Most
people don't know that their Individual Retirement Account can be legally
invested in almost any type of asset except collectibles and life
insurance. That means you can invest
your retirement funds in precious metals like gold, silver, platinum and palladium—and
it's a relatively easy process.
There
are four players involved when using your IRA to purchase precious metals: The IRS, a Self-Directed IRA Provider like
New Direction IRA, a Precious Metals Dealer and a Precious Metals Depository.
1. The IRS. In return for the
special tax status that retirement accounts receive, the IRS sets some
parameters that need to be followed.
First, your IRA is allowed to purchase metals as a commodity but cannot
purchase collectible coins. Therefore,
graded coins cannot be purchased.
However, the IRS does specifically allow U.S. minted American Eagles
that have not undergone grading.
Second,
there is requirement for the fineness or purity of the metals (note that these
requirements do not apply to American Eagle coins):
.995 for Gold
.999 for Silver
.9995 for Platinum and Palladium
Third,
your IRA cannot buy or sell your metals from a disqualified person.
Disqualified persons include you, your spouse, your ascendants, descendants and
their spouses.
2. Self-Directed
IRA Provider.
A self-directed IRA provider that allows assets like precious metals will help
make you aware of IRS requirements as well as perform record keeping for your
account. If your retirement funds are
not currently with an IRA provider that allows precious metal investing, you
will likely be able to move your funds without a tax penalty to a provider that
does allow precious metals. It is a good
idea to set up your self-directed IRA and fund it before negotiating your
purchase with a metals dealer. The prices of metals are volatile and brokers
are not likely to lock in a price for a long period of time.
3. Precious Metals
Dealer/Broker.
Self-direction of your retirement account means that you get to select a
precious metals dealer with whom you are comfortable. Due diligence is your responsibility, but
once you’re satisfied with your selection, you agree on the deal and direct the
IRA provider to fund your purchase.
4. Precious Metals
Depository.
The IRS restricts you from keeping your IRA-owned metals in your physical
possession. They must be held in a
depository for safe-keeping but the selection of this storage site is up to
you. Factors that you might consider
include fees, segregated vs. non-segregated storage, facility location and
insurance levels.
Now
that we’ve identified the four players involved and established some
expectations about their roles, it is time to start putting together your new
Precious Metals IRA. For more detailed
information, please visit www.newdirectionira.com or call us toll
free at (877) 742-1270.
