A gold IRA often has higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. In retirement, you need an investment that either generates current income or is reasonably expected to appreciate in value so that you can sell and use it for consumption in the future. You’re essentially wasting tax-deferred storage space on something that doesn’t generate income; so you’re not saved from taxes. As with any other traditional IRA account, the value of the account will be taxable when paid out
.
Unlike owning stocks, mutual funds, ETFs, etc., gold IRAs can be a good or bad idea, depending on your financial goals and how you integrate a gold IRA into your overall financial plan. If this isn’t a priority for you, there are other ways to add precious metals to your portfolio besides a gold IRA. Gold IRAs are unique in that you can store physical gold in a tax-advantaged
retirement savings account.
A key selling point that gold IRA companies like to tout in their marketing is that if you own a gold IRA, you’re holding the physical precious metals. While a gold IRA allows you to invest in physical gold, there are alternatives to investing in gold in other ways. Unfortunately, gold IRAs add many intermediaries that reduce the potential returns you could earn on your gold investment. Specialized custodian banks Standard depositories such as Fidelity, Schwab or TD Ameritrade
will not handle physical gold in an IRA.
You can transfer all or part of the balance to fund a Gold IRA with no tax liability, as long as you complete the rollover within 60 days. Those who want to own physical gold to combat inflation or diversify their portfolio might be happy to know that the gold is stored securely under the control of the depositary. A gold IRA consists of a single asset class, and when you eliminate the diversity you have with a traditional investment portfolio, you’re at higher risk and deprives you of the opportunity to earn income. There are minimum requirements for metal fineness or purity, as well as regulations for the size, type,
and weight of your IRA gold.
A gold IRA rollover involves withdrawing funds from another defined contribution account, such as an IRA, 401 (k), 403 (b), or savings plan. Instead of investing in a gold IRA, you can buy gold bars or coins outside of an IRA and store them in your home or in a local safe. However, since the Great Recession, there has been a wave of ads encouraging retirement savers to convert their savings into precious metals as part of an individual retirement account or a gold IRA. In general, the smarter option is to transfer a traditional IRA or a traditional 401 (k) to a traditional gold IRA and transfer a Roth IRA or Roth 401 (k) to a Roth Gold IRA.
If you’re trying to figure out how to invest money in gold coins or bars within an IRA, gold IRAs may be right for you. While the majority of IRAs invest in more traditional assets such as stocks, bonds, and cash equivalents, tax legislation also allows “self-directed vehicles” that can be used to hold precious metals such as silver or gold
.
