Adding Gold to IRAs
Getting Serious About Your Financial Future
Have you ever thought about adding gold to your IRA? With the global economy so unstable, and the U.S. national debt close to the breaking point, millions of people have turned to the gold IRA (individual retirement account) to protect wealth and add real, tangible assets in their portfolios. Only this type of precious metals account allows you to accomplish this aim.
We'll cover the very basics up to the detailed points, just in case you're brand new to long-term investing. Even if you already have an IRA or a 401k, it's important to learn how to start a precious metals IRA, see how they work, and understand how to set them up, etc.
Now Is the Time To Act
The U.S. national debt is unsustainable. It's no longer a question of "whether" the bubble will burst, but "when" an economic reckoning will take place. This dire situation is just one of many reasons investors should hedge their bets and diversify their portfolios by holding approximately 15 to 25 percent (as a minimum!) of their long-term assets in gold.
How is this possible? Simple: by adding physical gold, not paper stocks, to your IRA. With the national debt at a whopping level of $28 trillion, it's disconcerting to note that it took our country more than two centuries to accumulate just one trillion, the first component, of that amount.
But, in the past 17 years, we've added another $27 trillion to the pile, creating a monster that is edging toward an out-of-control state.
When the inevitable global monetary crisis strikes, the most secure people will be those who have physical gold as a financial backup. This is why gold IRAs make so much sense and why they're finally catching on in popularity. At one time in the not-to-distant past, they were illegal. You simply could not have an IRA that held physical assets.
Once the old taxation laws were rewritten, it became possible for individuals to place gold and other precious metals into their IRAs, but not just any IRA. It has to be a self-directed account, with a trustee who manages it, and a custodian (an IRS-approved storage facility to hold the precious metals).
The Advantages of Using a Professional for Precious Metals IRA Setup
Trying to set up a self-directed IRA on your own can be a daunting task, but don't worry, this guide will explain everything you need to know about the process. It will also show you how LCR Coin's expert team of gold IRA professionals can streamline and simplify the whole job for you.
What can the LCR Coin IRA team do? Not only can they walk you through the paperwork and fill in all the blanks for you, they'll also convert your current IRA directly into a gold individual retirement account in a matter of minutes. We make the transfer process easy so you don't have to bother with the details, paperwork, or any of the hassles. We act as your guides and agents in the process.
In short, when you call on LCR Coin to help you set up your precious metals IRA as a conversion of your current account or as your very first IRA, you'll enjoy tax-free conversion and setup, straight transfer from your current trustee to your new trustee, easy purchase of gold for your account, and shipment of your gold into an IRS-sanctioned depository that you select (Don't worry, there are plenty to choose from all over the U.S. and abroad).
Why Gold IRAs Make So Much Sense
Why do people choose gold IRAs besides as a backstop against a potential global meltdown? Investment diversification is one of the key reasons. Gold is not subject to the whims of the securities (stock and bond) markets.
When you accumulate gold in a self-directed IRA, you're taking the very first step to diversify your assets and protect your financial future against the ravages of inflation, a national debt crisis, a stock market collapse, and a devaluing U.S. dollar.
Plus, when you hold precious metals like silver and gold in an IRA, you have possession of the most liquid of all forms of money. In other words, whenever you want to convert them directly into cash (for whatever reason), you can do so on a moment's notice.
But, the main advantage of IRAs, in general, is the chance to earn tax-deferred growth on your account balance. Compared to non-IRA investment portfolios, IRAs are far superior in their ability to grow quickly, without the worry of paying tax year after year.
That means when you decide to make withdrawals from your IRA, you'll have a much larger balance because of the IRA advantage of deferred taxation.
The basic question is this: Are you happy with IRAs that are susceptible to the ups and downs of the world economy? If not, then it's essential to look into how owning gold and other precious metals in an IRA can completely improve your long-term financial picture for the better.
Diversifying at least a portion of your IRA into precious metals like gold and silver can put you on the road to stability and peace of mind as soon as you get started with a new account.
Helpful Terms
It's always wise to understand the key terminology when setting up an IRA. For self-directed IRAs that hold precious metals of any kind, there are at least five definitions to keep in mind:
- Account holder: The person whose funds are in the IRA.
- Trustee: The entity that administers the account for the benefit of the account holder. Trustees can be banks, other financial institutions, or stand-alone organizations that exclusively administer gold IRAs.
- Custodian: The company that has possession of the physical metals in an IRA.
- Broker: The dealer who sells you the precious metals for your IRA. Dealers can be banks, financial institutions, numismatic professionals, or independent operators.
