Using your Individual Retirement Account to invest in gold or other precious metals is an effective way to save money for retirement. Unlike traditional assets such as stocks and bonds, gold is an enormous investment and always maintains its value. Gold has protection against economic inflation, and its price increases when the cost of living goes up. For these reasons, you can be sure that it is worth saving for retirement with gold. However, if you wish to use your IRA to invest in gold, there are some things you need to know. Below is what you should know when investing in a gold IRA:
1) Finding a Broker or Custodian
When transferring your funds into gold, you need a broker to buy the gold. Do not buy gold with your account. The broker or custodian is the one responsible for this transaction. Once you have the gold, the custodian will create and manage your investment. Therefore, to invest in a gold-backed IRA, you need a custodian to administer your account. The broker will also help you store the gold in an IRS approved location since you are not allowed to store the gold IRA at home. A custodian can be a bank, credit union, or trust company that has the approval to give asset custody services by the state and federal agencies. There are several factors to look at when finding the right custodian to administer your account. Choose an IRA investing firm that is qualified, transparent, flexible, and that which has an outstanding reputation. There are many scam IRA gold companies, so make sure that you only choose a custodian with these qualifications.
2) Gold IRA Rules and Regulations
Owners of gold-based IRA accounts should follow the Internal Revenue Service (IRS) specified rules. As discussed above, the IRS requires one to have an approved administrator to have a Gold IRA. Also, the IRS rules state that gold investors should never have the metal in their possession. The custodian should hand over the gold to an IRS approved-third party offsite depository. The IRS has a 59.5 age limit for accessing the retirement gold fund. However, exemptions for early withdrawal include if the investor gets sick, disabled, dies, unemployed, or if an immediate family member needs funds for education. You will receive a 10% penalty charge for early withdrawal.
3) Additional Expenses
As an investor, you should be aware of all the costs of having a gold IRA. Apart from buying the gold, other charges include setting up an account, custodian fee, and maintenance & storage fee. The retirement account set-up fee is usually a one-time registration payment needed to create your gold IRA account. This fee differs depending on the brokerage firm so you should inquire how much is required to open a gold IRA. The custodian fee is an annual charge requirement to keep your gold safe from theft or getting lost. Paying this fee makes the custodian accountable for safekeeping your investment. The other expense is on storage and maintenance fee for the IRS approved depository. Storing in a private vault will cost differently from a general vault.
