IRA Precious Metal Investment – Four Parties

When using your self-directed IRA to acquire precious metals like gold, silver, platinum, and palladium as an asset, there are four entities to keep in mind:  the IRS, your self-directed IRA provider, a precious metals dealer/broker, and a depository.  Each has a role in the investment and three of the four have fees to keep track of.  Lets take a look at how each of the four participate in securing precious metals for a retirement account.

The IRS –  An IRA is allowed to purchase metals as a commodity but cannot purchase rare or collectible coins.  In other words, the value of the asset must be solely related to price of the raw metal.  While graded coins cannot be purchased, the IRS does specifically allow some types of coins including U.S. minted American Eagles that have not undergone grading.  Make sure to check that the metal product that you are considering is allowed as an IRA asset.  The IRS specifies requirements for the fineness (or purity) of the metals:  .995+ for Gold,   .999+ for Silver, and  .9995+ for Platinum and Palladium.  An IRA cannot buy or sell metals (or any other asset for that matter) from a disqualified person. Disqualified persons include you, your spouse, your ascendants, descendants, and their spouses.  It also includes companies owned or controlled by the those persons.  The IRS restricts you from keeping your IRA-owned metals in your physical possession.

Self-Directed IRA Provider – A self-directed IRA provider such as New Direction IRA will set up an IRA for you that allows assets like precious metals, will help make you aware of IRS requirements, and perform record keeping for the account.  If your retirement funds are not currently with an IRA provider that allows self-directed investing, you can move your funds without a tax penalty to a provider that does allow precious metals.  It is a good idea to set up a self-directed IRA and fund it before trying to negotiate a purchase with a metals dealer. The prices of metals are volatile, and dealers are not likely to lock in a price for a long period of time.

Precious Metals Dealer – With a truly self-directed retirement account, you get to select a precious metals broker with whom you are comfortable.  Due diligence is your responsibility, but once you’re satisfied with your selection, you make the deal and direct the IRA provider to fund your purchase.  Keep in mind that the dealer will be making some money, usually expressed as a commission, on the transaction for his/her service.  Shipping and handling are also charges that the dealer is typically passing on to you.

Depository -  When choosing a depository, there are several factors that you might consider including fees, segregated storage, facility location and type, and/or insurance levels.  The depository will, of course, charge for their storage services.  Be aware that it is the IRA that has the account with the storage facility, not the IRA holder.  So, in order to move or sell the asset, the you must work through the IRA provider.

It is your option to have precious metals as an asset in your retirement account.  This has been a legal investment strategy since IRAs were established in the 1970s, but, until recently, that fact has not been well-known.  When deciding whether it is right for your retirement funds to be in gold, silver, platinum, or palladium, it is important to know how the each of the entities associated with this investment participate in the process.  We have touched on the basics in the preceding paragraphs.  If you would like more information, call at 877-742-1270 or email New Direction IRA or visit our website www.newdirectionira.com.