A Gold IRA is a perfect way to store your retirement savings while helping you control your spending and realize the value of Gold. A Gold IRA is not a type of investment vehicle; it allows you to convert part or all of an existing individual retirement account (IRA) into a new IRA that exclusively invests in precious metals like Gold. A Gold IRA can be set up with one or more custodians or trustees, depending on who handles your current accounts. There are many different gold IRA companies that you can choose from.
Steps to Start Investing in a Gold IRA
- Choose a Company to Work With
The first step to investing in a Gold IRA is choosing a gold IRA company. The company you choose needs extensive knowledge of the IRA rules and regulations. You will also need a company that is open and transparent with their customer, offering services such as an on-site physical gold vault. A company that can be a good choice is Oxford Gold Group. See this Oxford Gold Group review to get more information about them.
- Choose Your Investment Options
There are several ways in which you can go about setting up your Gold IRA. There are physical Gold and silver options, bullion coins, and bars, and you can also choose to purchase a share in a gold mine or earn interest paid on the value of your metal. Some companies even offer the option to have your metals custom-made into an original work of art or jewelry piece.
- Form Your Gold IRA
Once your Gold IRA is set up, you must open an account with a certified gold dealer. The government licenses these dealers to sell precious metals and supply financial institutions with Gold and bars, coins, and bullion-based products for investment purposes. Once you have an account, you must complete the proper document to set up your Gold IRA.
- Fund your Account
After your account is set up, you can begin contributing to it. These contributions must be in cash or checks; however, some companies offer the option to pay with funds from an outside source such as a 401(k).
- Monitor the Performance of Your Metals
With a Gold IRA, you will have the ability to track your investment performance. A company that handles your account will inform you of your metals’ fair market value and the value at year’s end. Keep in mind that some companies allow you to buy Gold or other precious metals on margin, with the Gold being loaned against shares in a real estate investment or stocks, depending on which company you choose.
Benefits of Gold IRAs
- Tax Advantages
Tax incentives for a Gold IRA are similar to any other IRA; the longer you hold Gold, the more tax-advantaged it becomes. The IRS has historically been reluctant to tax profits on Gold because of its status as a precious metal asset. In some cases, investors can claim Gold in an IRA as “collectibles,” allowing them to receive capital and dividend treatment.
- Capital Gains Tax Deferral
Investing in Gold through a Gold IRA can potentially reduce your taxable income. Because you are converting a portion of an IRA into Gold, you may be able to claim tax-deferred growth from the day you make your first deposit. This is true regardless of whether you hold the Gold for less than one year or years.
- IRA Conversion
As long as your current IRA funds are still available, you can choose to cash out the excess into one or more metals ETFs. Once the Gold is converted, you can no longer withdraw it from the account. At that point, it is being held as a precious metal asset like gold bullion.
- Minimal Transaction Costs
Gold IRAs also differ from precious metals investing accounts because they rest in the name of an IRA holder. There are no daily price fluctuations, and you can always rely on the value of Gold to remain stable. You have complete control over your investments and can choose to have them delivered physically or held in a secure vault.
- Storing Your Gold
Your custodian may also offer storage options for your Gold through Brinks or Via Mat International. These two companies offer various storage options, including ground storage, air-freighted storage, and offshore storage.
- Risk Management
Gold has traditionally been an excellent way for investors to mitigate risk without sacrificing growth potential. The most common method is holding physical Gold in bullion coins or bars, which can be easily purchased at many local and online dealers. Other forms of bullion include jewelry, loose gemstones, and collectibles.
Gold IRAs provide an excellent way for investors to enter the precious metals market without fearing capital gains taxes. You can also take advantage of IRA regulations and withdrawals to physically hold a portion of your valuable metals. This allows you to sell your gold at any time without penalty while still enjoying all of the benefits of IRAs.