The concept of the IRA (Individual Retirement Arrangement) came into being in 1974 with the passage of relevant legislation. Later on, came the Roth IRA. With these types of IRAs, consumers had a choice to save for their retirement either with generally tax-free cash and be taxed on the proceeds once old enough to retire or to pay tax on their IRA investment and reap the benefits of paying no tax on their proceeds.
Most people would think IRAs are strictly funded with cash. Many would be surprised to learn that this does not necessarily need to be the case. IRAs can also be funded with gold or other precious metals. There are special IRS rules for doing so, and we will cover those rules shortly. One might be tempted to wonder about the point of funding an IRA with precious metals such as gold.
Those who would do so, tend to be suspicious of Fiat Currency (Government-issued currency) maintaining its value. This suspicion has been in the air since Nixon took the US off the gold standard in the 1970s. Currently, with escalating government debts and the lack of revenue to pay those debts and an inability to curb government spending, many see gold and precious metal IRAs as their only option to protect their wealth from the ravages of the government printing press and eventual out-of-control inflation.
While gold and precious metals do not create new wealth, they are excellent for maintaining the wealth one already has and that is their main appeal. For those of you who would also consider investing in a gold IRA, it is important to do gold IRA reviews to see what is available in the marketplace that inspires confidence and has reasonable fee structures.
One important disadvantage to consider when it comes to gold IRA’s is that one will be charged fees. This has to do with regulations concerning how the IRS recognizes a gold IRA. One cannot simply collect gold and put it in one’s safe and call that an IRA. Any gold bullion or coins you manage to collect personally are considered collectible items by the IRS. To be in an IRA your gold must be on deposit with a bank, a non-bank trustee, a registered stockbroker, or a life insurance company. Any of these trustees will require a fee to safeguard your gold holdings,
In most cases, you will pay a one-time fee to open an account and a yearly storage fee. It is usually best if you can find a flat fee rather than one based on the total amount of gold in your IRA. another thing to consider is that these trustees may require a minimum deposit to open an account.
Oftentimes, those who have an interest in opening a gold IRA will fund their account by rolling over a more traditional IRA due to this minimum required deposit. The procedure is to pay the trustee the fee and open the account by rolling over a traditional IRA or otherwise funding one’s account with the minimum required deposit, and talking to a trustee representative who helps one determine what gold bullion or coins to purchase for one’s account.
It is important to consider that not just any gold bullion or coins can be used to fund a gold IRA. The IRS has regulations that stipulate exactly the gold bullion or coins one may fund one’s account with. There are purity standards involved with determining this. You will notice that the gold used to fund a gold IRA is 99 percent pure gold or more.
When it comes to coins, only specific coins are acceptable by the IRS for funding one’s account. Some of these coins include the one-ounce Austrian Philharmonic, the one-ounce American Buffalo, the one-ounce Canadian Maple Leaf, and the one-ounce Australian Kangaroo. There is even a Chinese coin called the Panda.
Other than being funded by gold, a gold IRA is like any other IRA. For a traditional gold IRA, one is subject to contribution limits based on one’s filing status and yearly income. You must turn 59 and a half years of age before withdrawing from a gold IRA without a penalty.