- Precious metals IRA: These accounts are commonly called "gold IRAs," even though that's a misnomer. They are a special kind of self-directed IRA that are administered by a trustee for the benefit of the account holder. What makes them unique is that they can hold physical gold, silver, palladium, and platinum.
Getting Started is Fast and Easy
If you want to learn how to start a gold IRA, you're in the right place. LCR Coin specializes in assisting people who want to transfer an exiting IRA or who simply want to open a precious metals IRA for the first time, from scratch.
Here are the steps for getting started:
- One: Contact LCR Coin, Inc., and speak with a representative about opening a precious metals IRA.
- Two: Give the LCR rep the pertinent information about your current IRA or, if you don't have one, simply provide the required personal details for opening a new IRA.
- Three: Decide on the dollar amount of precious metals, and which kinds of metals, you'll be putting into your self-directed IRA. If you are simply doing a roll-over, you'll just need to select which metals will go into the IRA.
- Four: Finish the necessary paperwork with the LCR rep to provide for shipment of your metals to the secure location, and you're done. The entire process usually takes less than 20 minutes.
Addressing the Question of Secure Storage
LCR Coin works with two of the worlds' best depository services, International Depository Services to help keep your fees low and give you the most secure, efficient storage in the industry.
Your holdings are placed in highly protected vaults and insured against theft, damage, and loss.
All About Self-Directed IRAs
Have you ever wondered about all the different kinds of IRAs there are? Most people have heard of Roth and traditional versions, and gold IRAs are becoming more popular. But, when the term SDIRA pops up, lots of folks are thrown for a loop because they don't know what the letters stand for or where SDIRAs fit into the general scheme of things.
For starters, a SDIRA, with the "SD" standing for "self-directed," is different from regular Roth and non-Roth varieties based on one factor: what you can put into them. For example, with regular IRAs, investors can only have cash, mutual funds, bonds, or stocks in them. However, with a SDIRA, you have many more choices.
People who make the effort to find a broker, trustee, and custodian for a particular kind of non-traditional IRA investment (like real estate, precious metals, or a privately held company) can diversity more easily. Additionally, SDIRA holders can take advantage of investments that might have a higher potential return than stocks, bonds, and mutual funds.
Why Gold IRAs are Different
The word "gold" before the letters "IRA" is more of a nickname than an official term. IRS rules speak about precious metals IRAs and self-directed accounts that hold gold, silver, platinum, and palladium. In fact, the financial media created the term "gold IRA," so don't think that these accounts can only contain gold.
But, even though you have a choice of things to place into a self-directed IRA, when you choose one of the four precious metals, there are some very specific IRA regulations pertaining to what you can and can't add to your account.
These rules apply not only to the purity of the metals but also to a few prohibited items, like South African Krugerrand coins, Chinese Pandas, Austrian Coronas, U.S. Buffalo proofs, and more.
Just because a coin or bullion type is popular does not mean it's allowed in gold IRAs. Always be sure to speak with a qualified broker, like your LCR Coin rep, if there is a particular type of bullion coin, round, or bar that you are interested in.
A good rule of thumb is that you're generally okay with U.S. and Canadian government bullion products that have purity levels of .999 or higher for silver and .995 and up for gold. The cutoff points for platinum and palladium are .9995 purity.
The Many Benefits of Precious Metals Investments
Why are precious metals one of the ideal ways to achieve long-term savings goals? For centuries, metals like gold and silver have been a way for families to store their wealth in a secure way. In modern times, having about one-quarter of your total savings in the form of precious metals makes sense for dozens of reasons.
Here are some of the main advantages of having precious metals in your SDIRA.
- Financial catastrophe "insurance": Unlike corporations, gold and silver can't go bankrupt. In fact, when the overall business economy is doing poorly, the precious metals often rise in value. Time and time again, when the securities markets become highly volatile and reach crisis points, investors all over the world flock to the safety of precious metals, particularly gold and silver.
- Portfolio diversification: One of the main reasons people cite when asked why they place precious metals into an IRA is diversification. Since U.S. citizens have been allowed to own physical gold, millions of young and old investors have sought to keep at least 15 to 25 percent of their long-term portfolios in precious metals.
The stability and safe-haven status of gold and silver bullion serve as a counter-weight to a portfolio that is otherwise composed primarily of stocks, bonds, and other paper assets. - Potential growth rates: Unlike blue-chip stocks, ETFs, mutual funds, and bonds, precious metals have a very high potential return. And because metals are physical assets, their value is not dependent on the financial performance of a particular group of companies.
