What is a Precious Metals IRA?
A Precious Metals IRA is simply a Traditional, ROTH, SEP, SIMPLE, Rollover, or Inherited IRA that owns precious metals and may include gold, silver, platinum, or palladium. IRA Holders have been allowed to use funds in their IRA account to purchase approved precious metals since 1998 after the passage of the Taxpayer Relief Act of 1997. This act expanded the investment options for IRAs beyond paper assets.
What kinds of precious metals can a Precious Metals IRA hold?
A Precious Metals IRA can own four types of precious metals: gold, silver, platinum, and palladium. IRA gold is limited to 1 ounce, ½ ounce, ¼ ounce, and 1/10 ounce Gold American Eagles (Uncirculated or Proof) or other gold products (coins or bars) with a minimum purity of .995%. To qualify for an IRA, silver must be at least .999% pure; and both platinum and palladium must be at least .9995% pure.
Is a Gold IRA the same as a gold certificate?
No. A gold certificate is simply a piece of paper that can be redeemed for physical gold. If you have a precious metals IRA, your IRA directly owns physical bullion bars or coins that you select and order directly.
Why do I need to transfer or rollover my IRA to buy gold?
Any IRA is legally allowed to purchase gold and precious metals. However, a majority of the major custodians such as Charles Schwab, Merrill Lynch, and JP Morgan Chase do not offer physical precious metals as an investment option. Most traditional custodians are structured to only hold paper assets and structured as managed funds. Physical precious metals is a self-directed investment and generally requires a custodian that offers self-directed IRA investments. If your custodian does not offer precious metals as an investment option, we can help you initiate a rollover or direct transfer to a custodian who does. A rollover or direct transfer is a non-taxable event.
What fees are there for a Precious Metals IRA?
Generally, the standard fees charged by most custodians include a fee to open the account, an annual maintenance fee (including statements and filings), and a storage fee. Some custodians also charge a transaction fee to make your metals purchase. Note that the fees charged by different custodians can vary substantially. Midas Gold Group keeps an active chart of estimated fee schedules for various custodians.
Why are Precious Metal IRA fees higher than my regular IRA?
Most of the country’s largest IRA custodians like JP Morgan, TD Ameritrade, Edward Jones, and Merrill Lynch offer structured paper financial products like stocks, mutual funds, CDs, etc. Many of these custodians charge only nominal fees or even no direct fees for having an account with these. They are structured to make money off of the investment products they sell. As a bank, even if you only have only cash in your IRA, they can make money by lending out the deposited cash because of the fractional reserve banking system. A self-directed IRA custodian does not make money off any of the assets you own through their IRA. Therefore, they must charge a fee in order to stay in business and to provide necessary custodial services including providing IRA statements. They also need to pass on the costs of secure storage to the account holder.
Are fees to set up and maintain my Gold IRA tax deductible?
Yes, all setup and annual IRA fees are always tax-deductible expenses.
What is the difference between an IRA transfer and an IRA rollover?
An IRA transfer is a direct means of transferring IRA funds from one custodian to another. It is normally done using a transfer that is first signed by the account holder and then sent from the receiving custodian to the releasing custodian requesting a partial or complete transfer of IRA funds or assets. The funds are sent straight from custodian to custodian without any tax consequences. A rollover is the preferred and most efficient method when moving from like-accounts such as from one Traditional IRA to another. There is no limit on the number of transfers that can be done in a calendar year.
A rollover is generally done when transferring between two different accounts such as from a 401(k) to an IRA. A transfer can be direct, meaning it is sent directly from one custodian to another or indirect meaning that the funds are sent from a custodian to the account holder. The account holder then has 60-days to move these funds to another retirement account such as an IRA. If the account holder fails to move the funds within 60-days they will be taxed on those funds and possibly penalized for early withdrawal. This is also known as a 60-day rollover. You are only allowed one 60-day rollover in any 12-month period.
Are the precious metal account fees paid out of my IRA or do I pay them out of pocket?
