If you're considering investing in a precious metals IRA, it's important to do so conservatively. Most experts recommend that you invest no more than 5 to 10% of your retirement funds in precious metals. You can either have a custodian store the metals in a warehouse for you, or you can store them yourself, which is riskier. If you choose an ETF, you will receive a piece of paper stating your interest in gold.
High operating expenses add to the cost of owning an ETF, even when the price of gold falls. Storing gold away from one of these designated locations could jeopardize the safety of your precious metal. When opening an account, the IRA depositary will have a list of specific precious metal items that are not allowed in the account. There are a variety of gold, silver, platinum and palladium ingots and coins that can be purchased in a precious metals IRA.
IRS-approved facilities that store investments in precious metals typically charge storage fees, either a fixed fee or a percentage of the total investment amount. However, when buying precious metal ingots, you must purchase those that are marked “IRA-compliant” or “IRS-approved” in order to include them in your IRA. Precious metals invested in a self-directed IRA must be stored in an approved repository, such as the Delaware Depository. Minimum withdrawals can be more complicated since you'll be forced to make them at intervals equal to those of the complete pieces of precious metals you own.
To receive that benefit on an ongoing basis, IRA assets must be in the hands of a financial institution or an IRA depositary qualified by the IRS. Opening a self-directed IRA and investing in precious metals is more complicated than opening a traditional or Roth IRA. You can choose the type and shape of the precious metal you want to invest in, or select a gold-related paper option such as ETFs. Your precious metals advisor and your IRA liaison will provide you with the necessary documentation and help you every step of the way.
And if you accept in-kind distributions, you'll have to sell your metals quickly or have cash to pay the taxes you owe on the precious metals sent to you. Just as you have chosen an IRA custodian to store your IRA assets, you would choose a custodian to keep your IRA's holdings secure. Precious metal IRAs are more expensive than other investment options. In Money Reserve's self-directed IRA program for precious metals, your IRA account executive will coordinate with your custodian to set up your IRA account and arrange for the transfer of funds from your old custodian to your new custodian.