- Tax treatment: Suppose the price of gold rises significantly in a short time period. Because the physical metals are shielded by their IRA status, you don't pay tax on any of the gains until you take distributions after you retire. And even then, you won't have to pay capital gains rates but personal income tax rates at your (likely) much lower tax rate.
- Control: Those first two letters in SDIRA are quite important. They signify one of the central advantages of using precious metals for wealth accumulation. In other words, as the account holder, you have control, which is what the concept of "self-directed" is all about.
There are no brokers or employer plan administrators making decisions for you about what can and can't be in the account. All those decisions are up to you. Whenever you feel the need, it's perfectly acceptable, in a precious metals IRA (a special type of SDIRA), to buy more gold, sell the gold to capture profits, whatever. As long as all the assets stay in the account, the SDIRA remains intact and under your full control.
People Who Use Gold IRAs To Build Wealth
What types of investors seek out gold IRAs? There's no single demographic, but there are certain kinds of people who seem to focus on acquiring the diversification and other advantages of a self-directed, metals-based IRA.
Based on what LCR Coin reps see every day and the many inquiries they receive over the phone and through email, it's apparent that gold IRAs are popular among many different groups of working adults, including the following:
Middle-aged working people: Somewhere around the age of 45, it's apparent that some working professionals begins to think seriously about long-term financial security. At that point, they often begin doing research about the best ways to save. Often, they already have IRAs through an employer or one they set up long ago and forgot about.
Once they begin to focus on the details of how best to achieve diversification and wealth accumulation, they very often start shopping for a precious metals IRA.
Newly married young couples: The fortunate ones of the bunch are young couples who already understand the power and safety of having gold in their IRAs. With the growing popularity of gold IRAs, it's becoming more common for younger folks to set up these kinds of accounts and build significant amounts of wealth with several decades of consistent contributions to their accounts.
Older folks who got started a bit late: It happens. Lots of working adults just never got around to setting up any kind of IRA. If they're over the age of 50 when they suddenly realize how essential it is to have an IRA, they can use the catch-up provision and contribute a higher annual amount than usual. Often, people in this category opt for the power and potentially higher returns of gold IRAs.
Single people of all ages: You need not be married, middle-aged, young, or older to start saving for the long haul. Single adults who never plan to have families also want the security of financial independence in their later years. When they stop and think about the possibilities, many of them choose gold IRAs.
What To Discuss With Your IRA Account Representative
Doing a little homework before speaking with an IRA professional will save you time and help you figure out exactly how you want to structure your precious metals IRA. For example, ask yourself a series of questions and write your answers down on a note card or in a digital file. When you begin to set up your metals-based SDIRA, you'll be able to convey your preferences quickly and accurately.
Consider the following questions and remember to make notes about any other points you want to ask your account rep about:
- Should I opt for all gold, all silver, or a combination?
- About how many years will I be contributing to the account before I retire?
- What are my legal limits for annual contributions?
- Will I be converting my current IRA or simply starting a new one for metals alone?
- Is there a benchmark "grand total" I'd like to accumulate by the time I retire?
- Should I "consolidate" several IRAs into one for the purpose of saving on account maintenance fees?
- Can I open an IRA if I'm under the age of 21?
- Should my spouse and I open gold IRAs at the same time?
FAQ
We receive many inquiries each day about precious metals IRAs. The most common ones are listed below. However, if you have any questions that you don't see here, feel free to call our IRA Hotline at 800.830.5578 and we'll give you an answer right away.
Are gold IRAs wise investments?
More properly called "precious metals IRAs" because they can hold gold, silver, platinum, or palladium, gold IRAs can be a wise way to protect your long-term wealth and assure a reliable, liquid, physical form of assets that will never result in a zero balance.
Stocks, bonds, real estate, mutual funds, and other possible components of self-directed IRAs all have the potential to bottom out. Precious metals, particularly gold and silver, do not.
How do precious metals IRAs work?
If you're familiar with traditional IRAs, you already know most of the details about how self-directed IRAs operate. That's because nearly all the IRS guidelines that apply to standard Roth and non-Roth IRAs also apply to self-directed ones (which are the types of IRAs that are allowed to contain precious metals).
The account holder must hire a trustee to manage the account. Then you, as the account holder, must find a dealer to sell you the metals you wish to deposit. Those metals, after you buy them, must be physically transported to an IRA-approved depository for safekeeping by a custodian. The account trustee manages the investments in the account according to your directions.
Can I take possession of gold in my IRA?