Whether you are setting up a brand new IRA or transferring funds from an existing IRA or retirement plan, you may elect to pay all start-up fees out of the assets in the IRA. You may also elect to pay these fees directly out of pocket via check or credit card. Any fees paid as part of your IRA setup are 100% tax-deductible.
Do I need to invest all the money in my Gold IRA at once?
No. Once you have set up your Gold IRA, you can transfer or rollover the funds from an existing IRA or other retirement plans. You can leave that money in cash until you are ready to make a purchase. At any time you can invest as much or as little as you want to keep the balance in cash or even investing it in other assets.
Can I use my ROTH IRA to buy gold?
Yes. A ROTH IRA can own gold and IRA eligible precious metals just like any other IRA including a traditional IRA, SEP-IRA, SIMPLE IRA, Inherited IRA, Rollover IRA, and Spousal IRA.
What is a Gold IRA?
A Gold IRA can be a Traditional IRA, a ROTH IRA, a SEP-IRA, a SIMPLE IRA, or and Inherited IRA that is self-directed and owns IRA eligible physical gold coins or gold bars.
What is a Silver IRA?
A silver IRA is also a Traditional IRA, a ROTH IRA, a SEP-IRA, a SIMPLE IRA, or and Inherited IRA that is self-directed by the account holder and owns allowable forms of physical silver coins or silver bars. Many precious metals IRAs own a mix of gold and silver.
What is a Palladium IRA?
A Palladium IRA is a form of a self-directed IRA or Precious Metals IRA that is invested in certain allowable types of physical palladium coins or palladium bars.
What is a Platinum IRA?
A Platinum IRA is an IRA with some of all of its assets invested in IRA approved forms of Platinum bullion. A Platinum IRA is generally set up through a self-directed IRA custodian.
I only want to move part of my IRA to precious metals. Can I use only part of my IRA funds?
Yes. Many clients elect to do a partial IRA rollover to a Gold IRA. You may elect to move only a portion of your IRA or retirement account to a Gold IRA. Note: individuals are allowed to have multiple IRAs and divide their IRA assets among different custodians.
Can I own rhodium in my IRA?
No. Rhodium is not an authorized IRA precious metal.
My IRA custodian doesn’t offer gold. Do I have other options?
Yes. You can move your IRA to a self-directed IRA custodian who does offer gold as an investment. Midas Gold Group works with virtually all self-directed IRA custodians offering gold and we can help you initiate a tax-free transfer or rollover to a new custodian. There is no limit on the number of direct IRA transfers from one IRA custodian to another that you can initiate.
I have a retirement plan at work. Can I use it to buy gold?
If you have a retirement plan from a previous employer or if you are retiring or changing jobs, you can roll the funds from your employer plans such as a 401(k), 403(b), 457(b), or TSP into a self-directed IRA to purchase precious metals. If you are still employed with the employer offering the plan, you should check with your plan administrator to see if you are eligible to roll some portion of your plan over to an IRA. Some employers offer employees the ability to move a portion of their retirement plan to an IRA while still employed.
Can I store my IRA precious metals myself?
The IRS requires that precious metals owned by an IRA be stored in the possession of a trustee or custodian. The IRS code also states that
The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. —26 U.S. Code § 408. However, many IRA holders use what they believe is a “loophole” in the US Tax Code that allows the account holder to self-store the metals using a “checkbook control IRA”, “LLC IRA”, or “Home Storage IRA”. Midas Gold Group does not generally recommend using this structure as it has never been approved or recognized by the IRS. Storing your IRA metals at home may expose the IRA account holder to a material risk of IRS penalties. Custodians who offer a Checkbook IRA structure mostly recommend that clients hold the IRA metals in a bank safety deposit box.
How do RMDs work for a Gold IRA?
IRA holders must take Required Minimum Distributions (RMDs) beginning at age 70 ½. With a Gold IRA, you can take your RMDs “in kind” meaning that you have the physical precious metals sent directly to you. Alternatively, you may sell the precious metals and take distributions in cash.
