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If recent global events are to go by, we need to re-evaluate our investment options to hedge our retirement savings against market flatters, government instability, inflation, and other external influences. For example, we saw a significant decline in the purchasing power of the American dollar and an increase in inflation that interfered with conventional investment opportunities such as stocks and treasury notes.
One of the best alternatives to conventional investments is investing in precious metals such as gold, silver, platinum, and palladium. Precious metals offer diversity and are mostly immune to inflation/deflation and political instability.
Below, we will cover some key aspects of investing in precious metals through a gold IRA and how much you can put in your account.
What is a Gold IRA?
A gold IRA also referred to as a precious metals IRA, is a specialized self-directed IRA that allows you to own physical metals in the form of coins, bars, and bullion. With this individual retirement account, you can also invest in other precious metals-related securities, including stocks in a mining company, precious metals mutual funds, ETFs, and gold commodity futures.
Gold IRAs are similar to conventional IRAs based on the tax benefits, how much to deposit, and withdrawal limits. However, these accounts need to be held separately from your traditional retirement account.
Despite having numerous similarities, gold IRAs are not opened by conventional custodians or brokerage firms. Most of these companies don't offer self-directed individual retirement accounts, which are needed to invest in precious metals.
When investing in gold IRAs, you need to find a reputable and authorized company specializing in gold IRAs. These firms are well-equipped to handle the necessary documentation, reporting, and paperwork required to set up and purchase precious metals.
Although precious metals are considered alternative investments, they are subject to the same regulations regarding contribution limits and distributions. Account holders below 50 are required to contribute a minimum of $6000 annually. However, these figures go up to $7,000 when you are 50.
You can only withdraw from your IRA when you are 59 ½ years old or older. Taking your distributions earlier makes you subject to a 10% penalty on your investment.
Another special consideration you should account for is storage. Unlike a traditional retirement account, you need IRS-approved storage to hold your physical metals after purchase. You can use a bank, national depository, or an IRS-approved third-party facility.
Types of Gold IRAs
There are three types of gold IRAs, each varying based on your tax preference. You can choose a traditional, Roth, or SEP precious metals IRA:
How Much Can You Put In a Gold IRA?
Investing in precious metals is a good way to hedge your portfolio and spread your risks. However, you need to know how much you need to invest. Keep in mind that investing in precious metals bears the same risks as investing in other businesses and should be approached cautiously.
Going through various research materials, summarized the opinions of multiple experts on how much to put in your gold IRA. It's advisable to invest between 5% and 10% of your retirement funds in precious metals.
Gold IRAs observe the same contribution limit as traditional individual retirement accounts. As of 2022, investors are required to contribute at least $6,000 to their gold IRAs. However, this figure is set to rise in 2023 to $6,500.
You should remember that once you are 50 years or older, you will be required to make an additional $1,000 payment bringing the total for 2022 $7,000 and $7,500 for 2023.
Types of Precious Metals to Invest In Using a Gold IRA?
Gold IRAs are self-directed retirement accounts that allow you to own alternative investments such as precious metals and real estate. However, there are limits to the precious metals you can buy using your IRA account. IRA-approved metals include gold, silver, platinum, and palladium.
Each meta needs to meet specific IRS standards for you to purchase them through a gold IRA. For instance, gold bought through an IRA needs to be 99.5%pure, silver 99.9%, while platinum and palladium must be 99.95% pure.
Aside from purity, there are specific coins, bars, and bullion that you are IRA-approved. This is where a reliable gold IRA company has its advantages. When investing in precious metals, you need to choose a reputable IRA company specializing in precious metals. They are equipped and knowledgeable as to which metal to invest in to avoid penalties.
Top Recommended Gold IRA Companies?
Goldco is arguably one of the best gold IRA companies in the country, with more than fifteen years of experience to its name. The company attributes its success to its ability to cultivate long-term professional relationships with clients.
Its founder Trevor Gerszt is focused on helping investors find a simple and transparent way to set up a gold IRA and purchase precious metals. He also believes diversifying one's portfolio with physical assets such as gold and silver helps provide stability and safety against market fluctuations.
Services and Products
Goldco Gold IRA
Anyone below the age of 70 qualifies to own a gold IRA which allows them to buy precious metals using their retirement funds. Goldco stands out because it guides investors on the best precious metals to buy based on their investment goals.
Investing with Goldco gives you access to industry experts with knowledge of IRS guidelines and regulations on precious metals. You also don't have to worry about the safety of your metals since the company has partnered with reputable firms such as Delaware Depository to ensure your physical metals are safe till retirement.
