Gold IRA: Questions and Answers
Answers to questions about IRA investments in gold and other precious metals
Whether you’re new to the world of investing or an experienced investor interested in learning more about gold and other precious metals IRAs, you’ll find valuable information here. It’s all about demystifying and making the process of diversifying your investment portfolio with precious metals as simple as possible.
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What is an IRA?
An Individual Retirement Account (IRA) is a retirement savings plan that provides some tax advantages to the individual, like tax-deferred or tax-free growth of any earnings. Because there are a number of different types of IRAs, the age for withdrawal, contribution limits and other important factors vary by type. IRAs can be used as a supplement to a 401(k) account or as an integral part of an investment portfolio.
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Can a person have more than one IRA?
While there is no limit on the number of IRAs you can have, there is a maximum deferred annual contribution of $5,000 if you are younger than 50 at the end of 2011, and $6,000 if you are 50 and older. This is a total per individual, whether you contribute to one IRA or several.
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Can a precious metals investment be made through an existing IRA?
Yes, provided the current trustee or custodian is willing to administer an investment in precious metals.
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How can an investment in precious metals be made through an Individual Retirement Account?
An investor with a self-directed IRA may direct that some of the funds in the IRA be invested in precious metals. IRA investments may include any gold, silver, platinum, and palladium bullion coins, bars, and rounds that meet certain purity and refinement requirements. See GoldStar’s list of allowable metals."
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What is a self-directed IRA?
A self-directed IRA is exactly like any other IRA, with one major difference. You choose where your IRA funds will be invested, rather than just accepting whatever the IRA trustee or custodian decides. This gives you greater flexibility, because you can choose precious metals, stocks, bonds, CDs, mutual funds, government obligations and other investments.
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What is a traditional IRA versus a Roth IRA?
Your tax or financial advisor can help you determine what type of IRA would best benefit you. Here is a basic overview of the traditional IRA versus the Roth IRA. Basically, anyone who has earned income can contribute to an IRA each year. The maximum contribution amount in 2011 is $5,000, with $6,000 allowed for those 50 and older.
Depending on your income, marital status, and participation in employer plans, your contribution to a traditional IRA may be deductible. A traditional IRA helps reduce your yearly tax liability, as what you contribute to an IRA each year is deducted from your total income, so you are not taxed on it. You can contribute up to $5,000 each year (total for all IRAs, even if you have multiple accounts). However, if you choose to withdraw your money before age of 59½, you will have to pay taxes and penalties. The only exception to this is if you are withdrawing the money for purchasing a house or to cover approved higher education costs – taking your money out for these reasons will allow the penalty to be waived, although you will still pay tax on the amount.
With a Roth IRA, you don’t get a tax deduction on contributions, but at retirement, qualified distributions from the account are completely tax free. You are not required to begin taking withdrawals from Roth IRAs after age 70½. Not everyone qualifies for a Roth IRA – you must have earned a modified adjusted gross income of less than $107,000 for a single taxpayer and of less than $169,000 for a married couple filing jointly.
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Can I roll over my existing IRA?
Money in an existing IRA can be moved to a precious metals IRA by transfer or rollover, which does not necessitate reporting to the IRS. You can transfer funds as often as you like, without restrictions. You simply open an IRA and authorize the transfer. Your new IRA custodian will contact the previous institution and take care of getting the funds moved. IRA rollovers require reporting to the IRS and there are time limits and other restrictions. You should always seek competent tax advice before taking a distribution for rollover.
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How quickly can I expect my IRA to be rolled over into gold?
The amount of time it takes to complete the process can vary. Rest assured that your Blanchard and Company, Inc. representative will be working with your IRA custodian to expedite your transfer or rollover.
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Is gold the only asset that I can hold in my IRA?
Because your precious metal IRA is self-directed and allows you control over your funds allocation, you make the choice of what assets are in your IRA. You can select stocks, money market accounts, bonds, mutual funds, and more – as well as gold and other precious metals.
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Is it possible to open a new IRA with cash?
You can certainly fund your new IRA with cash, but you should be aware that you will only get tax benefits on the first $5,000/$6,000 for age 50 or older (maximum annual contribution).
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How much does a typical IRA investor invest in precious metals?