Do I pay taxes when I transfer into a Gold IRA?
No. When you properly move your funds from an IRA or retirement account to a Gold IRA, there are no tax implications.
Are there any metals not allowed in a Precious Metals IRA?
Yes. The only precious metals permitted in a Precious Metals IRA are:
- Gold: Gold American Eagles (Proof or Uncirculated) in 1 ounce, ½ ounce, ¼ ounce, and 1/10 ounce sizes as well as other gold coins or bars with a minimum purity of 99.5%.
- Silver: Coins or bars with a minimum purity of 99.9%
- Platinum: Coins or bars with a minimum purity of 99.95%
- Palladium: Coins or bars with a minimum purity of 99.95%
Can I also have silver in my Gold IRA?
Yes. Many Gold IRA holders own silver in their IRA in addition to gold.
What if I need to liquidate my Precious Metals IRA?
You can sell the gold or precious metals in your IRA at any time without any taxes or penalties, provided you do not take the cash out of your IRA. If you take the cash out of your IRA you will need to pay taxes on the cash unless it is a ROTH IRA.
What happens to my Gold IRA if I die?
In the event you pass away, your IRA and its assets will be transferred to your IRA beneficiary or beneficiaries. You can name the beneficiaries to your IRA when you establish the account and you may change the beneficiaries at any time.
Can I leave my Precious Metals IRA to my church or charity?
Yes. You may name your church or any charity as the beneficiary of your IRA and its assets.
Can I add to my Precious Metals IRA or make more transfers?
Yes. You may always add to your Precious Metals IRA. You may add to it by transferring funds from another IRA or retirement plan. You can also make annual contributions to your IRA based on the limits set by your category of IRA and your age.
Can I change metals within my Gold IRA?
Yes. You are allowed to trade, transfer, swap or sell the precious metals in your IRA at any time without any tax implications.
Where are the storage facilities for my Precious Metals IRA?
Various custodians use different storage facilities for the secure storage of your precious metals. Some custodians use multiple facilities and give you the option of choosing between different facilities. Midas Gold Group keeps an active list of available storage options through various custodians here. Some of the most popular facilities include:
- Delaware Depository Service Company (DDSC), Wilmington, DE
- Brink’s Global Service, Los Angeles, CA, Salt Lake City, UT, and Springfield Gardens, NY
- International Depository Services (IDS), New Castle, DE, Toronto, Canada, and Ontario, Canada
- First State Depository, Wilmington, DE
- CNT Depository, Bridgewater, MA
Will my Precious Metals IRA be stored safely and are my metals insured?
The depositories used by the major self-directed IRA custodians use state-of-the-art security systems, armed security, and surveillance. The facilities carry excess insurance policies from major global insurers like Travelers and Lloyd's of London. Some policies are in the billions of dollars. When you choose a reputable custodian and reputable storage, you can rest assured of the safety of your IRA precious metals.
Can I change storage facilities?
Yes. If you are unsatisfied with your storage facility or the fees charged, you may move your precious metals to another storage facility. If your custodian does not offer the storage facility you desire, you may need to change IRA custodians.
Can I take delivery of the metals in my IRA to satisfy an RMD?
Yes. You can always take direct delivery of the precious metals in your IRA at any time for any reason including to satisfy your RMD requirement.
How do I pay my annual Precious Metals IRA fees?
You can pay your annual Precious Metals IRA fees via check or credit card. Alternatively, you may elect to pay your fees out of any cash that you have in your account. All fees paid out-of-pocket for your IRA are always 100% tax-deductible.
What happens if I miss my annual IRA fee payment?
If you miss your Precious Metals IRA payment, you will be charged a late fee. If you fall significantly behind in your payments, your custodian may actually be able to sell some of the precious metals in your account in order to pay delinquent fees.
Do I receive statements for my Precious Metals IRA?
Yes. You will receive quarterly statements of your IRA account from your custodian.
Can I see the precious metals in my Gold IRA?
Yes. Depending on what storage facility you select, you can generally make an appointment to actually view your precious metals.