Legally speaking, you can certainly take physical possession of the assets in your precious metals IRA anytime you wish. This is strongly discouraged, because once possession is transferred to you, you are responsible for tax on the withdrawal as if you received ordinary income.
(This is true in the vast majority of cases, but you should speak with your personal tax advisor to understand exactly how a metals withdrawal will affect your tax status).
Which precious metals can I hold in an IRA?
IRS rules are very strict in this regard. As for the four main precious metals, namely gold, silver, platinum, and palladium, you can hold as many of each kind in any amounts. The restrictions pertain to purity.
There are long, detailed lists about exceptions to the purity rules, by for the most part, account holders must place metals of 99.9 percent, or better, purity into their IRAs.
Is conversion tax-free?
Yes. Converting your traditional IRA into a gold one is a non-taxable event. You need to be sure to use a professional to do the transfer. That's because if you try to do the transfer by yourself, there's a good chance you might accidentally "take possession" of the funds from your traditional IRA before you deposit them into the new one.
If that happens, you could be on the hook for a hefty 10 percent penalty as well as ordinary income tax on the total amount. Using a professional trustee (which is often a financial institution) can help avoid that dilemma. In any case, when you convert one IRA into another, and the process is done correctly, there's no tax liability whatsoever.
The way the IRS looks at it is as a swap-out of one account for another, with a change in trustees, and possibly a change in the type of the IRA from traditional to self-directed (in this case a self-directed precious metals IRA).
Can anyone learn how to start a gold IRA?
Starting a precious metals IRA is simple. There's really nothing you must "learn" to get started. Once you connect with a reputable broker like LCR Coin, you'll be guided through the rest of the process seamlessly.
Later on, after you've gotten your IRA started, you'll want to take advantage of all the educational resources offered by LCR Coin and learn more about the general topic of using precious metals, particularly gold and silver, to enhance your long-term wealth.
What are the most common kinds of precious metals investments?
Gold and silver top the list for the vast majority of investors who have gold IRAs and other precious metals investments outside of an individual retirement account.
Note that LCR Coin's website includes detailed listings of IRA-approved gold and silver products. In most cases, U.S.-minted bullion coins in both silver and gold are okay to place into an IRA, as are most Canadian bullion coins.
There are a few exceptions, and a purity of 99.9 percent is always the minimum on eligible metals, whether they're gold, silver, platinum, or palladium.
Can I have more than one IRA?
Of course, you can have as many IRAs as you like. The thing to remember is that you are still limited by the amount you can deposit into all of them, combined, each year. That ceiling amount is based on IRS regulations for different tax-filing statuses.
Typically, it's $6,000 per person for people under the age of 50, and $7,000 per person for those 50 and older.
For the sake of simple record-keeping, most folks don't try to maintain and track their investments in multiple IRAs. On average, people tend to have just one or two accounts.
For example, you could maintain a traditional IRA at your local bank and have a precious metals IRA for the sole purpose of accumulating gold and silver, and for diversifying your total IRA portfolio.
What is the ideal age at which I should start an IRA?
Most financial advisors will tell you, "The earlier, the better." That's because the power of compound interest kicks in when you start saving while you're still young. The beauty of starting in your 20's, 30's, or even 40's is that you can max out each year's contribution limits and build a substantial base amount within just a few years.
Even if you wait until later, after the age of 50 for example, the "catch-up" provision in the law works to your advantage. You may have noticed that people over 50 are allowed to contribute and extra $1,000 per person to their IRAs, regardless of which kind of account it is, traditional, Roth, or a gold account.
If my IRA includes physical gold, can it be a Roth IRA?
Yes, you can set up your precious metals, self-directed IRA to be of either the Roth or non-Roth variety. Generally, when you place gold or silver into a Roth self-directed IRA, you use funds that you have already paid tax on (and for which you did not make a deduction on your annual tax filing).
For non-Roth IRAs, you deposit metals up to your annual contribution limit, and then can deduct that amount from your income when it's time to file. The big difference is that with a Roth IRA, you will not pay tax even upon withdrawals of the funds or the accumulated interest.
With a non-Roth IRA, you will pay tax on the withdrawals at your ordinary personal rate when you take the money out.
How does a gold-type IRA differ from a gold ETF?
There are many differences, primarily that an ETF (exchange-traded fund) is simply an investment on which you must pay tax on any gains. There's no tax advantage to owning an ETF as opposed to an IRA.
However, it's possible to own shares of a metal-backed ETF within a self-directed IRA. Still, gold IRAs have an advantage because an ETF is only a paper version of the metal, not in physical form.
