All You Need To Know About IRA-Allowed Precious Metals
So, you’re looking to expand your investment portfolio. You may have heard the buzz around investing in gold and other precious metals, and you want to know if it’s right for you.
The answer is yes! Investing in IRA-approved precious metals can provide excellent returns, plus a few surprises that you may not have expected.
Continue reading to learn everything you need to know about IRS-approved precious metals.
Table of Contents
What are IRA-Allowed Precious Metals?
IRA-allowed precious metals refer to those that are approved for use in an Individual Retirement Account (IRA).
These include gold, silver, platinum, and palladium. Investment in these metals provides a secure way to diversify your retirement portfolio and hedge against market fluctuations.
Benefits of Investing in IRA-Allowed Precious Metals
Investing in precious metals through an IRA offers many benefits including:
Diversification – Adding Precious Metals to Your Investment Portfolio
Precious metals like gold and silver are an excellent way to diversify your investments, which is important for any investor who wants to protect their assets from potential market downturns.
Gold prices tend to move independently of stocks and bonds, so adding gold to your portfolio can reduce overall risk.
Plus, there are no taxes on gains from investments in gold or other precious metals until they are sold.
Protection Against Inflation
Inflation erodes the purchasing power of cash over time—but it has less impact on the value of gold or silver coins and bars.
This makes them an ideal hedge against inflation since their value will remain relatively constant even when the dollar loses its purchasing power.
Safe Haven During Uncertain Times
Gold has long been seen as a safe haven during times of economic uncertainty due to its historical stability compared with other investments like stocks or bonds.
It provides peace of mind that it won’t be affected by market fluctuations or sudden economic downturns like those experienced during the 2008 financial crisis.
This means that investing in gold is a great way to protect your wealth without having to worry about market volatility.
Investments in physical gold are highly liquid since they can easily be converted into cash at any time by selling them on the open market or through a reputable dealer which specializes in buying and selling certified coins from all major mints worldwide.
This makes them much more desirable than other investments that may take longer periods of time before they can be converted into cash.
Investing in physical gold offers tax advantages since profits made on sales of these investments do not need to be reported on income taxes until they are sold (which could be years later).
Additionally, there are no capital gains taxes incurred when making purchases with money held within an IRA account (as long as the metal purchased meets IRS requirements for approved coins or bullion).
This makes investing in precious metals a smart choice for investors who want to minimize their tax liability while still making sound investments with long-term growth potential.
Types of Precious Metals Allowed in an IRA
The IRS allows individuals to invest in gold, silver, palladium, and platinum through an IRA. The specific type of precious metal that you can purchase must meet certain criteria established by the IRS.
Gold Coins and Bars
Gold coins and bars are the most common investments made with a precious metals IRA. The IRS allows only certain types of gold coins to be included in an IRA account. Some of these include the following:
- American Eagle Coins
- Canadian Maple Leaf Coins
- Austrian Philharmonic Coins
- American Buffalo Coins
- Chinese Panda Coins
- Australian Kangaroo/Nugget Coins
- South African Krugerrand Coins
- Mexican 50 Peso Coin (Centenario)
- New Zealand Mint Kiwi Bullion Coin
Gold bars must also meet specific standards set by the IRS; they must contain 99.5% or more pure gold with no other alloying elements present.
The American Gold Eagle coin is allowed a minimum purity of 91.67%.
Silver Coins and Bars
Silver is another popular choice for precious metal IRAs. Just like gold coins and bars, there are certain rules that silver investments must meet in order to qualify for an IRA account. Some of these include:
- American Eagle Silver Coins
- Austrian Vienna Philharmonic Silver Coin
- Mexican Libertad Silver Coin
- Australian Kookaburra Silver Coin
- Canadian Maple Leaf Silver Coin
- Great Britain Britannia Silver Coin
- China Panda Silver Coin
- New Zealand Mint Kiwi Silver Bullion Coin
- Johnson Matthey 10 Oz Bar
- Engelhard 10 Oz Bar
- Royal Canadian Mint 10 Oz Bar
- Sunshine Mining 10 Oz Bar
All silver coins and bars must contain 99.9% pure silver or higher with no other alloying elements present.
Platinum has recently become more widely accepted as an appropriate form of investment for a precious metal IRA account. As such there are now several platinum bar products approved by the IRS for use in such accounts including:
- Pamp Suisse 1 oz platinum bar
- Credit Suisse 1 oz platinum bar
- Valcambi 1 oz platinum bar
- Johnson Matthey 1 oz platinum bar
- Heraeus 1 oz Platinum Bar
Each one of these bars must contain 99.99% pure platinum or higher with no other alloying elements present in order to qualify for an IRA portfolio.
– Pamp Suisse 1 oz platinum bar
– Credit Suisse 1 oz platinum bar
– Valcambi 1 oz platinum bar
– Johnson Matthey 1 oz platinum bar
– Heraeus 1 oz Platinum Bar
Palladium Coins & Bars
- Canadian Maple Leaf Palladium Coins
- Australian Kangaroo/Nugget Palladium Coins
- Valcambi Suisse 1 oz palladium bar
- Credit Suisse 1 oz palladium bar
- PAMP Suisse 1 oz palladium bar
- Johnson Matthey 1 oz palladium bar
Palladium bars must contain 99.95% pure palladium or higher with no other alloying elements present in order to qualify for an IRA account.
How to Buy IRA-Allowed Precious Metals
Investing in gold and silver can be a great way to diversify your portfolio and protect your hard-earned money from market fluctuations.
But where do you begin? Don’t worry – we have all of the information that you need to get started on the right track.
