Gold has been used for centuries as a way to store wealth. You can even put gold in an IRA. Here’s how:
Establish a Self-Directed IRA
You won’t be able to invest gold bullion in a traditional IRA. To use physical gold as an investment, it must be a self-directed IRA. This allows you to choose the assets that you use for your investment. While it involves trustees, they will typically let you invest in items such as promissory notes, tax lien certificates, real estate and precious metals.
Establishing a Trustee
A self-directed IRA requires the use of a trustee. They are in charge of opening and managing your IRA. When you use physical gold as an investment in a self-directed IRA, it’s held by a trustee. The trustee that you use will be a brokerage firm, trust company, bank or credit union. They will have approval by agencies at the local or federal level that have been designated with the ability to act as a custodial service. It’s important to ask many questions when you are searching for a trustee. You should consider items such as:
– Restrictions on types of gold that can be invested
– Fees involved
– Additional services
– Appropriate license and qualifications
– Track record
Funding Your Account
To fund your self-directed IRA, you are required to use cash and will be capped on the amount that you can contribute each year. This contribution is typically set at a limit of $5500. If your goal is to have $16,500 worth of physical gold in your IRA, it will take you three years to fund that amount.
With a self-directed IRA, you make all of the decisions. Your trustee does not give any guidance. Their main job is to make investments for you and hold your assets. You must decide the type of bullion or coins that you’ll use for investing. These investments must be approved by federal and state governments. These items include the following:
– Any type of gold that has been issued and minted by the United States Secretary of the Treasury
– Any type of gold that has been issued via the jurisdiction of any state
– Any type of gold bullion that exceeds a purity equal to or higher than 99.5 percent
In some cases, your trustee will not be able to purchase physical gold for your IRA. In these cases, you must use a qualified broker. Your trustee will probably have a name of a broker that can make the purchase.
Once you’re ready to purchase gold, you’ll need to identify the asset by using a direction of investment form. This document will list the details, cost of gold and where your funds should be sent. It’s important to make sure that the title of this form is in the name of your IRA. Otherwise, you could be taxed for a distribution.
Once your trustee reviews the amount of funds that you are using for the purchase, they will buy the gold items that you specify for your investment. Any correspondence, deeds or notes will be retained by your trustee. They will store your gold and will probably charge you a nominal amount for this service.