Contributor, Benzinga
July 4, 2023

Historically precious metals like gold have always been a store of value and wealth desired by kings and nobles for thousands of years. They're finite in nature, limited in supply, and have broad industrial applications. In essence, gold is real money. A company's stock can decline to zero, as seen with the Lehman Brothers; a government bond can get nominal haircuts like in Greece or default like in Argentina. The U.S. dollar can also weaken over time. However, gold's intrinsic value will never amount to zero. 

Therefore gold can act as a hedge against an inflationary and deflationary economy as well as weakening dollars. And so, if you're an investor trying to build long-term wealth before retirement, a gold IRA offers an excellent means to diversify your portfolio and turbocharge your investment. Individual retirement account (IRAs) is one of the primary tax-advantaged retirement savings and investment options available for U.S. investors. Gold IRA has increasingly become popular among investors since the 2008 financial crisis.

Benzinga takes a deep dive into gold IRA, providing deeper insights into how you can leverage it to build wealth before your golden years.

How Does a Gold IRA Work?

A gold IRA is a special retirement plan and investment account that lets investors hold physical gold or other precious metals, unlike other IRAs. Precious metals like gold have become a vital investment instrument for IRAs thanks to the 1997 Taxpayer Relief Act. However, before going on a bullion-buying spree for your IRA, you must understand how it works. 

There are three primary categories of IRAs — traditional, Roth, and Self-directed IRA (SDIRA). Traditional and Roth IRAs allow investment in mainly conservative asset classes like stocks, bonds, ETFs, mutual funds, and dividends and are controlled by private fund managers that oversee the investment. Their core difference lies in the timing of the tax advantages. In traditional IRAs, contributions are deducted from your pretax or gross income. So you pay tax on the investment earnings during withdrawal at retirement. However, in Roth IRAs, you contribute your after-tax dollars or net income and pay zero tax on the earnings at retirement.

In contrast, despite being administered by a custodian like the traditional and Roth IRAs, SDIRA offers you total control over your assets. Furthermore, unlike traditional and Roth IRAs, SDIRA allows you to choose from diverse alternative investment assets, including real estate, cryptocurrencies, private equity, and precious metals (gold and silver). In fact, the so-called gold IRA is SDIRA, with gold as the investment instrument. SDIRAs are available as either traditional or Roth SDIRA, which determines the timing of the tax advantages, withdrawal, and contribution limits. 

Benefits of a Gold IRA

Some of the benefits of a gold IRA are.

Long-term Profitability 

Historically, precious metals like gold perform better long-term. Gold's current price is over 6X its price in 2000 when it sold at approximately $275 per ounce. Gold IRA, therefore, presents an excellent opportunity for buy-and-hold investors like IRA account holders to reap long-term profit. 

Portfolio Diversification

Gold and all precious metals are uncorrelated with conservative asset classes like stocks and bonds and, as such, are unaffected by macro and micro economic forces that impact them. And so investing in a gold IRA adds diversification to your retirement investments and protects your funds when economic pressures hit your conservative assets in a traditional or Roth IRA. Furthermore, it can hedge against inflationary and deflationary forces that erode your investment.

Control Over Your Investments 

Gold IRAs are SDIRA with gold as the investment vehicle. With SDIRA, you're directly in charge of your portfolio management and make all the requisite decisions. 

Tax Benefits 

The unique tax benefits of standard IRAs also apply to gold IRAs. Contributions to traditional SDIRAs are tax-deductible, while qualifying withdrawals from Roth SDIRAs are tax-free.

How to Choose a Gold IRA

If you're hoping to invest in gold IRAs, here are a few things to consider.

Storage Options 

IRA-eligible gold cannot be stored in your home or local security deposit boxes as such can be considered a distribution, meaning you'll lose your unique tax-deferred benefit and potentially get hit with penalties. Furthermore, the IRS might force you to pay back taxes owed from the date of the distribution (the date you took it home). 