If the ETF goes out of business, files for bankruptcy, or simply drops to a very low market value, you could lose most or all of your investment. Worse, you'd be left with no physical metals as security, just a semi-worthless piece of paper.
If I already own gold or silver, can I place it in my precious metals IRA?
The IRS says you can't ever place your own metals into gold IRAs. Whatever gold and silver you do put in must be purchased directly from a dealer and shipped straight to the custodian.
Are precious metals IRAs insured in any way?
When you purchase precious metals from a broker, like LCR Coin for example, and store the bullion in an IRS-approved vault, your assets are typically insured against theft, loss, or damage to the metals in exchange for the annual storage fee you pay to the custodian (the company that stores the metal).
Why can't I store the gold myself and cover it with insurance?
This is one of the most frequent questions we get about gold IRAs. In fact, you can buy all the precious metals you wish, store them in your home or safe deposit box, purchase theft insurance, and do whatever you want with them.
The big catch is that you will pay tax on annual appreciation, gains on sales of the metals, and will not be able to call your holdings an "IRA."
The reason is because the IRA laws were written to exclude personal holding of precious metals from the tax advantages of IRAs. Basically, to have a self-directed precious metals IRA, you need three things: a broker to buy the metals from, a trustee to oversee the account administration, and a custodian to hold the metals in a secure location.
Trustees and custodians must be on an IRS-approved list.
Bottom line: No, you cannot have physical possession of the metals in a self-directed IRA. Once you take personal possession of the metals that are in an IRA, you are liable for either capital gains on the withdrawal or ordinary income tax on the amount.
Additionally, you could be hit with a flat 10 percent penalty on however much you take out.
If I currently don't have an IRA, can I open a gold retirement account?
Of course. Precious metals IRAs welcome two kinds of customers. One, anyone who wants to roll over their current IRA into a precious metals IRA. Two, people who are opening an IRA account for the first time ever, a group which usually includes younger people and a few older folks who are catching up on their savings goals.
If I already have a 403b, a TSP, a traditional IRA, or a 401k through my employer, can I convert it to a gold retirement account?
Yes, and the process is amazingly simple when you use a qualified, experienced metals broker to start the process. Brokers work with trustees, who will actually be administering and overseeing the account.
So, when you contact a broker and explain that you want a precious metals IRA, you'll be walked through the conversion process to transfer the assets in your current account into the self-directed, metals-backed IRA.
Roll overs are common kinds of transactions and the paperwork is not a problem if you have a broker and trustee who are willing to take you through the enrollment and do the paperwork for you.
What are the fees and other costs associated with precious metals IRAs?
For the most part, you sometimes pay a fee to the trustee to set up your account, as well as an annual fee for account maintenance. Additionally, there are annual fees for storage of the metals at a secure location, and shipment of metals from the broker/dealer to the custodian.
Depending on the metals dealer, trustee, and custodian you choose to work with, fees can be higher or lower.
It's almost always to your advantage to work with a metals dealer like LCR Coin that already has an established relationship with approved trustees and custodians. That way, the process moves along much more smoothly and fees are kept to a bare minimum.
Will LCR Coin be my IRA custodian?
You'll hear lots of new terminology when you open a precious metals IRA. Sometimes, people use the same words to mean different things, so it's important to be careful about definitions.
Generally, the "dealer" or "broker" is the precious metals seller who offers bullion to buyers who want to start gold IRAs.
The "trustee" is the bank or other kind of financial institution that administers the account, keeps all the records, and files all the necessary paperwork. The "custodian" is the organization that operates a secure facility, often called a vault, where your metals are stored.
If you choose to work with LCR Coin to set up a self-directed IRA, we'll technically be the dealer or broker who sells the metals to you.
We have long-term relationships with a designated, reputable trustee and with two different storage facilities. This combination of resources makes it easy for our clients to set up gold IRAs quickly and seamlessly, and without unnecessary fees.
Are there any dollar-amount minimums for opening this kind of IRA?
Each dealer and trustee can set minimum opening balances for precious metals IRA accounts under their purview. If you want to open an account, speak with an LCR Coin representative to learn the details about specific account minimums.
Take Action To Solidify Your Financial Future: Open a Precious Metals IRA Now
Say goodbye to risky stocks and bonds and other paper assets. Trade them in for real, tangible wealth by opening a gold-IRA through LCR Coin today. Our professional wealth experts will do all the paperwork and put you in control of your retirement with a precious metals IRA.
Call us to get started. Complete account setup, whether you currently have an IRA or not, takes just a few minutes. Our direct gold-IRA phone line is 800.830.5578. We look forward to helping you strengthen your financial future.