With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. Another alternative is a gold ETF, an exchange-traded fund that tracks the performance of gold as an asset. A gold IRA is a type of self-managed individual retirement account (IRA) that allows you to own gold bars. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs).
Gold has become popular due to its ability to diversify portfolio and hedge inflation. As the US hits a new 40-year inflation high, hedging against inflation has become even more important and we can expect gold IRAs to become more popular in the future. Investors can also convert their 401 (k) or traditional IRA to a gold IRA. All Gold IRA rollovers follow the same rules as converting to a traditional IRA or a Roth IRA.
For example, pre-tax funds included in a Roth IRA are taxed before they are converted to a Roth IRA, while post-tax funds are not taxed. On the other hand, pre-tax funds that go into a traditional IRA aren’t taxed until they’re withdrawn. The IRS has strict rules for physical gold and other precious metals. For example, to be IRS-eligible, gold bars must have a purity of 99.5%, silver a purity of 99.9%, and platinum and palladium a purity of 99.95%.
Once you reach 72 years of age, you’ll be required to accept the required minimum distributions (RMDs) from a traditional gold IRA (but not from a Roth IRA). If you’re interested in turning your traditional IRA funds into physical precious metals, you’ll need to decide how to store them before you fund a self-directed IRA. To do this, you’ll need an individual gold retirement account, commonly referred to as a Gold IRA, although this account has its own additional rules and fees. Thankfully, Gold IRA companies make it easy to meet these requirements and add precious metals to your retirement plan.
However, the IRS has introduced additional tax reporting and accounting requirements for gold IRAs due to the more complicated assets they own. Physical gold is considered an alternative investment, which is not allowed in a regular IRA. So if your portfolio consists of both gold and paper investments, a loss on the gold side is offset by the gain in other assets. While there are fewer companies that offer gold IRAs than other types of IRAs, you still have multiple options.
With your Gold IRA or Custom Precious Metals IRA, you still have beneficiaries, receive quarterly account statements, and can sign up online to check your balances. Even if you open a Gold IRA, it’s important to note that you can’t fund your account directly with gold bars or coins that you own. For gold IRAs, government regulations specify what type of gold can be kept in the account and where it should be kept. Allegiance Gold offers a streamlined process with a senior portfolio manager and an IRA specialist to help you do just that.
Some of these funds also invest in the various companies in the gold industry, while others invest in gold futures contracts. Gold IRAs are usually defined as “alternative investments,” meaning that they are not traded on a public stock exchange and require specialized expertise to value them.