Investments of $10,000 to $20,000 are fairly common, with the amount invested in precious metals sometimes reaching $100,000 or more. Keep in mind that though the yearly maximum contribution is $5,000/$6,000 for age 50 or older, many investors have accrued a substantial amount in their accounts over time.
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Why should I choose GoldStar Trust Company as my IRA custodian?
The choice of your IRA custodian is an important one. When considering adding precious metals to your IRA, selecting a company with solid precious metals experience is key. GoldStar Trust Company is a leading custodian for precious metals IRAs in the United States. Their experience and expertise in this area make it easy for you to work with them to open your precious metals IRA.
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Can the dealer handle the Investment Directions for me?
Investment Directions must be in writing with approval signified by the account holder’s signature. If the investor desires, the Investment Direction Form can be signed and forwarded to the dealer for completion of details and forwarded to GoldStar (or other custodian). Generally, GoldStar requests an indication by the dealer that the final details have been discussed with the client prior to forwarding the Investment Direction, but this cannot be ensured.
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What happens to my gold or other precious metals?
Once you choose a precious metals IRA, your gold or other precious metals will be securely stored at an already designated specialized precious metals depository. While your precious metals will be safely stored, this facility will allow for easy access to your metals should you choose to have them physically delivered.
Please note, though, if you actually take possession of your precious metals, you’ll likely face penalties and taxes because it counts as a distribution.
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How safe are my precious metals?
Precious metals IRA assets are deposited with Delaware Depository Service Company (DDSC), an exchange-approved precious metals custody and distribution center licensed by Nymex, Comex & CBOT. That means you can feel confident that they are safe and secure. In the highly unlikely event that anything should happen to DDSC or GoldStar, your gold or other precious metals are yours and will always be yours, unless you elect to sell these assets or a personal lien is placed against you.
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Are the precious metals for my IRA account separately identified and stored?
The precious metals assets of all IRA accounts for which GoldStar Trust Company serves as custodian are stored together. The assets are considered “fungible” and are not individually identified. Your IRA will be credited with the assets received for it by type of metal, type of coin or bullion, manufacturer of bullion, denomination of coins, and weight of item.
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Can I transfer my precious metals to a storage facility I choose?
GoldStar Trust Company is responsible for custody of IRA assets and selects the facility used to deposit all precious metals held in IRA accounts. You may, of course, transfer the IRA assets in kind to a different trustee or custodian which currently uses a different depository or permits segregated, individual storage of assets for your IRA. GoldStar Trust Company will deliver the assets in accordance with the instructions of the successor trustee or custodian after payment of costs and fees due.
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Can I take custody of IRA assets?
While you may take a distribution of assets in your IRA, you cannot physically take custody of your gold or other assets. These assets must remain with GoldStar Trust or other custodian or trustee of the IRA. Should you take a distribution, however, this must be reported to the IRS.
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What is the difference between a custodian and a trustee?
The differences between a “custodian” and a “trustee” are minor. A trust is a legal entity under which assets are actually owned and held on behalf of a beneficiary. The trustee has some level of discretionary fiduciary authority over the assets of the fund. The trustee must exercise that authority in the best interests of the beneficiary. A custodial arrangement, on the other hand, is like a trust, but the custodian simply holds the assets on behalf of the owner of the assets. Other than holding the assets and doing as the owner orders, the custodian has no fiduciary obligations to the owner. The determination of what constitutes a trust or custodial arrangement is a determination made under state law.
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What type of precious metals can be held in my IRA?
Gold must be .9950 pure, silver must be .9990 pure, and both platinum and palladium must be .9995 pure to qualify. Bullion bars must be fabricated by COMEX, NYMEX, or ISO 9000 approved refiners in order to be accepted by GoldStar. Proof coins must be ungraded, complete with certificate of authenticity and in original mint packaging. All bullion coins must be uncirculated in excellent condition. Types of bullion coins include American Eagles, U.S. Buffaloes, Canadian Maple Leafs, Austrian Philharmonics, and others. See GoldStar’s full list here.
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Do I get a statement on a regular basis?
Yes. GoldStar Trust sends statements via regular mail on a quarterly basis.
GoldStar will provide you with a semiannual account hardcopy statement, showing all activity in your account and the fair market value of your investments as well as providing you with 24/7 online access to your account.
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What are the fees for establishing a self-directed gold IRA?
The GoldStar Trust fee schedule and financial disclosures can be found here.
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