Investing in precious metals can be an appealing option for individuals looking to diversify their portfolios. Precious metals such as gold, silver, platinum and palladium provide a unique opportunity to invest in tangible assets often immune to market fluctuations, making them an attractive option for those looking to protect their assets.
However, certain rules and regulations must be followed when investing in precious metals to maximize the potential return on investment. This guide comprehensively overviews the different types of IRA-approved precious metals. Anyone can confidently and successfully invest in precious metals with the right information.
What Is IRA-Approved Precious Metals?
IRA-approved precious metals refer to a specific list of precious metals that can be held in an individual retirement account (IRA). The Internal Revenue Service (IRS) has strict regulations on what is allowed to be held in an IRA. Only certain types of gold, silver, platinum and palladium bullion coins and bars meet the criteria.
Gold coins must have been minted by the U.S. Treasury or other approved mints and have a fineness of .995 or better. Silver coins must have been minted by the U.S. Treasury or other approved mints and have a fineness of .999 or better.
Platinum coins must have been minted by the U.S. Treasury or other approved mints and have a fineness of .9995 or better. Palladium coins must have been minted by the U.S. Treasury or other approved mints and have a fineness of .9995 or better.
Certain types of gold, silver, platinum and palladium bullion coins and bars are also eligible for inclusion in an IRA, provided they meet certain criteria. These criteria include that the metal must have been produced by an accredited refiner and must have a purity of at least .995 or better.
IRA-Approved Gold Bullion
The IRS has approved certain types of gold bullion for inclusion in IRAs. IRA-approved gold must meet certain fineness standards and be in the form of coins or bars. Examples of approved gold bullion include:
Even though American Eagle coins don't have a high enough purity to qualify for an IRA, the IRS has exempted them.
Keep in mind that even if a coin is declared pure by the IRS, it may still not be suitable for an IRA if it is also a collectible. The British Sovereign, the French 20 Franc gold coin and the American Liberty are examples of the many different bullion coins available.
Don't panic if the prerequisites seem overly restrictive at first. You can easily locate gold that is IRA-eligible thanks to our recommended IRA companies that provide it.
IRA-Approved Silver Bullion
The IRS recognizes particular silver bullion as eligible for purchase in an IRA. The approved silver bullion includes coins and bars of .999 fine silver.
Approved silver coins include:
Approved silver bars include:
IRA-Approved Platinum Bullion
The approved platinum bullion products include coins or bars that are at least 99.95% pure platinum. Examples of popular IRA-approved platinum bullion products include:
IRA Approved Palladium Bullion
These include palladium bars, coins and rounds that meet certain purity standards, weight and form. The approved palladium products must be at least .9995 fine or 99.95% pure.
The most popular IRA-approved palladium bullion products include:
Benefits of Investing in Precious Metal IRAs
There are a variety of advantages associated with investing in precious metals.
This type of investment allows investor to withdraw their funds at any time. Precious metals are universally accepted as a form of payment, so they can easily be converted into cash when needed.
Additionally, investors can buy and sell gold, silver and other precious metals online, which makes it easy to access funds quickly and conveniently.
Investing in Precious Metal IRAs also gives investors greater flexibility and control over managing their investments. The ability to purchase and sell these assets without being subject to the restrictions of traditional retirement accounts is a major benefit for investors.
When investing in a Precious Metal IRA, you are exempt from paying any capital gains taxes. This means you can enjoy long-term growth benefits without paying taxes on the profits.
The IRS allows investors to defer taxation on any income earned within the account until it is withdrawn. This means you can benefit from the compounding effect of long-term growth without paying any taxes until you withdraw the money.
Finally, a Precious Metal IRA is exempt from any estate taxes, meaning that your heirs will not have to pay taxes on any earnings or profits when they inherit the account.
