Almost any type of investment is allowed within an IRA, including stocks, bonds, mutual funds, pensions, exchange-traded mutual funds (UITs). If you decide to invest in a precious metals IRA, you should do so conservatively. Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your retirement savings in precious metals. Stock and bond ETNs work pretty much the same as their ETF equivalents, with long-term gains taxed up to 23.8% and short-term gains taxed as ordinary income.
Many Gold IRA companies have preferred custodian banks that they either recommend or require their customers to use, or you can search for a custodian on the RITA website. To avoid the prospect of missing out on the rollover cutoff, many people choose to have their Gold IRA company coordinate the rollover through a direct transfer from institution to institution. An IRA owner who discovers a collectible or antique worth thousands of dollars at a flea market won’t be able to protect the tax on the profit from selling that asset under an IRA or other retirement plans. Opening a self-directed IRA and investing in precious metals is a bit more complicated than opening a traditional IRA or Roth IRA.
If that doesn’t matter to you, there are other ways to add exposure to precious metals to your retirement portfolio, such as buying stocks in gold mining companies. Even with a long time horizon, gold investors have no guarantee of making money from their investment, particularly if you’re planning to rely on a gold IRA company’s repurchase program to sell your gold if you need to accept distributions from that IRA. Unfortunately, most Gold IRA companies don’t have a good record of fee transparency on their websites, so finding out the details may require a phone call or two. If you’re not sure whether a gold IRA or a silver IRA is right for you, contact a fee-based financial planner who isn’t affiliated with a gold IRA company to determine whether it would be a good addition to your portfolio.
If you just want to buy gold or silver, here’s what you need to know about buying gold outside of an IRA. IRS rules allow funding a Gold IRA with funds from another IRA, 401 (k), 403 (b), 457 (b), or Thrift Savings Plan. People who believe that physically owning gold or other precious metals is safer can achieve that peace of mind with a gold or silver IRA. They sell gold coins, gold bars, and the like, but they don’t offer IRA investment advice (regardless of what their websites or other marketing materials might suggest).
The list of investment instruments that cannot be placed in an IRA or a qualified plan should not be confused with the list of prohibited transactions that cannot be made with these accounts, such as when you borrow money from an IRA. To avoid running afoul of tax rules for proprietary transactions, self-governing IRAs, including gold IRAs, must have an IRS-approved custodian bank. Most IRA companies may buy back gold, but be aware that the price at which they buy gold is lower than the price at which they sell gold. If you withdraw gold from your IRA before you’re 59½ years old, you’ll be charged income tax on the value of that gold, as well as a 10% penalty for making an early withdrawal from a retirement account.