traditional, Roth, simplified employee pension (SEP) and simplified incentive match plans for employees (SIMPLE).
To invest in gold using your IRA, you’ll first have to find out if your current IRA custodian allows precious metal investments. Some custodians don’t have this option available, if so, you’ll have to find a custodian who does allow precious metal investments. If you must open a new IRA account check out Lear Capital (learcapital.com) or American Church Trust inHouston for custodians who allow precious metal IRA investing.
Second, select the gold-silver IRA plan that is administered by a custodian. Be sure to select the custodian who has a lot of experience dealing in gold.
Third and finally, submit the required paperwork to the new IRA custodian to open your gold-silver IRA account, the account application, tax forms. The custodian will help you take care of all the required paperwork. There will be other forms to fill out regarding the storage fee for holding the gold bullion coins in your account.
According to current IRS rules, the gold bullion must be stored at an approved depository — a separate location from your IRA’s custodian. Then wire some money over and buy the gold.
Other tips and information
Gold coins must be 99.5 percent pure gold to be IRS-approved and put into an IRA. They must also be classified as legal tender to qualify. At this time, the coins that qualify are the American Gold Eagle, Perth Mint Lunar series and Kangaroo Nuggets from Australia, the Canadian Gold Maple Leaf and Austrian Philharmonics coins.
Holding stock from mining companies that mine gold is another way to add gold to your portfolio. This can be risky, though, in the event the company goes bankrupt or the price of gold falls. However, as gold mining company stock rise, the yield can potentially be greater than that of gold coins.
Always remember there is some level of risk involved in all investment transactions. Consult your accountant or tax professional before making major decisions involving your retirement accounts.
Related posts:
- American Gold Eagle
- How to Buy Physical Gold and Why Not to Invest in Gold ETFs!
- Why is Gold Going Down in This Stock Market Panic?
- Gold Coins Make Great Investments For More Than Just Collectors
- IRA Investors Increasingly Turning to Precious Metals
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