What Retirement Fund is Best for Buying Precious Metals?
Many investors wonder whether they can use their retirement funds for buying physical precious metals. It’s important for those who want to diversify their portfolios and reap the wealth-retention benefits of gold and silver. The answer depends mostly on what type of retirement fund you have.
401k Retirement Funds
401k owners can use their funds to purchase “paper gold” in the form of exchange-traded funds (ETFs) or mutual funds. ETFs are different from mutual funds because they have a per-share price that trades actively throughout the day just like an individual stock. However, unlike individual stocks, ETFs include management fees and expenses associated with their particular fund structure.
Some 401ks have an “in-service rollover” option, which can allow you to dedicated a portion of your current employer’s 401k into a self-directed IRA. With that self-directed portion, you would be allowed to purchase precious metals.
Self-Directed IRAs
To properly invest retirement funds directly in physical gold and silver, a self-directed IRA is necessary. Self-directed IRAs have been around a long time. They’re similar to any other IRA or 401k but have unique investment options.
For example, a self-directed IRA can allow you to buy eligible bullion and gold and silver coins. You can then have your coins or bullion physically allocated with a third-party custodian. Precious Metals IRAs are great retirement plans because they allow you to protect your wealth with the ultimate safe-haven assets while also enjoying the tax benefits of an IRA.
Like all IRAs, self-directed accounts must have a custodial entity such as a bank, credit union, trust company, etc. However, for a self-directed IRA, you must have a dedicated self-directed custodian, but there are many to choose from throughout the market.
Buying and Storing Bullion
After you’ve acquired a self-directed IRA, the next few steps are pretty easy: choose what metals you want and deposit them. Companies like SchiffGold have specialized precious metals brokers who can help you choose the right bullion products to fit your retirement portfolio.
Once you’ve decided which products to buy, you need to inform your IRA custodian who can wire funds to precious metals brokers like SchiffGold. The custodian will receive the shipment and store it for you. You retain title to the precious metals and can take delivery anytime.
You always have the option to take an IRA distribution of actual metals, as opposed to liquidating the coins or bars. For example, a client who owns gold American Eagles inside of a Metals IRA can receive the actual gold American Eagles as the distributed asset. The IRS tax rules apply to this in-kind distribution, just as if cash had been distributed.
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