For investors looking to add precious metals to their portfolios, the process is simple and convenient — even for those that already have existing IRA accounts. The process is called an IRA “rollover” and can be completed with ease and convenience. In a precious metals IRA rollover, one sets up an account with a self-directed IRA custodian. The IRA custodian handles the actual transfer of funds and other administrative procedures.
A self-directed IRA account gives the investor the opportunity to dictate what investments he or she would like to make. This is in comparison to a traditional IRA account in which investors may be limited to traditional investments such as stocks, bonds and mutual funds. A self-directed IRA account gives investors additional choices in alternative asset classes such as precious metals, futures and real estate. The IRS determines what types of investments are acceptable in a self-directed IRA.
If one decides that he or she would like to invest in precious metals in their IRA account, here are the steps that need to be taken.
All in all, the process of setting up a self-directed IRA account is simple and convenient. Accounts can be completely set up, funded and holding precious metals within a short period of time, such as two weeks.
There are some key guidelines to follow when considering a precious metals IRA rollover. Some of these guidelines are:
DO NOT TAKE MONEY OUT OF YOUR IRA ACCOUNT. LET THE CUSTODIAN HANDLE ALL TRANSFERS OF FUNDS. It is important that you do nothing to disrupt the tax deferred status of your IRA account. Self-directed IRA custodians are well versed in handling these types of transactions and will handle them in such a way as to protect your account status. Any accidental withdrawal could be treated as a taxable distribution and could also carry with it potential early withdrawal penalties.
IN A PRECIOUS METALS IRA ROLLOVER, YOU CANNOT TAKE PHYSICAL DELIVERY OF THE METAL. If you think about this it makes total sense. If you have a traditional IRA account, then you have not yet paid taxes on the funds in it. The government wants to make sure those assets are protected and there for you when it becomes time to start taking distributions. This way, you get your metals or cash, and the government can collect the taxes owed on the holdings.
DISTRIBUTIONS CAN BE TAKEN IN METAL. You do not have to sell your metals when it comes time to take a distribution. You can take delivery of the metals or sell the metals for cash — it’s up to you depending on your financial goals.
ONCE YOU COMPLETE AN IRA ROLLOVER, YOU MAY STILL BE ABLE TO CONTRIBUTE MORE. If you meet IRS guidelines, then you can continue to contribute to your precious metals IRA once it is established. Obviously, you have to be under a specific age and there are maximum annual contribution limits. This can be a great way, however, for those looking to accumulate more gold, silver or other precious metals over time.
DEAL WITH A REPUTABLE AND EXPERIENCED SELF-DIRECTED IRA CUSTODIAN. There are many self-directed IRA custodians to choose from these days. Do your due diligence. Research companies before using them. Look for a custodian that has good online reviews and that has been in business for a while. In addition, look for custodians that specifically have experience with precious metals IRAs and IRA rollovers.
New Direction IRA is our preferred IRA custodian. New Direction manages over half a billion dollars in assets such as precious metals, real estate, and equities, and is one of the biggest and most trusted players in the space.
When looking to set up a precious metals IRA account, one should also consider issues such as what type of allocation may be appropriate for themselves and what products may best suit their needs or objectives.
When it comes to matters of financial advice or potential tax issues, we recommend one consult their financial adviser and tax professional. Nothing contained here is or should be construed as tax advice. Always consult your own CPA or tax professional regarding any tax related issues.