You cannot hold physical precious metals in a regular individual retirement account (IRA). However, there are specially designed precious metal IRAs that allow you to invest for retirement using gold, palladium, silver and other valuable metals. A gold IRA is a specialized, self-directed individual retirement account designed to hold precious metals. As with a traditional IRA, a golden IRA allows pre-tax contributions and investment gains can accrue tax-deferred.
The contribution and income limits are the same. But unlike a traditional IRA, which typically contains paper assets such as stocks, bonds, funds, ETFs, and cash equivalents, a gold IRA is strictly established to hold physical gold or other approved metals. You don't keep the gold yourself; you must keep it in a secure deposit. On the other hand, a self-directed IRA allows you to establish your own investment vehicles.
Self-directed IRAs give you more freedom to diversify your portfolio. Generally, all gold IRAs, also known as precious metal IRAs, are self-directed, although there may be some exceptions. Precious metal IRAs are usually self-directed IRAs, a type of IRA in which the custodian allows more diverse investments to be held in the account. There are currently a variety of precious metals that meet the minimum purity requirements that are acceptable for inclusion in a gold IRA account.
The practical concern is to find an IRA trustee who is willing to establish a self-directed IRA and facilitate the physical transfer and storage of precious metal assets. Augusta's two major drawbacks are its limited choice of metals and its high minimum investment requirement to establish a gold IRA. As such, the transaction is characterized as a taxable distribution of the IRA followed by a purchase of the metal or currency by the IRA owner (you). Custodians who offer a checkbook IRA structure primarily recommend that customers keep IRA metals in a bank safe deposit box.
For example, you might have an IRA that is invested in precious metal bullion and another IRA that is invested in liquid assets, such as publicly traded stocks and mutual funds. Different investors recommend different amounts of gold or precious metals in an IRA, and most don't recommend placing most of the IRA's assets in precious metals. Orion Metal Exchange is a California-based company that offers gold IRAs and a variety of precious metals, coins and bullion. A precious metal IRA is simply a traditional, ROTH, SEP, SIMPLE, accumulated or inherited IRA that holds precious metals and can include gold, silver, platinum or palladium.
IRA holders have been allowed to use the funds in their IRA account to purchase approved precious metals since 1998, following the passage of the Taxpayer Relief Act of 1997.Storing your IRA metals at home can expose the IRA account holder to significant risk of IRS penalties.