You've probably heard about precious metals like gold and silver before. They're valuable materials that have been used as money and for jewelry for thousands of years. But did you know that you can actually hold physical precious metals in your Individual Retirement Account (IRA)?
That's right! The IRS allows people with self-directed IRAs to buy approved IRA-eligible precious metals. This means you can diversify your retirement savings by investing in these tangible assets.
In this article, we'll explore the different types of precious metals that are eligible for IRAs, the benefits of holding them in your retirement account, and the process of setting up a precious metals IRA. We'll also cover important topics like fees, storage options, and potential risks to be aware of.
IRA Eligible Precious Metals
The IRS has specific rules about which precious metals can be held in a self-directed IRA. Eligible metals include gold, silver, platinum, and palladium that meet certain purity requirements. Let's take a closer look at the approved forms of each metal.
Gold
When it comes to IRA-eligible precious metals, gold is probably the one you're most familiar with. It's that shiny yellow metal that has been prized for its beauty and rarity throughout human history.
For your gold holdings to qualify for inclusion in an IRA, there are some specific requirements set by the IRS. First, the gold must meet a minimum fineness or purity level of 0.995 (99.5% pure). This rules out things like gold-plated jewelry or coins with lower purity.
The approved forms of gold that can go into an IRA include bars and rounds produced by an NYMEX or COMEX-approved refiner or national government mint. Popular IRA-eligible gold bars are made by well-known mints like the Perth Mint or PAMP Suisse.
You can also hold certain gold coins in your IRA, such as American Gold Eagle coins, Canadian Maple Leaf coins, and coins issued by other national mints that meet the fineness standards. However, collectible coins with numismatic value usually don't qualify.
Silver
Silver is another popular precious metal choice for IRA investors. Like gold, it has industrial uses as well as being valued for its beauty in jewelry and collectible coins.
The IRS requirements for silver to be held in an IRA are similar to gold. The silver must meet a minimum fineness of 0.999 (99.9% pure). This extremely high purity level ensures you are investing in true bullion-quality silver.
Approved silver products for IRAs include bars and rounds produced by refiners or mints accredited by the NYMEX/COMEX, LBMA, LME, or ISO. Well-known IRA-eligible silver bars come from mints like Sunshine Minting, PAMP Suisse, and the Royal Canadian Mint.
You can also purchase certain silver coins for your IRA, as long as they meet the 0.999 fineness standard. Popular options are American Silver Eagle coins from the U.S. Mint and Canadian Silver Maple Leaf coins. Older 90% silver U.S. coins like dimes and quarters typically do not qualify.
Platinum
Platinum is a dense, rare, and highly valuable precious metal that can make an excellent addition to your IRA portfolio. While not as popular as gold or silver for investors, platinum still has several IRA-eligible options.
The key requirement for platinum to be held in an IRA is that it must be of minimum fineness of 0.9995 (99.95% pure). This extremely high purity standard ensures you are investing in true platinum bullion.
Approved platinum products include bars and rounds produced by refiners accredited by the NYMEX/COMEX, LBMA, LME, or other accepted mints and refiners. Some examples are Credit Suisse and Valcambi platinum bars.
There are also a few specific platinum coins that meet the IRS fineness rules for IRAs, such as the American Platinum Eagle coins from the U.S. Mint. However, most platinum coins do not qualify due to their lower purity or numismatic collector value.
While platinum tends to be one of the more expensive IRA precious metals upfront, its rarity and industrial uses could make it an intriguing long-term investment option.
Palladium
Palladium is the lesser-known precious metal that can be held in an IRA. While not as popular as gold or silver, palladium has some unique properties that make it appealing to certain investors.
Like the other approved metals, palladium must meet stringent purity requirements to qualify for an IRA. Specifically, it needs to be 99.95% pure palladium or higher fineness.
The most common way to invest in palladium for an IRA is through bars or rounds produced by NYMEX/COMEX-approved refiners or national mints. Examples include bars from major mints like the Perth Mint or PAMP Suisse.
There are currently no palladium coins that meet the IRS fineness standards to be included in an IRA. So your options are limited to just palladium bars and rounds for now.
One advantage of palladium is that it tends to be more affordable upfront compared to similar amounts of platinum. It also has important industrial uses in automotive catalytic converters and electronics.
However, palladium can be more volatile in price compared to gold or silver. It's considered one of the rarer precious metals, which impacts its supply and demand dynamics.
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Benefits of Holding Precious Metals in an IRA
One major benefit of adding precious metals to your IRA is diversification. By holding physical gold, silver, platinum, and palladium, you diversify your retirement portfolio away from just paper assets like stocks and bonds. This can help reduce your overall investment risk.
Another key advantage is that precious metals tend to hold their value over the long term, even as the purchasing power of paper currency declines due to inflation. This makes them a good hedge against rising costs of goods and services.
While past performance doesn't guarantee future results, precious metals have historically appreciated in value over time. This growth in prices can potentially increase the value of your retirement savings held in metals.
Certain types of precious metals IRAs allow you to defer or potentially avoid taxes on the capital gains from your metal investments until distribution in retirement. This provides valuable tax advantages.
