U.S. Money Reserve Clears Up Common Gold IRA Misconceptions

A self-directed individual retirement account (IRA) allows you to hold alternative assets — including physical precious metals — along with the stocks, bonds, and mutual funds you can include in a conventional IRA.

A limited amount of gold exists, so the precious metal has maintained an intrinsic value for thousands of years, generally performing well during both robust and challenging economic periods.

Because of this performance, gold has often been viewed as a form of wealth insurance to offset other losses. However, many portfolio holders still do not fully understand how to include precious metals in their retirement portfolio or how a precious metals–backed IRA works, says U.S. Money Reserve President Philip N. Diehl, who served as the 35th Director of the U.S. Mint.

Some, for instance, might believe that any jewelry or other gold items they own can be added to an IRA. In fact, gold assets must meet specific requirements set by the IRS to be included in a self-directed IRA, such as the need to have a fineness of at least 0.995 (with limited exceptions). Silver assets, meanwhile, must have a 0.999 or greater composition.

Another misconception is that gold or silver assets held personally can be added to an IRA.

“People think they can buy gold and take it or have it shipped to their home, then hold it as part of an IRA,” Diehl says. “Under the IRS rules, portfolio holders cannot store precious metals products held in an IRA at home. That’s a very important fact to understand.”

IRA-related gold, silver, and other assets must be purchased by an authorized custodian using retirement account funds and kept in a recognized financial institution or IRS-approved depository for the account holder to receive the associated tax benefits, including tax-deferred growth for traditional IRAs and tax-free withdrawals for Roth IRAs.

Incorporating Gold

Another gold IRA–related misconception involves the steps required to include physical precious metals in a retirement portfolio.

You’ll first need to establish a self-directed IRA. You can then fund it via a direct rollover — where a plan administrator transfers money from a previous account to your new IRA — or an indirect rollover, in which you withdraw funds from your previous custodian and are then responsible for depositing those funds into your new account. If funds are not deposited in the new account within 60 days, penalties may apply.

“I’ve been surprised by how many well-informed investors have no idea how easy it is to roll over part of an IRA into a self-directed precious metals IRA,” Diehl says. “Gold is security in the face of economic and political storms — and it has been for generations.”

Thanks to the flexibility provided by self-directed IRAs, you can include conventional short-term assets like stocks in tandem with physical precious metals like gold — which, according to Diehl, might be treated as a long-term asset.

“Physical gold is traditionally a buy-and-hold asset,” Diehl says. “Individuals like you and me are not trying to take advantage of short-term price movements like we might want to with stocks or other commodities. Gold tends to be ballast in a portfolio; it provides a stabilizing influence to a portfolio.”

In the past 23 years, U.S. Money Reserve has shipped more than 4.5 million coins and served more than 960,000 clients. If you’re interested in finding out more about adding precious metals to your portfolio, U.S.-based Account Executives are available to answer your questions at 833-845-1748.