A gold IRA is an account in which gold or some other approved type of precious metal is held for an Individual Retirement Account owner’s benefit. A gold IRA works the same way as a standard IRA except physical bullion bars or coins are held instead of paper assets. Precious metals IRAs are a type of retirement account which allows the custodian to hold more diverse investments in their account. Self-directed IRAs may include 401(k)s, SIMPLE IRA, Roth IRAs, and Thrift Savings Plan. There are four precious metals which can be held in these types of accounts. They are gold, palladium, platinum, and silver.
Types Of Gold IRAs
Gold in the IRS-approved form of bars or coins is the metal most commonly purchased. Hence the term “gold IRA” is the industry slang term used to denote an IRA which contains any precious metal combination. Occasionally the terms palladium IRA, platinum IRA, silver IRA, or precious metals IRA are also used. Precious metals are used by investors to hedge against inflation and to diversify their portfolio. According to IRS code, there’s a specific storage method approved for precious metals. They may be held in-house or in third party metals depositories.
Investors were allowed to have a portion of their IRA invested in gold, palladium, platinum, silver bullion or platinum coins beginning in 1998. This was because the Taxpayer Relief Act of 1997 broadened the investment types that were permissible. Having gold coins in your IRA has a number of advantages over gold bars. Coins are easier to sell and to be delivered because of their smaller size and lower value. Coins are also more difficult to be counterfeited. There are number of precious metals which the purity requirements for inclusion in a gold IRA account. Some gold IRA companies argue against inclusion of certain coins in a precious metals IRA.
In order to comply with requirements of the IRS, trustees or custodians must be in possession of all assets. This includes those IRAs that contain precious metals. The IRS also requires the custodian or trustee be savings and loan associations, federally insured credit unions, banks, or entities approved by the IRS. Some custodians or trustees store their IRA metals in private depositories. Those depositories usually have excellent security and insurance policies sometimes in excess of $1 billion. Two types of Gold IRA storage are permitted. Segregated and unsegregated.