An Introduction to Precious Metals IRA & Investing in IRA’s

Today, investors are seeking alternatives to equities and bonds for their IRA (Individual Retirement Account) investing. Given the recent recessionary economy, coupled with the volatile stock market, many have turned away from the more “traditional” investment options in hopes of finding a better way to grow and protect their retirement nest eggs.

The good news is that there are some savvy investors who have found a way to do just that – while at the same time benefitting from tax deferred or tax free investing – and they have done so by opening a precious metals IRA account.

What is a Precious Metals IRA?

A precious metals IRA account works in a similar fashion to a regular traditional or Roth IRA, except that it allows its owner to include gold and other qualifying precious metals. In doing so, the investor can benefit in a variety of ways, including:

  • Additional Growth Opportunity - Throughout time, gold and other precious metals have proven themselves to provide steady growth. Both the demand and the price of gold, for example, have consistently trended upward for years – and are expected to continue to do so going forward.
  • Asset Protection – Precious metals – and gold in particular – have proven to protect purchasing power, and they are also considered to be a safe haven against inflation and turbulent global economies.
  • Inflation Hedge – By adding precious metals to their retirement portfolios, investors can also add a hedge against inflation. This means that even in an inflationary environment, gold and other metals tend to maintain – or even to increase – their overall value.
  • Portfolio Diversity – Metals can also provide a nice tangible asset into the portfolio mix in order to help in diversifying one’s overall distribution of funds. This is especially the case in IRA accounts, where investments are oftentimes limited to more traditional investments such as stocks and mutual funds.
  • Tax Deferral (or Tax Free Investing) - Because these metals are placed inside of an Individual Retirement Account, they are given the same advantages that any other funds would be that are invested in an IRA account. Therefore, growth on precious metals that are inside of a traditional IRA account are allowed to grow on a tax deferred basis – and, those that are in a Roth IRA account are allowed to grow – and to be withdrawn – tax free.

What Can Be Included in a Precious Metals IRA Account?

While there are many types of gold and precious metals that can be purchased for investment, the IRS (Internal Revenue Service) has some very specific guidelines as to what can be placed into a precious metals IRA account. Therefore, investors cannot place just any type of gold, silver, or platinum into their IRA accounts.

IRA approved precious metals include the following:

Gold

  • American Gold Eagle Coins
  • Canadian Maple Leaf Coins
  • American Buffalo Bullion Gold Coins
  • Australian Kangaroo / Nugget Coins
  • Proof American Eagle Coins
  • Austrian Philharmonic Coins
  • Credit Suisse / PAMP Suisse Gold Bars
  • Various Gold Rounds and Bars .995

Silver

  • American Silver Eagle Coins
  • Canadian Maple Leaf Silver Coins
  • Proof American Eagle Coins
  • Australian Kookaburra Coins
  • Austrian Vienna Philharmonic Coins
  • Mexican Libertad Silver Bullion Coins
  • Various Silver Rounds and Bars .999

Platinum

  • American Eagle Platinum Coins
  • Canadian Platinum Maple Leaf Coins
  • Australian Koala Coins
  • Austrian Philharmonic Coins
  • Various Rounds and Bars .9995

Palladium

  • Canadian Maple Leaf Coins
  • Various Rounds and Bars .9995

Where to Open an Account

Today, there are a number of both brick and mortar and online precious metals dealers that can help investors with learning more about precious metals IRA investing, as well as with opening a precious metals IRA account.

Prior to opening an account, however, it is important to ensure that the company chosen has a good amount of experience in gold and precious metals IRA investing, as well as an excellent reputation in the industry.

Other factors to consider should include:

  • Good product selection
  • Professional and courteous customer service
  • Metals storage options
  • Low account and storage fees
  • Good reviews from the Better Business Bureau

How to Fund a Precious Metals IRA

Once the metals IRA account has been opened, there are several ways that it can be funded. An investor can actually choose one or all of these funding options. These include:

  • Direct Cash Deposit – One way to fund a precious metals IRA account is through a direct deposit of cash. Each year, IRA investors are allowed to deposit a certain amount of money into their IRA accounts. In 2014, that amount is $5,500 for those who are age 49 and younger, and $6,500 for investors who are age 50 and over. It is important to note that this is a total for all IRA accounts that an investor has. Therefore, if an investor owns two IRA accounts, he or she cannot deposit $5,500 into each of the accounts, but rather a total of $5,500 among the two in total.
  • IRA Transfer – If an investor already has another IRA account established, they can transfer some or all of the money that is in that account into the precious metals IRA account. This is a great way to help increase the amount of funds to use for purchasing metals for IRA investing.
  • IRA Rollover – Funds can also be “rolled over” from an employer sponsored retirement account such as a 401(k) plan. Here, too, is another way to greatly increase the amount of funds that are in one’s precious metals IRA account. And, while there is an annual contribution limit on the amount of direct cash that is deposited into an IRA account each year, there is no dollar amount on the amount that may be transferred or rolled over into an IRA account.

Taking the Next Step

In taking the next step towards precious metals IRA investing, investors should determine what their short and long term financial goals truly are. Then, when ready to move forward with diversity, inflationary hedges, tax deferral, and an opportunity for real investment growth, they will be able to see how investing in precious metals can help to get them there.

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