Everything You Need to Know to Get Started in Self-Directed Gold IRAs

/in , /by

Gold is not your typical investment. As a matter of fact, some financial gurus will tell you it is not really an investment at all. Because it is a tangible asset, they say, you could look at gold more as an insurance policy. You hold it in case there is a financial crisis, and your other investments are in turmoil.  No matter how you choose to look at gold—investment or insurance—it should be part of your portfolio in a Self-Directed Gold IRA. Hard assets, which could also include other precious metals like silver and platinum, can provide a hedge against inflation. They are negatively correlated with traditional investments like stocks and bonds. In other words, when stocks and bonds take a downturn, tangible assets such as gold tend to appreciate.

While no one can say what percentage of your portfolio should be in a Self-Directed Gold IRA without first looking at your situation, typically you will see hard assets taking up from 5% to 20% of an investor’s retirement portfolio. But regardless of the amount you hold, the arguments for having some of your retirement funds in a Self-Directed Gold IRA are compelling.

Here are a few:

Diversification

Diversification is always first on the list of suggestions for protecting and growing your retirement funds, which makes it essential that a Self-Directed Gold IRA be part of your strategy. Hard assets offer true diversification by working in a different direction than your financial assets and helping you create a tactically-balanced portfolio.

It is easy for investors to feel comforted because they have their stocks spread over various sectors or asset classes or their bonds split between Treasuries, corporates, and high-yield offerings. In truth, these methods provide only limited diversification. The lack of correlation that comes from tangible assets adds a much more diverse element to your account.

Potential for Growth

The same economic factors that cause stocks and bonds to diminish can help gold to increase in value. For example, over the last 15 years, gold has increased by 315%. Over that same period, the Dow Jones Industrial Average went up 58%, and investment-grade bonds returned 127%.

Taking a longer look, however, gold has gone up 335% over the past 30 years, while the Dow has gained 1255% and bonds have returned 672%. All of these figures show the growth potential for gold, but, even more importantly, underscore the need for diversification within a long-term portfolio.

Tax Advantages

A Self-Directed Gold IRA provides the same tax benefits as a conventional IRA. Contributions to your Self-Directed Gold IRA may be claimed as tax-deductible, depending on your tax bracket, of course.

And any gains made from selling gold within the IRA are not taxed until you take a distribution. In many cases, investors will see higher after-tax returns with a Self-Directed Gold IRA than with a conventional non-retirement brokerage account.

Financial Insurance

Financial assets like stocks, bonds, mutual funds and cash will make up the lion’s share of your retirement portfolio. So, holding a portion of your retirement account in physical gold can be viewed as taking out an insurance policy on your retirement.

That is because gold, unlike common stock in a company, can never be worthless. Gold does not go out of business, and that helps to offset some of the risks in your non-tangible assets. And, while stocks and bonds are vulnerable to inflation, gold acts as a hedge against it. Yes, you could call it an insurance policy–insurance against the inflation that could eat away at the future buying power of your retirement account.

Under your Control

“Self-Directed” says it all. You are in control of your asset mix rather than having it pre-determined by a fund manager. You have the flexibility to add a Self-Directed Gold IRA to diversify as you see fit and the opportunity to take control of your retirement savings with a wider range of investment options.

At American IRA, we have the experienced professionals to guide you through the simplified application process and get you on your way to earning tax-deferred and/or tax-free income within your retirement account.  To download your free Self-Directed Gold IRA guide, click here.

For more information on opening a Self-Directed Gold IRA account, call us today at 866-7500-

The Advantages and Regulations for Self-Directed Gold IRAs

/in , /by

There are many benefits to Self-Directed IRAs, the chief of which is allowing you to invest in many ways. One excellent example of this is the Self-Directed Gold IRA. Although certain other precious metals can be used in this type of Self-Directed IRA, gold is by far the most common.