The IRS guidelines recommend keeping the gold in only an IRS-approved depository (or bank) or an approved third party. While you can't store your IRA-eligible gold, you can influence where it is held through your choice of custodian. Ensure you choose a custodian that's transparent about where your asset is held. Most custodians in Benzinga's list meet this criterion and provide 100% insurance coverage during storage. 

Fee Structure 

The complexity involved in transporting, storing, and safeguarding the gold means will naturally add more fees to your gold IRA unlike the Roth and traditional types. These fees vary according to companies and may include setup, administrative, shipping, storage, management, annual, and transaction fees. Look out for custodians that offer a low-cost and transparent fee structure.

IRA-eligible Golds

Unfortunately, not all golds are IRA-eligible. To be held in an SDIRA, gold bars, coins and bullion must meet specific requirements set forth by the Internal Revenue Code. For instance, such gold must be produced by an accredited assayer (refiner or manufacturer) or a national government mint and must meet a .995 minimum finesse requirement. Nevertheless, you have a plethora of options. 

Gold You Already Own 

You can't add gold you already own into your gold IRAs even if it's IRA-eligible. Instead, you must buy through a custodian using funds from your IRA. Funds can be deposited directly into your new retirement plan or rolled over from one retirement account to another. You can also transfer funds between two custodians. Either way, your custodian is responsible for the gold purchase and subsequent delivery to the approved storage facility.

Best Custodians for Your Gold IRA

To keep gold in an IRA, you must first open a self-directed account managed by a specialist custodian who handles and stores the metal. The best gold IRA custodians offer a transparent fee structure, easy account setup, excellent customer service, and are generally trustworthy. Benzinga's five picks for the best gold IRA custodian meet these criteria. A review of these custodians.

1. Advantage Gold

Leveraging the Advantage Gold platform for your gold IRA exposes you to a world of opportunities where you can further tap on the range of precious metals available to turbocharge your investment portfolio. These include gold, silver, platinum, and palladium, available mainly as coins, with various silver and gold bullions. 

You can buy these metals directly from the platform and have them shipped to your address. Or hold it as part of your retirement savings and investment after a simple IRA account setup, in which case, it is compulsorily stored in a depository in line with IRS guidelines. For secured storage service, Advantage Gold partners with Brinks and  Delaware Depository — one of the largest and most secured exchange-approved private depositories for precious metals. 

However, what makes Advantage gold outstanding is its excellent customer service and extensive educational and research materials, which can significantly help new beginners kickstart their gold or precious metal investing. The fees are also said to be beginner-friendly. Furthermore, unlike competitors, the company offers a liberal buy-back commitment at the prevailing market rate. Advantage Gold partners with Equity Trust and  Strata Trust to help manage the IRAs account.

2. Augusta Precious Metals

Augusta Precious Metals is a renowned precious metals provider offering primarily silver and gold IRAs. Since its inception in 2012, Augusta Precious Metals has built its reputation for integrity and transparency in service delivery, as reflected in its overwhelmingly positive reviews across platforms. The company is rated A+ by Better Business Bureaus, 5 out of 5 by Consumer Affairs, and other impressive ratings by platforms like Business Consumer Alliance, TrustLink, National Ethics Association, and more.

Setting up a gold IRA account with Augusta is fast and hassle-free, thanks to its partnership with Equity Trust — a leading SDIRA provider with over 30 years of experience serving customers in all 50 states. And once you've purchased the gold for your retirement account, the company takes charge of storing it physically using the Delaware Depository. You can also buy physical gold and silver through the company. You simply transfer funds to your Augusta account and select the products you want. The company will have it delivered to your doorstep. 

Augusta sells silver and gold bullion and premium coins like the 2022 St. Helena Gold Sovereign. You can also buy gold bullion bars (from 1 to 10z) and silver bullion bars (from 10 to 100z). Augusta offers transparent and modest pricing structures with 7-day price protection for premium products. The company also has excellent customer service reps or specialists that can guide you through the account setup or answer questions on pricing. There are also sufficient resource-rich educational contents to guide your investment journey. However, you can't order online or buy precious metals other than gold or silver through Augusta. 

