The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualified retirement plan. Investors with gold IRAs can hold physical metals such as gold bars or coins as well as securities related to precious metals in their portfolio. Traditional gold IRAs are financed by your pre-tax dollars, and contributions are tax deductible. As with traditional IRA accounts, withdrawals are subject to income tax when you receive your distributions in retirement.
‘s because your account grew before retirement in a tax-deferred state. If you properly transfer your money from an IRA or retirement account to a gold IRA, there is no tax impact. With this type of IRA, you can manage the account and invest in a wider range of products than other IRAs. Alternatively, a physical gold CEF is a direct gold investment, but it has the advantage of being taxed at LTCG rates.
Gold has attracted investors for centuries because of its rarity and beauty, which explains why almost half of the world’s demand for gold comes from the jewelry industry (World Gold Council, Gold Investor, Vol. If you’re interested in setting up such an account, you’ll need to look for a specialized custodian or firm that is able to manage all documentation and reporting for tax purposes that are required to maintain a Gold IRA. You can invest in other options, such as stocks in a gold company, gold investment funds, or exchange-traded gold funds. You can sell the gold or precious metals in your IRA anytime without taxes or penalties, unless you withdraw the money from your IRA.
A platinum IRA is an IRA in which a portion of its total assets is invested in IRA-approved forms of platinum bars. While secondary gold investments such as gold mining stocks, mutual funds, ETFs, or ETNs can result in lower pre-tax returns, after-tax returns may be more attractive. The IRS allows some gold coins, such as American Gold Eagle, Canadian Maple Leaf, and American Buffalo, to name a few. Exchange-traded gold funds (ETFs) offer an alternative to buying gold bars and are traded like stocks.
premiums on gold bars are generally lower than for country-specific gold coins, but both are tax collectable. She earns more than 3.2 percentage points of annual return after tax when she uses a traditional IRA instead of a brokerage account for her investment in gold mutual funds, and more than 4.2 percentage points of annual return after tax for her investment in gold coins. The results for Emma and Lucas shown in Figure 3 suggest that after tax returns on gold investments in a traditional IRA dramatically exceed those of gold investments in a brokerage account or a Roth IRA. The annual return on gold coins after tax is the lowest and is around one percentage point below that of the gold investment fund, which is subject to LTCG treatment.
The practical problem is finding an IRA trustee who is willing to set up a self-governing IRA and facilitate the physical transfer and storage of precious metals assets.