Perhaps you have heard the old saying “good as gold” when referring to something that is both secure and valuable. When it comes to investing, that old saying can certainly be true. In times of uncertainty, gold has always been the ultimate safe harbor.

Your investment can be held in either gold company stock or exchange traded funds that track a gold index as well as physical gold. Holding the actual metal provides the ultimate amount of control, eliminating any risk of the fund getting into trouble.

 

Advantages of Self-Directed Gold IRAs

There are a number of advantages to using Self-Directed Gold IRAs. The most important is the security that comes with gold, perhaps the planet’s oldest store of value. Like all investments, gold prices will fluctuate, but having a portion of your assets invested in gold is perhaps the safest bet. Gold prices frequently move in the opposite direction of paper assets, meaning if much of your portfolio falls in value, it will provide a cushion against those losses. Since the financial crisis of 2008 and the resulting Great Recession,  Self-Directed Gold IRAs have become much more popular. Self-Directed Gold IRAs also provide an insurance policy against inflation.

 

The Regulations Governing Self-Directed Gold IRAs

Self-Directed Gold IRAs can are subject to the same regulations as other types of Self-Directed IRAs with some additional rules specific to gold or other precious metals. Some of these regulations involve the trustee requirements, types of metal permitted and storage plans.

 

Trustee Requirements for Self-Directed Gold IRAs

Just like all other Self-Directed IRAs, in order to comply with IRS requirements, a Self-Directed Gold IRA must be held by a U.S. trustee. Therefore, legally speaking, precious metals in a Self-Directed IRA are in the custody of the trustee or custodian, not the IRA owner. According to the IRS, “A trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.”

 

Types of Gold Which Can be Used for Self-Directed Gold IRAs

If you choose to hold gold in physical form, it may be either in bullion or coins, and there are specific requirements for each. These regulations are set by everyone’s favorite organization, the Internal Revenue Service. Gold held as bullion must meet certain requirement standards. It must be a fineness level of .9950% and come from a COMEX or NYMEX approved refiner. Certain types of gold coins are also permissible. Only the certain coins are allowed, which excludes a number of “collectable” coins. The permitted coins include:

 

Types of Storage Plans for Self-Directed Gold IRAs

There are two types of permitted storage plans for gold which is held in the Self-Directed IRA. They are known as either national storage plans or local storage plans.

When using a national storage plan the gold is sent directly to an approved national depository. When using this method, the national facility is responsible for security, but you never see your gold because it is sent directly to the facility and not your trustee.

When using a local storage plan, your gold is sent to the manager of the Self-Directed IRA and you choose where to store it, provided the site meets certain requirements.

 

Costs Involved When Using Self-Directed Gold IRAs

Owning gold in a Self-Directed Gold IRA does come with some special expenses, in addition to those associated with all other types of Self-Directed IRAs. Some of these charges that an investor will have to pay include the seller’s fee, custodian fee and storage fees. The seller’s fee (or markup) can vary depending on what type of gold you purchase, such as bullion or coins. The custodian fees are an annual expense which may be higher for Self-Directed IRAs than other types of accounts. There are also the annual storage fees which are charged by the storage facility where your gold is kept.

 

Required Distributions from Self-Directed Gold IRAs

Just as with Traditional IRAs, an investor must start to take required minimum distributions, or RMDs, once they turn 70½. Account holders are required to remove a portion of assets from their Self-Directed IRAs each year as a distribution, so the government can begin collecting taxes on your savings. If you have multiple Traditional IRAs you can “aggregate” your distributions from different accounts, possibly allowing you to keep more in the Self-Directed Gold IRA provided you remove a sufficient amount in total.

When you begin making distributions from your Self-Directed Gold IRA, you can sell some of the gold and withdraw the money as cash. You can also take a “distribution in-kind” and receive the physical gold itself and be taxed accordingly.

For more information on Self-Directed IRAs or Self-Directed Gold IRAs, call us today at 866-7500-IRA (472) or visit us at www.AmericanIRA.com.