Protection Against Inflation
Investing in Precious Metal IRAs can provide a valuable form of protection against inflation. When inflation rises, the value of paper money depreciates, whereas the value of physical precious metals tends to increase. This is because while paper money is backed by government-issued fiat currency, precious metals are tangible assets that hold intrinsic value.
With an IRA backed by precious metals, investors can benefit from the potential for higher returns due to the rise in the value of these metals during times of high inflation. This form of investing can also hedge against market volatility, allowing investors to maintain their purchasing power and preserve their wealth over time.
When you diversify your investments, you spread your money across different asset classes so that if one type of investment loses value, another may gain value, helping to minimize the impact of any losses. Investing in a Precious Metal IRA also allows you to diversify into a non-correlated asset class, as the prices of precious metals tend to move in the opposite direction of stocks and bonds.
This means that when stocks and bonds are down, the price of gold or silver may go up, providing an opportunity to make money. Additionally, precious metals have historically been viewed as a haven during economic uncertainty. By adding these types of assets to your retirement portfolio, you can protect your investments from fluctuations in the stock and bond markets.
Precious metals tend to hold their value over time, making them a great choice for long-term investments. These assets are scarce and will eventually become more valuable over time, making them a reliable and secure investment.
Some investors choose to invest in a precious metal IRA purely for the long term without expecting to withdraw their funds for several years. Of course, there is always the option to sell your investments at some point, but this is not a frequent practice among those who invest for long-term purposes.
Types of Precious Metal IRAs
The three main types of precious metal IRAs are the Traditional IRA, the Roth IRA and the SEP IRA.
Each type of Precious Metal IRA has advantages that make them a great choice for different investors. It is important to carefully research each type of IRA when investing in Precious Metals because each has unique features that make it suitable for certain investors.
How Do You Start a Precious Metal IRA?
If you're interested in starting a Precious Metal IRA, here are the steps you should take:
1. Choose a Custodian
You'll need to choose an IRA custodian specializing in Precious Metals IRAs. When selecting a custodian, it's important to do some research and choose one that is reputable and has a good track record. Some things to consider include their fees, storage options, customer service and the types of precious metals they offer. It's also a good idea to check their online reviews and ratings before deciding.
2. Open an Account
Once you've chosen a custodian, you'll need to open an account. This will involve providing personal information and selecting funding options. Generally, you can fund your Precious Metal IRA through the following avenues:
3. Select Your Precious Metals
Once your account is funded, you'll need to choose which precious metals you want to invest in. Popular options include gold, silver, platinum and palladium. You'll also need to decide how much of each metal you wish to put in your portfolio.
4. Place Your Order
Once you've made your selections, you'll need to place your order. Your custodian will then purchase the metals on your behalf and store them in a secure vault.
How Are Precious Metals in an IRA Stored?
There are two ways of storing precious metals in an IRA:
This option involves using a third-party custodian to store the metals in an IRS-approved depository. With this option, the metals are physically separated from other accounts and the custodian acts as a trustee for the owner of the IRA. This type of storage generally provides the highest level of security and asset protection, as the metals are not commingled with other assets.
The custodian holds legal title to the metals on behalf of the IRA owner, so the owner does not have actual physical possession of the metals. This also helps to protect the metals from theft or other potential losses. Segregated storage is ideal for those who want the ultimate asset protection regarding their retirement savings.
This form of storage involves mixing multiple investors' metals into one collective pool, which is then stored in a secure, insured vault. Since the metals are all mixed, tracking which investor owns which metal is impossible, providing an extra layer of security for each investor.
It also allows for more efficient storage, eliminating the need for multiple vaults. Commingled storage also offers cost savings since the costs are spread out among all investors in the pool.
Precious Metal IRAs are a great way to diversify a retirement portfolio and achieve important tax advantages. By choosing the right custodian and precious metals, investors can enjoy more flexibility with their investment choices while diversifying their holdings.
It is important to consult one of our recommended IRA companies, which will guide you through choosing a custodian, investing in your Precious Metal IRAs and providing you with helpful guidance and advice.