The only thing you can be certain about in today’s economy is that it’s uncertain, which is why many investors add precious metals to their retirement portfolios to protect their savings from stock market volatility and a weak U.S. dollar. Opening a Precious Metals IRA account, while a relatively simple process, does involve taking a few steps before you can get your retirement plan up and running.
Step 1: Choosing Your Investment
Although self-directed IRA
plans have been around since the 1970s, the IRS did not permit investors to choose precious metals until 1986, when they allowed the inclusion of gold and silver American Eagle coins. These restrictions were further relaxed in 1997, enabling investors to choose gold, silver, platinum and palladium in coin or bullion form.
Even though these changes offer great freedom when it comes to deciding what goes into your Precious Metals IRA
, the IRS requires that certain standards must be met for your investment to qualify. First of all, precious metals must be acceptably pure. For example, gold coins and bullion bars need to be 24 karat (99.9% pure) for them to qualify, though an exception is made for 22 karat American Gold Eagle coins.
In addition to making sure that your investment is pure, you also need to obtain certification. In the case of gold, the IRS allows coins minted by the U.S., Canadian and Austrian governments. While bullion remains popular due to lower premiums, it is also more susceptible to forgery, which is why gold bullion needs to be hallmarked by an IRS-approved assayer or refiner such as COMEX- and NYMEX-.
Step 2: Opening Your Account
Now that you have decided which precious metals to put into your IRA, opening up an account is the next step. Both traditional and self-directed IRAs require a licensed custodian to administer your plan, which must be an unrelated third party such as an IRS-approved bank or brokerage firm. Unlike financial advisors, custodians do not direct you toward investment decisions, but instead process your purchasing requests and generate status reports.
Finding a good custodian for your Precious Metals IRA requires diligent research on your part, but these tips will help get you started. First of all, consult the Better Business Bureau to see if they have a good reputation. Secondly, establish how long they have been in business, which is a sign of good management. Lastly, inquire about any service charges to keep your investment from getting hit by hidden costs.
Step 3: Dealers and Depositories
After transferring funds to your Precious Metals IRA account, you can then direct your custodian to a dealer of your choice. Reputable dealers share many of the same characteristics as an IRA custodial firm in terms of experience and consumer confidence. A good dealer will also buy back any purchases you make as a sign of trust.
Storing your investment is another challenge, as the IRS requires that any purchase made for a Precious Metals IRA must be stored in an approved depository. Although some IRA custodial firms will store your precious metals for a fee, making sure that they use a federally-insured depository from a third party institution such as a bank will help you avoid fraud.
These steps are only basic guidelines for opening up a Precious Metals IRA. Doing additional research of your own as well as seeking expert advice from organizations such as Scottsdale Bullion and Coin
will help you find the right investment plan for your retirement needs.
Learn more about a Gold backed IRA
or Silver IRA
as well as other precious metals investment tips in this must read Precious Metals Investment Guide – Free