What You Don’t Know about Precious Metals Investing in a Self-Directed IRA

Precious metals are one of the most time-tested hedges in the entire world of investing. Gold and silver have been around in the world of investing for thousands of years—so when the stock market has a blip, it’s easy to feel confident when you’ve got some precious metals standing by. However, there’s another way of precious metals investing that many investors love: the Self-Directed IRA. When you self-direct, you can invest in all sorts of stock market hedges—and if you use precious metals that way, it can help your peace of mind. But what is it like to invest in precious metals, and what might you need to know about investing in them using a Self-Directed IRA? Here are a few of the keys.

The Rules and Benefits of Precious Metals in a Self-Directed IRA

Unfortunately, investing in precious metals through a Self-Directed IRA isn’t as simple as heading to the nearest coin shop and stocking up on gold bars. The IRS has specific rules about the types of metals you can invest in. There are also some rules about how they have to be stored.

For starters, eligible precious metals must meet minimum fineness requirements. Gold, for example, needs to meet certain purity standards to be considered a valid retirement investment. No 14k gold necklaces are allowed. Common examples of eligible investments include American Gold Eagles, Canadian Maple Leafs, and certain bullion bars that meet the IRS standards.

One of the most important aspects to understand? Storage. The IRS requires that the metals you buy for your Self-Directed IRA will be held in an approved depository. This means you can’t stash them in a personal safe or bury them in your backyard, tempting though it may be. The good news is that secure storage in facilities designed to protect your investments against theft or damage.

Tax Advantages

When you invest in precious metals through a Self-Directed IRA, you’re not just adding diversification to your portfolio—you’re also reaping tax benefits. Just like with traditional IRA investments, you can choose between a Traditional IRA or a Roth IRA structure for your precious metals investments.

With a Traditional IRA, your contributions are tax-deferred. This means you won’t pay taxes on your investments’ growth until you start taking distributions in retirement. Think of it as a potential way to let your precious metals accumulate value over time without the drag of annual taxes. On the other hand, a Roth IRA allows you to invest after-tax dollars, meaning your withdrawals in retirement are entirely tax-free. This requires that you meet the eligibility requirements, of course, by placing valid investments in gold and other precious metals. A Self-Directed IRA administration firm like American IRA can help you with that.

These tax advantages can make a huge difference in the long run, especially if precious metals rise in value over time. By strategically using a Self-Directed IRA, you can maximize the benefits of these tax shelters while leveraging the stability of precious metals.

Is It Time to Invest?

We can’t give you specific retirement investment advice—because that’s your domain when you use a Self-Directed IRA. However, we can point to why investors like precious metals. Precious metals might go up when the stock market is down because the two aren’t completely correlated assets. That means diversification. And for many investors, diversification means de-risking as a retirement investor.

Interested in learning more? Reach out to us here by dialing 866-7500-IRA.