3. American Hartford Gold

American Hartford Gold is another reputable gold or precious metal IRA company with an A+ rating by Better Business Bureau (BBB), a perfect rating on Trustpilot (5), and an overwhelmingly impressive rating across various other platforms. American Hartford Gold helps you invest in precious metals, including gold, silver, platinum, and palladium, by buying directly or using IRAs. For a direct purchase, you can have your gold bar or coin delivered to your doorstep, in which case you take care of the storage. Or you can have the company store it for you using Brinks or Delaware Depository — their partner depositories. AHG will register, insure, and deliver your gold or silver to your home free of charge.

However, for the tax-advantaged gold IRA, your precious metal must be stored in either of the company's partner depositories in line with IRS guidelines. Signup for a gold IRA takes only minutes with a personal representative agent assigned to guide you through the process and afterward. Just like Augusta, Equity Trust manages the IRA. Suppose you want to learn more about gold or precious metals IRAs before investing. In that case, you can leverage the 25-page free guide detailing how to take charge of your retirement savings with a precious metal IRA. The News and Chart section of the website can also have insightful articles that can guide your investment decisions.

Unlike most gold IRAs, AGH offers buy-back commitments and price matching. So you can potentially sell your gold bullion back to the company and save liquidation fees. AGH charges zero setups, management, and storage fees for the first year. Fees may apply after.

4. Lear Capital

  • securely through Lear Capital's website
    securely through Lear Capital's website
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Investors looking for rare or premium coins or international investment-grade bullion coins can leverage Lear Capital. The company offers a transparent pricing structure by ensuring all fees and taxes are quoted before final purchases. Furthermore, there's a price-matching guarantee. Free shipping is available within 15 days for all qualifying direct purchases. The company partners with the Delaware depository to store IRA gold and provides 100% insurance coverage. Furthermore, Lear Capital covers most of your storage and setup fees.

With Lear Capital, you can seamlessly roll over your IRAs and 403(k) into gold SDIRA, thanks to their expert personal account executives. For newbies, the free investor's kit can provide insightful content on available products. Additionally, the website contains many valuable investing tools ranging from smart tool suites to precious metal price charts. Lear's efficient customer service, evident from near-perfect ratings across diverse platforms, is the icing on the cake for one of the best gold IRA companies.

5. Red Rock Secured

Red Rock Secured is a Southern California-based precious metal IRA custodian offering investment-grade premium and bullion coins. While gold and silver coins dominate its offerings, the company also provides platinum and palladium coins. Red Rock Secured prides itself on its commitment to efficient customer service delivery and resource-rich educational and research materials to help investors of all types make knowledge-based investment decisions. Its near-perfect ratings on Trustpilot, Consumer Affairs, and Better Business Bureau validate this.

Like most of its peers, Red Rock offers zero commission and setup charges, free shipping with 100% insurance for eligible direct purchases, zero management and administration fees for qualifying accounts ( check the company website for eligibility), and a price-protection program. Setting up an account for the gold IRA is fast and easy, with agents assigned to work you through the steps. These agents also help you roll over funds from old IRAs and 401(k) at no charge. Furthermore, the company offers buy-back commitments. However, remember that liquidating your IRA assets has tax implications, so always consult your custodian.

Investing in Gold to Support Your Retirement Plan

A gold IRA is a form of retirement savings that allows individuals to invest in physical gold bullion, coins, and bars. This type of retirement account offers investors the potential for portfolio diversification, tax advantages, and protection against inflation. Gold IRAs have become increasingly popular as an alternative investment option for those looking to protect their retirement savings from market volatility.

Frequently Asked Questions

Q

Is a gold IRA safe?

A

Yes, a gold IRA is a safe and excellent way to invest for retirement.

Q

What is the benefit of a gold IRA?

A

Gold IRA can deliver excellent profitability long-term. Furthermore, it can hedge against inflation while providing portfolio diversification.

Q

Does a gold IRA make money?

A

A gold IRA investment can be used to diversify a retirement portfolio by providing a safe haven for long-term wealth preservation and growth. Gold IRAs offer investors the opportunity to protect their savings from inflation and market volatility.

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