Precious Metal IRA

An IRA, or individual retirement account, is a popular way for individuals to set aside money for their eventual retirement. A precious metal IRA allows individuals to store their money in the form of bullion or other acceptable gold forms, to serve as a safeguard against inflation or other financial risk. These accounts offer investors the opportunity to defer or avoid taxation on income and capital gains, but early withdrawals are often subject to strict penalties.

Unlike 401(k) plans, which can only be rolled over when one leaves their employment, IRAs are not tied to a specific employer and can be transferred at any time. This means securities in an existing retirement account can be liquidated to fund a precious metal IRA. Starting a precious metal IRA usually involves contacting a reputable custodian or trust company experienced in handling these types of investments. Once an account is opened with a trust company, the actual gold is shipped to the vault of the trust company where it is held for the life of the IRA. In order to qualify as an IRA, the bullion must be held by a third party. The storage and maintenance of the account means there will be custodial fees assessed upon it.

When a 401(k) plan is eligible for rollover, you can also transfer the funds and use them in a precious metal IRA. When the funds in a precious metal IRA are distributed, most custodians will either ship the physical bullion or send a check for the equivalent value, which is treated as taxable income to the recipient for that fiscal year. A penalty of 10 percent applies if the withdrawal occurs prior to age 59 1/2.

Before 1997, Gold and Silver Eagle coins were the only legal tender allowed in a precious metal IRA. These coins of 1 oz. or less are minted by the U.S. government. After the law was changed, bars in larger weights with a recognized assay mark were permitted. This was especially helpful for investment in silver, which holds measurably less value per ounce. (An assay mark, also called a hallmark or plate mark, is a mark stamped into goods made of silver, gold or platinum. The mark indicates the country of origin, the quality of the piece, and the date the piece was crafted.) It also permitted the investment in popular foreign bullion such as those minted by the governments of Canada and Australia, though gold Krugerrands from South Africa, being 22 karat, and other U.S. gold coins, still do not qualify. To be included in a precious metal IRA, bullion must be 99.5 percent pure. Another key change since 1997 is the addition of platinum, palladium and other platinum group metals to the list of approved bullion. Private assayers, like Pamp Suisse, Johnson Matthey and Englehard, also offer investment-grade bullion in gold, silver and platinum, though some trustees will limit their precious metal IRA accounts to legal tender coinage. United Gold Direct can help answer your questions about a precious metal IRA.