Finally, unlike stocks or funds, precious metals are physical, tangible assets you can literally hold in your hand. Some investors feel more comfortable with this tangible form of wealth preservation.
By strategically adding precious metals exposure, you can potentially enjoy these benefits while still maintaining a balanced, diversified retirement portfolio across different asset classes.
Precious Metals IRA Rollover
If you already have an existing retirement account like a 401(k) or traditional IRA, you may be able to roll over some or all of those funds into a new self-directed precious metals IRA.
This rollover process allows you to transfer money from your old retirement accounts into a new IRA without having to pay taxes on it right away. The funds just move from one type of tax-advantaged account to another.
To be eligible for a precious metals IRA rollover, you generally need to be over age 59½ or meet certain other criteria like disability or job loss. The money must also be moved directly between custodians to avoid taxes and penalties.
The rollover process typically involves opening a new self-directed IRA with a custodian that specializes in holding physical precious metals. You'll then fill out some paperwork to initiate a direct transfer or rollover of funds from your existing accounts.
It's important to follow all the rules carefully during a rollover. Working with the right IRA custodian can help ensure you don't accidentally trigger taxes or penalties by making prohibited transactions.
Once your funds arrive in the new precious metals IRA, you can then begin purchasing approved gold, silver, platinum, or palladium bars, coins, and rounds for the account.
Precious Metals IRA Fees
While investing in precious metals for your IRA can provide some great benefits, it's important to understand the various fees involved. These can eat into your investment returns if you're not careful.
First, there is usually an initial setup or administration fee charged by the IRA custodian when you open a new precious metals IRA account. This covers the paperwork and account setup.
Then, you'll likely pay an annual maintenance or storage fee each year to the custodian or depository vaulting company. This covers secure storage and insurance for your physical precious metals.
When you go to buy approved gold, silver, platinum, or palladium for your IRA, you may get charged a percentage transaction fee by the dealer. This is their commission or markup on the precious metal sale.
Some IRAs also charge additional fees for things like account valuations, selling holdings, or closing the account later. These miscellaneous fees can really add up over time.
It's important to understand all the fees you might face with a particular precious metals IRA custodian or program. Shopping around and comparing total costs can save you a bundle in the long run.
The higher the fees, the more it will eat away at your investment gains. But reasonable fees may be worth paying for a secure way to own physical precious metals.
Choosing a Precious Metals IRA Custodian
One of the most important decisions is selecting the right custodian to administer and hold your precious metals IRA assets. Not all custodians are equal when it comes to IRA-eligible precious metals investments.
You'll want to look for firms that specialize in this area with extensive experience. U.S. Gold Bureau stands out as an excellent choice, with over 15 years focused specifically on precious metals IRAs.
U.S. Gold Bureau offers a wide selection of IRS-approved precious metal products from respected mints and refiners. This gives you plenty of investment options to choose from for your portfolio.
U.S. Gold Bureau also has very competitive fees for account setup, annual administration, and transactions compared to other custodians. Their low costs help maximize your investment returns over time.
With an A+ rating from the Better Business Bureau and thousands of positive customer reviews, their quality service is top-notch. U.S. Gold Bureau also provides extensive educational resources, videos, and one-on-one guidance to help you make informed decisions about your precious metals IRA investments.
Storing Precious Metals in an IRA
One important requirement for holding precious metals in your IRA is that you cannot store them at home or take personal possession of the assets. The IRS mandates they must be kept at an approved, insured third-party depository.
When opening your precious metals IRA account, your custodian will provide options for where to store your gold, silver, platinum, and palladium holdings. They typically work with several different IRS-approved depositories around the country.
These secure storage facilities are designed specifically for safeguarding valuable bullion, coins, and precious metal investments. They utilize advanced security measures like 24/7 monitoring, vaulting, and strict access controls.
At the depository, your precious metals may be stored in either a segregated or non-segregated manner. Segregated storage means your specific bars or coins are identified and stored separately from other investors' holdings.
Non-segregated or commingled storage is when the depository combines everyone's precious metal holdings of the same type together in their vaults, but still maintains a record of how much you own.
Most depositories insure the precious metals they store against any potential loss, damage, or theft. However, the specific insurance coverage levels can vary between different facilities.
Your custodian can explain the storage options available and the associated costs for segregated versus non-segregated storage at each IRS-approved depository they work with. Choosing the right solution for your needs is important.
Next Steps for Investing in IRA-Eligible Precious Metals
IRA-eligible precious metals offer a unique way to diversify your retirement portfolio and hedge against economic uncertainty. By investing in IRA-eligible precious metals, you can potentially grow your savings while reducing overall risk.
As you explore this opportunity, be sure to carefully weigh the pros and cons we covered to determine if precious metals are a good fit for your investment goals and risk tolerance. Consulting with a financial advisor can also provide valuable guidance.
The U.S. Gold Burea has over 15 years of experience and a wide selection of IRS-approved metals. Get started by grabbing your free copy of our precious metals investor guide. Learn how to invest in precious metals like a pro.
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byUnited States Gold Bureau