Goldco has partnered with Equity Trust as their primary custodial company responsible for the paperwork needed to ensure compliance with IRS regulations. However, the company has also partnered with several other custodial companies; consult with your account administrator on your options if you prefer working with another company.
There are restrictions as to which precious metals you can buy using your self-directed IRA. However, you can open a non-IRA account with Goldco that you can use to directly purchase various metals, including the collectible offered in Goldco's products catalog. Direct purchases offer flexibility as to how much you can invest in and your choice of storage. Unlike IRA-approved metals, metal bought directly can be stored at home in a secure safe.
Goldco offers a buyback program where they buy your precious metals when you decide to sell your assets. This program makes it easy when you want your distribution in the form of cash instead of physical metals. However, remember that you can only take your distributions when you reach 59 ½ years.
Goldco doesn't offer a clear direction on fees charged for their different services on their website. However, their customer support team will gladly answer your questions. Some of the fees include a one-time setup fee of $80. You will also pay $200 annually for storage, maintenance, and insurance.
Investors must also have a minimum deposit of $25,000 to purchase gold and silver bullion.
Pros & Cons of Goldco
Augusta precious metals pride itself on being one of the top gold investment companies in the industry with a decade of experience. The family-owned business major in precious metals IRAs and other gold-related services, including direct purchases and gold storage.
The Casper-based company was founded on transparency, quality customer service, and simplicity. All clients are provided with lifetime support immediately after they open an account; this way, they can make informed decisions on the best metals to buy.
Augusta Precious Metals is a good choice for investors who are new to gold investment and want guided steps to gold IRAs. It's also worth noting that you need at least $50,000 in your IRA account to roll over or invest in metals.
Services and Products
Gold and Silver IRAs
Augusta primarily deals in precious metals IRAs, allowing you to invest your retirement savings in precious metals such as gold and silver. The company has partnered with Equity Trust as its custodian with clients across the country.
Precious metals bought through your IRA will be stored at IRS-approved depositories (Delaware Depository). Aside from the secure storage, your precious metals are also protected by a $ 1 billion all-risk insurance cover. Some of the IRA-approved coins include:
Investors can also buy non-IRA precious metals through Augusta. These metals are flexible and can be stored at home, unlike those purchased through your IRA account. This account allows you to invest in other metals, including:
Augusta offers a buyback program that allows you to sell your assets directly to them instead of finding another buyer. This move is designed to give your maximum returns on your investment since the metals are bought at competitive market prices.
The company doesn't offer a guarantee to buy your metals. However, they haven't turned down any investors looking to liquidate their assets.
Augusta charges a competitive price for its services, including a one-time setup fee of $50. You must also pay an annual custodian fee of $100 and $100 as depository fees. The company stands out among its competition as it doesn't charge customers shipping, insurance, and management fees.
It's worth noting that Augusta charges a margin on all purchases, with some going up to 66% for premium coins.
Pros & Cons of Augusta Precious Metals
American Hartford Gold is one of the top gold IRA companies in the country, focused mainly on selling IRA-approved precious metals such as gold, silver, platinum, and palladium. Investors can also buy non-IRA precious metals through AHF, which includes perks such as a buyback guarantee, price matching, and free insured shipping.
To open an account, you need a minimum of $5,000 which is relatively low compared to what its competitors require. Clients can as well rollover their existing IRA accounts with a 60-day rollover option to invest in precious metals.
Services and Products
AHG offers gold IRAs that allow you to invest in IRA-approved metals. It has partnered with Equity Trust, an IRS-approved custodian, to help manage the paperwork and all the compliance issue related to buying Precious metals through an IRA.
Investors have the freedom to choose an IRS-approved depository from one of AHG's partners, including Delaware and Brinks Depository. The best part about working with American Hartford is that you can visit your metals at the depository by scheduling an appointment.
Customers can also buy non-IRA metals through AGH and have them shipped to their preferred location. Some of the coins and bars include:
American Hartford stands out for its relatively low fees compared to its competition. Unlike most companies that charge you for setup, insurance, management, and storage, AHG waives these for the first year. After this, you will pay an annual fee of $280. However, customers with an investment of more than $300,000 have their fees waived for three years.
Pros & Cons of American Hartford Gold
Investing in gold IRAs is one of the best ways to hedge your retirement saving against market flatters. However, the maximum amount you can put in your IRA depends on your level of income. Keep in mind that different precious metals IRA companies require customers to have specific amounts in their accounts before they can buy metals. Take time to research individual companies to find one that best fits your needs.