An IRA or individual retirement account is a way for investors to save money for their retirement in a specific account that is not directly tied to their employee accounts for retirement. An IRA provides a tax shelter for the investor as well. There are lots of ways to invest IRA funds for retirement purposes. Some savvy investors are now considering adding precious metals such as gold and silver to their IRA portfolios.
Investing in Gold and Silver within IRA Portfolios
There are two kinds of IRAs. There are traditional IRAs and there are Roth IRAs. Roth IRAs are generally considered to be tax-free by the IRS, but traditional IRA funds are taxed on income that they generate. Most investors use CDs, stocks, treasuries and mutual funds to invest their IRA funds. Until recently, investing in gold and silver in an IRA portfolio was not allowed by the IRS, because these tangible assets are not easy to follow on paper, and therefore are not easy to collect taxes on. However, gold, silver and other precious metals make good investment tools and are popular with many different types of investors. So the IRS now allows precious metals to be held in IRA investments as long as the investment positions exist on paper and the physical metals are held by a third party administer. This means it is now possible to participate in precious metal IRA investments.
Types of Precious Metals IRA Investments
There are several ways for an IRA portfolio owner to begin investing in gold and silver. ETFs, or exchange traded funds, work in a very similar fashion to mutual funds. The investor will buy ownership shares in an EFT and the administrator of the ETF will pay out dividends to the investors whenever necessary. For precious metals investing in ETFs, the funds will move according to the spot price of the metals on the global market. The investor will not actually own any physical precious metal assets, only paper ones.
There are also specific precious metal IRA accounts. These types of accounts are typically held separate from the investor’s other accounts and investments. These types of IRAs are very often held within the operations of a precious metal business or dealer. An IRA precious metals account will require its own administrator and the investor will have to have a self-directed IRA account set up. All of the precious metals that are purchased by this IRA will be held by the administrator until they are resold.
It is also possible to roll over a 401K to a precious metal specific IRA account. In order for this to work, the 401K must be in cash form. This cash is what will be used to purchase the precious metals for the account. The most commonly purchased type of precious metals for this type of IRA account is bullion coins that are government issued.
Today, investing in gold and silver IRA accounts is possible if it is handled correctly. For many investors precious metals are a more secure bet for investing for their retirement.