The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualified retirement plan. Investors with gold IRAs can hold physical metals such as gold bars or coins as well as securities related to precious metals in their portfolio. Investors choose to buy precious metals in individual retirement accounts (IRAs) because of their tax-free or tax-backed status. To comply with IRS requirements, all IRAs, including precious metal IRAs, must keep their assets owned by a trustee or custodian rather than the individual owner.
Since gold is bought the most frequently, the overarching term gold IRA is most commonly used as industry slang to refer to a retirement account that contains any combination of precious metals. Numismatic coins pay higher commissions to the gold company, but precious metal bars reflect the spot price of the precious metal more directly. Some gold IRA companies argue that certain coins are included in a precious metal IRA. However, several of these companies were investigated by the government for misleading customers and selling numismatic coins aggressively in exchange for gold bars. The term gold IRA is primarily used to describe a self-directed IRA whose funds are invested in hard metals.
Gold IRA companies can help you with this process, from choosing a custodian bank to arranging the storage of your precious metals. It works in a similar way to a traditional IRA and offers the same tax benefits — but with the added ability to hold precious metals, which is often used as a hedge against inflation and economic uncertainty. One reason is that IRAs are not allowed to own collectibles and precious metals such as gold and silver are considered collectibles. Several companies are promoting gold IRA arrangements based on the checkbook control strategy, in which the IRA does not directly own the metals but owns a limited liability company (LLC) through which the taxpayer buys and stores the metals.
Money deposited into a traditional IRA is deductible up to the permitted annual limits, while cash in a Roth IRA grows tax-free and can be withdrawn tax-free in retirement. Precious metals IRAs are usually self-managed IRAs, a type of IRA in which the custodian bank allows you to manage a more diverse range of investments in the account. The four precious metals that may be held in an individual retirement account are gold, silver, platinum, and palladium, as long as they are IRS-approved coin or ingot products.
