Getting to Know Gold IRAs: Are They the Right Option for Your Retirement?

Is it a good idea to invest in gold? The answers to this commonly asked question tend to go to one extreme or the other. There are some investors that believe investing in gold is a losing proposition. That’s because it pays no dividends or interest, and it costs you money to protect and store it.

However, on the other side of the argument, investors believe as the U.S. dollar loses its purchasing power, gold is going to retain its value. Many experts are worried that eventually, debt and inflation combined are going to cause the dollar to lose all value.

If you lean toward the side that believes gold is a smart investment, you may be interested in a Gold IRA (individual retirement account). However, before making gold IRA investments, you need to know how they work.  

Here you can learn about gold IRA investments

Explanation of the Gold IRA

While most IRAs invest in traditional assets, such as bonds, stocks, and the cash equivalents, it’s also permitted by the tax code for “self-directed” vehicles, which can hold various precious metals, such as gold or silver. However, this doesn’t mean that every type of precious metal is allowed in your IRA.

The tax code has outlined what precious metals and the purity rate that is required for gold and other metals to be included in an IRA. Keep in mind, it’s only platinum, gold, silver, and some palladium that meets the set requirements. All other types of precious metals, including jewelry and collectible coins, aren’t allowed.

Setting up your Gold IRA is a multi-step process. You need a custodian, and to find an approved depository. Next, you must purchase the precious metals or gold, such as palladium, platinum, and silver that are approved and transfer them to the depository in a way that the custodian can account that it was done.

Required Minimum Distribution (RMD): Everything You Need to Know

Upon reaching 70.5 years old, you have to take the RMD from a traditional IRA. With a Roth IRA, these are subject to the RMDs. If you have a traditional IRA, you must have proper liquidity to take the required distributions. Meeting these rules with a Gold IRA is more challenging. You may find you have to sell your holdings to adhere to the requirements.  

There is good news, though. If you have another IRA account, the entire RMD can be taken out of it. Make sure to consider the RMD rules when deciding if you want a traditional or Roth Gold IRA.

What is the difference between Roth Gold and traditional IRA?

Is the Gold IRA a Smart Investment?

Investing in gold is popular, but there are certain things you need to understand. You have to ensure your investment portfolio matches your risk tolerance, along with your time horizon. It’s important to make sure your decision to include this type of alternative investment is going to work with your bigger financial goals.

Don’t forget, when you include gold as part of your retirement IRA, you are helping to diversify your portfolio. This can help to alleviate some of the worries over the economic uncertainty that was mentioned above. While this is true, if you choose to move forward with a Gold IRA, it only needs to be a small part of your retirement savings or plan.

There are other ways to include gold (and other metals) in an IRA, too. For example, with Gold EFTs you can sell and buy shares and then hold them in the conventional 401(k) or IRA. Be sure to explore all the available options when making a decision about retirement savings and investing. This will help ensure you choose the right option for your needs and situation.

1 thought on “Getting to Know Gold IRAs: Are They the Right Option for Your Retirement?”

  1. After Retirement, I have been so inspired by your journey and the confidence of your voice in this space. Thank you for continuing to grapple with a meaningful life and to share your questions and current answers. I’m happy you are finding joy in negotiating the balance of life.

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