What is a Precious Metal IRA?

A precious metal IRA is a retirement fund that uses gold, silver, and other precious metals instead of stocks, bonds, or other futures in an Individual Retirement Account, or IRA. Essentially, it combines the security of precious metals with the tax benefits of an IRA. Investors see precious metal IRAs as an alternative investment, set apart from traditional stock market investments. Another benefit of precious metal IRAs is they are self-directed, meaning investors have greater control over what they IRA-approved products they wish to invest in. Any profits made from selling your IRA investments can be tax deferred so long as the earnings from the sale are kept with your custodian for reinvestment or you move the funds to another IRA.

Security.

Precious metals historically increase in value in response to economic instability and inflation. Having a portion of your retirement fund invested in a precious metal IRA helps offset the possible risks of investing in financial assets linked directly to the stock market, like bonds and futures. This strategy is known as "diversification" and is recommended by many financial experts based on today's regularly fluctuating economy.

Tax Benefits.

By purchasing gold and silver through a precious metal IRA, savvy investors can avoid costly taxations and fees. With a traditional IRA, investors can defer taxes on gold and other precious metals until a withdrawal is made from their IRA account. For investors eligible to open up a precious metal Roth IRA, gold and silver will be taxed at the time of purchase, but will not be taxed again when the investor goes to withdraw funds from the account.

Control.

Owning a self-directed precious metal IRA puts you in charge of your own investments. You choose the IRA custodian, the IRA depository, and the IRS-approved precious metal that will go into your account – physical gold, silver, platinum and/or palladium. Under your guidance, a precious metal IRA specialist at Provident Metals can help determine which IRS-approved precious metal is best for your financial goals and desires.

STEP 1: Choose a Custodian.

A custodian, or trustee, is a company that manages your IRA account.  These companies keep track of your IRA records and assist you in other services related to your self-directed IRA account. Investors must use an IRS-approved custodian to create a precious metal IRA.

STEP 2: Choose a Depository.

When dealing with physical commodities, like gold and silver, it’s necessary to store these commodities in a secure location. Most IRA custodians do not offer storage options, so investors must find an insured depository that will work well with their preferred custodian.

STEP 3: Choose Your Metal.

Buying precious metals is easy once you find a reliable dealer. However, not all precious metals are eligible for a self-directed IRA. The IRS has outlined fineness standards required for bullion intended for precious metal IRAs. There are also strict limits on which precious metal coins are allowed in a self-directed IRA. Investors should make sure they’re buying eligible IRS-approved metals before making purchases.