You cannot own physical gold in a regular IRA, although you can invest in a variety of assets with exposure to gold, such as stocks of gold mining companies or gold exchange-traded funds (ETFs). Not every investment in gold can be owned by an IRA. The basic rule is that an IRA is not allowed to own a collector's item, and precious metals are defined as collectibles, whether the investment is in bullion or coins. Fortunately, there are exceptions to the general rule for gold, silver, platinum and palladium that is held in certain forms.
There are many reasons to make a gold account part of your long-term retirement plan. First, you can diversify your portfolio. If you invest heavily in stocks, mutual funds, ETFs, and other securities linked to the stock market, your portfolio could be at greater risk if the market struggles. Gold IRAs are specialized individual retirement accounts that contain precious metals, such as gold, silver, platinum or palladium.
Like traditional IRAs, these accounts generally allow pre-tax contributions and have similar income limits and contributions. Financial professionals around the world agree that asset diversification is the key to success. A self-directed IRA can buy gold and silver as long as the purchased assets meet the requirements of the IRS. IRAs cannot invest in collectibles (including collector coins).
Precious metals add diversity to retirement portfolios. They protect themselves against market cycles and inflation. In some cases, your gold IRA firm will sell IRS-approved metals so you can buy your coins and bullion directly from them. Presumably, when a reputable brokerage firm acts as an IRA trustee, it will not allow an IRA to buy shares of an ineligible ETF in the first place.
Conversely, if you were to facilitate an IRA transfer, the funds would never reach your bank account before being transferred to your new IRA. The big practical concern is to find an IRA trustee who is willing to establish a self-directed IRA and facilitate the physical transfer and storage of precious metal assets. You may be wondering if it really is beneficial to invest in gold for your retirement funds instead of holding a traditional or 401 (k) IRA. A gold IRA is a specialized, self-directed individual retirement account designed to hold precious metals.
However, since all of these companies offer similar services, you can't go wrong in choosing one of them to facilitate your investment in gold IRAs. You can fund your account by transferring funds from an open IRA or by transferring a 401 (k) to a new self-directed IRA. It would be less problematic, and perhaps more desirable, if your gold IRA were only part of your overall retirement portfolio. Gold IRAs are usually defined as “alternative investments,” meaning that they are not traded on a public exchange and require special experience to value them.
However, investing in a gold IRA is a good option to consider if you want to stabilize and diversify your portfolio.