Read on for a detailed step-by-step guide to buying IRA-allowed precious metals.
Step #1: Choose a Custodian
When investing in precious metals through an IRA, you must use a custodian or trustee approved by the IRS.
The custodian will handle all of the paperwork and transactions involved with acquiring and storing your metal investments.
Step #2: Select a Precious Metal Provider
After you have selected the desired custodian, select a precious metal provider offering great services.
You can check our list of top 5 gold IRA providers and have yourself partner with the best dealer.
Opening an account with a trusted dealer will allow you to securely purchase your chosen metal through an online platform or by phone.
You may need to provide some additional information such as your name, address, Social Security number, etc., so make sure that all of your information is up-to-date before beginning the process.
Step #3: Select Your Desired Precious Metals
The next step is choosing the type of precious metal you want to purchase. Gold and silver are the two most popular choices for those investing in an IRA-allowed metal, but there are other options as well.
Platinum, palladium, and rhodium are all allowable investments under IRS rules.
Make sure you do your research before deciding which metal is right for you, as each carries its own risks and rewards.
Step #4: Choose The Depository
Step 4 is choosing a place to store your precious metal investments. This is called a depository and it is where the metals will be kept safe until you decide to sell them.
A good rule of thumb is to choose a depository that has been approved by the IRS, such as Delaware Depository. This will help ensure that your metal investments are safe and secure.
Step #5: Make The Purchase
Once you’ve selected the metal you want to invest in and chosen a custodian, precious metal provider, and depository, the next step is to make your purchase.
Many recognized providers provide a simple online platform for purchasing precious metals that can be used from anywhere in the world.
You will need to provide payment information, such as credit card or bank account information, and you’ll also need to include an address for where the physical metal will be sent.
How To Sell IRA Allowed Precious Metals
Before you start selling your precious metals, make sure to do some research so that you understand the process and how it could affect your financial goals.
And always consult with a qualified financial advisor if you have questions about what to do.
With the right knowledge and guidance, selling your IRA-allowed precious metals can be a profitable endeavor.
There are mainly two ways to sell your precious metal IRA.
When you want to sell, contact your custodian and they will help you finish the sale. They will transfer the money to your IRA account or send you a check. Be sure to keep records of all transactions for tax purposes.
Utilize BuyBack Program
Many precious metal providers like Goldco, offer their customers buyback programs at market competitive prices.
This allows you to sell your precious metals back to the precious metal dealers from where you bought them.
Tax Implications of Investing in Precious Metals IRAs
When investing in any type of retirement account, there are certain tax implications that come with it. Investing in a precious metal IRA is no exception.
Here’s a breakdown of some of the most common tax implications that come with investing in these types of accounts:
Capital Gains Tax
If you decide to sell the gold, silver, or platinum that you hold within your IRA account, then you will be subject to capital gains taxes on any profits that you make from those sales.
Keep this in mind if you’re considering selling your precious metals at any point down the line.
Early Withdrawal Penalty
If you decide to withdraw money from your IRA before age 59 ½ then you may be subject to an early withdrawal penalty.
This penalty can range from 10-20% depending on your situation and can have serious financial implications if not accounted for properly.
Just like other retirement accounts, there are contribution limits when investing in a precious metal IRA—you cannot contribute more than $6,500 per year (as of the year 2023).
It’s also important to note that contributions must be made on an annual basis and can be adjusted based on factors such as income level and filing status.
Learn more by clicking the link below.
Diversification Strategies With an IRA Portfolio That Includes Precious Metals
This strategy involves buying small amounts of gold at regular intervals over time, instead of making one large purchase all at once.
This helps to minimize the risk associated with higher prices since you will be purchasing gold at different points in its price cycle.
By investing a fixed amount each month or quarter, you will also be taking advantage of fluctuations in the market and potentially getting better pricing overall.
Investing in Different Forms of Gold
Another way to diversify your investments is by investing in different forms of gold, such as bullion coins, collectible coins, or bars and rounds.
Each form has its own advantages and disadvantages, so it’s important to research which form is best for your investment goals before making a purchase.
Investing Across Different Currencies
If you are looking for extra diversification, consider investing across different currencies as well as gold itself.
For example, if you invest in both euros and US dollars, then when one currency drops against the other due to economic events or changes in interest rates, the other currency will benefit from the change and potentially increase your profits on investment gains accordingly.
Consider Other Precious Metals
While gold tends to get most of the attention when it comes to precious metals investments, there are several other metals worth considering as well.
Silver is often seen as a less volatile option than gold but still can provide good returns over time depending on market conditions; palladium and platinum can also offer additional opportunities for diversification within a portfolio that includes precious metals investments.
Additionally, even copper can provide an interesting addition due to its industrial uses and potential for long-term growth prospects depending on economic factors at play at any given time.
Buy Physical Gold Bullion
Even though many investors rely solely on ETFs (Exchange Traded Funds) when it comes to precious metal investments, there’s still value in buying physical bullion bars or coins if possible.
This is because they provide direct ownership over tangible assets instead of just paper contracts that are subject to market forces beyond your control.
This could lead to losses rather than gains depending on market conditions at any given time during an investor’s holding period.
By diversifying your portfolio with IRA-allowed precious metals, you can take advantage of their stability to protect your financial future.
However, it is important to do your own research and consult with a tax professional or financial advisor when making any investment decisions.
Investing in these types of assets involves risk, so be sure to weigh the pros and cons of adding precious metals to your IRA before making a final decision.
With the right strategy, investing in precious metals can be an effective way to diversify your retirement portfolio.