shopper approved

    What Is A Precious Metals IRA?

    An IRA is an individual retirement account. There are different types of IRA accounts available to people based on their goals and objectives. Some people may invest in an IRA account on a tax-deferred basis while others may invest in a Roth IRA on an after-tax basis. What type of IRA one should use depends on their specific circumstances and goals. This is an issue that is best discussed with one’s CPA or tax advisor.

    In addition to the IRA type, there are also differences in what types of investments the IRA can hold. When the majority of people think of an IRA account, they likely think of an account that simply holds stocks, mutual funds, bonds and the like. It seems that many people out there are not aware of what they can do with a self-directed IRA. A self-directed IRA gives an investor the freedom to decide what to invest in. This is in contrast to most standard IRA accounts in which the investment types are limited. Many people, for example, are not aware that a self-directed IRA account gives them the ability to invest in alternative asset classes such as precious metals, futures, limited partnerships, commercial paper or real-estate.

    Self-directed IRAs have been around since 1975 and are part of the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA. Since their inception, self-directed IRA accounts have grown in popularity as investors look for additional ways to diversify their portfolios. More and more investors, it seems, are looking to branch out beyond the traditional stocks and bonds portfolio, and a self-directed IRA account can potentially provide them with a vehicle to do so.

    The term precious metals IRA simply refers to a self-directed IRA account that invests in precious metals. It is worth noting, however, that savers can also invest in other assets besides precious metals. In fact, one of the nice things about a self-directed IRA account is the fact that an investor may hold their traditional stock and bond investments in it while adding other alternative asset classes. This offers investors a great deal of flexibility.

    How is a Precious Metals IRA Setup?

    Setting up a precious metals IRA is a relatively simple process but there are some necessary steps involved. Here we will outline some of the necessary steps as a guide.

    • Will you be setting up a new IRA account or transferring an existing IRA or other retirement account? This is one of the first issues to take into account. An investor may look to start a new IRA account if he or she does not have one already. An investor may also decide to “rollover” an existing IRA account, 401k or other retirement account. Obviously, an investor will need to discuss these matters with their CPA or tax adviser. Certain types of accounts can be rolled over while other types cannot. An investor must determine his or her eligibility prior to considering a rollover.
    • Choose the IRA account custodian. Self-directed IRA accounts are held by what is called an IRA custodian or trust company. These companies act as a fiduciary on behalf of the account. Some of their responsibilities include account setup, producing account statements and accepting allowed contributions. There are many different IRA custodians to choose from, and one can easily compare these companies from the comfort of their own home or office. Different companies charge differing amounts for their services and may have different fee structures. Fees are certainly one thing that a potential investor should consider when looking to establish a self-directed IRA account with a custodian. Often times, precious metals dealers will have custodians that they do business with or recommend. One can, however, use the custodian of their choice when setting up a self-directed IRA account.
    • Choose a precious metals dealer. When one establishes a self-directed IRA account, he or she can still buy precious metals from the dealer of their choice. Investors can shop bullion dealers to compare prices and products.
    • Decide what bullion products to buy. There are only certain bullion products that are eligible to be held in an IRA account. Some of these products include gold and silver American Eagles (including proof sets), Philharmonics and Canadian Maple Leafs. In addition, one can buy gold Australian Kangaroos, gold American Buffaloes, silver Australian Kookaburras and Mexican Libertad coins. In addition, various gold rounds and bars of .995 percent minimum fineness may be eligible as well as various silver rounds and bars of .999 minimum fineness. Finally, certain platinum and palladium products are also eligible. One can choose any of the IRA eligible products they like.
    • Decide on a depository. Precious metals held in an IRA account cannot be delivered to the account holder. The metals must be stored in an approved depository, such as the Delaware depository. IRA custodians may recommend an approved depository, but investors do have the ability to choose where their metals are stored from approved depositories.
    • Make their purchase. When all of the pieces are in place, an investor can make their precious metals purchase. The IRA custodian will handle the payment and the dealer will ship the metals to the chosen depository.

    Once an investor’s account is established and their metals have been purchased, the custodian will provide them with periodic account statements detailing their holdings and the bid or wholesale value of those holdings.

    A precious metals IRA owner may liquidate his or her metals at any time. A precious metals IRA account also gives the account holder the option of taking required minimum distributions in the form of bullion.

    Setting up a precious metals IRA account has never been easier. The process is streamlined and an investor can have precious metals within their self-directed IRA account in a matter of days or weeks. Be sure to check out the JM Bullion IRA page to sign up today.

    Any questions regarding required minimum distributions, account liquidation or other issues regarding a precious metals IRA should be directed to one’s CPA or tax professional. Investors should consult their CPA or tax professional prior to investing.

    All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.