What You Need to Know About a Gold IRA

Traditional and Roth IRAs are very popular among investors looking to plan ahead to a more comfortable retirement. An IRA, which stands for Individual Retirement Account, may be mistaken for an investment in of itself - but it's just the “basket” in which you keep the stocks, bonds, mutual funds and other assets, reports CNN/Money.

There are many types of IRA accounts, such as Roth IRAs and Traditional IRAs.  However, many investors are surprised to learn about the availability of Gold IRA or Silver IRA.  An IRA holding precious metals, are held in custody at a depository for the benefit of the IRA account owner.  A precious metals IRA functions the same as a regular IRA, only instead of holding paper assets, it holds physical bullion.

Can I buy physical gold for my Individual Retirement Account (IRA) or 401(k)? 

You can buy gold coins and bullion, and other precious metals, in a self-directed IRA or 401(k) established with a trust company. People with retirement plans typically have a conventional IRA or 401(k) with a bank or brokerage firm that specializes in bank deposits, stocks, mutual funds, annuities and other assets. In many cases, these investors have little or no say in the investments being made.  A self-directed retirement plan, empowers the individual investor to make his or her own investment decisions and can expand the available investment options.

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The gold coins or gold bars must meet IRS standards and must be held by the IRA trustee instead of the IRA owner. The gold must be stored in an IRS-approved depository.

Can you have other precious metals in an IRA? 

Yes.  There are four precious metals you can buy and invest for an IRA account: Gold, Silver, Platinum or Palladium.

Can I do a rollover from my current IRA or 401(k)? 

Yes.  Most precious metals based retirement plans begin with a rollover. The current law allows for both transfers from IRAs as well as rollovers from qualified retirement plans, such as 401(k), 401(a), 403(b), 457, Thrift Savings Plan (TSP) and annuities.

What is the difference between a Roth IRA and a Traditional IRA? 

One of the big differences between a Roth IRA and traditional IRA, is that traditional IRAs can delay taxes until retirement, but with Roth IRAs, you pay tax now rather than later.  A traditional IRA may allow you to deduct at least part of your contributions if you qualify, but requires you to pay income tax on money you withdraw in retirement.

Who can contribute to IRAs? 

Traditional IRA - According to the IRS: You can contribute if you (or your spouse if filing jointly) have taxable compensation but not after you are age 70½ or older.

Roth IRA - The IRS reports that you can contribute at any age if you (or your spouse if filing jointly) have taxable compensation and your modified adjusted gross income is below certain amounts.

How much can I contribute to traditional and Roth IRAs? 

The IRS is clear: The most you can contribute to your traditional and Roth IRA is the smaller of:

$5,500 (for 2015 and 2016), or $6,500 if you’re age 50 or older by the end of the year; or your taxable compensation for the year.

What is the deadline to make contributions? 

The IRS stipulates that your tax return filing deadline (not including extensions) is the deadline to make IRA contributions.

When can I withdraw money? 

Whether you are the holder of a traditional IRA or Roth IRA, you can withdraw money at any time, although there may be penalties and taxes due. 

Do I have to take required minimum distribution? 

The IRS requires the owner of a traditional IRA to start taking distributions by April 1 following the year in which you turn age 70½ and by December 31 of later years.

If you have a Roth IRA, you are not required to take a minimum distribution if you are the original owner. 

Are my withdrawals and distributions taxable? 

Many deductible contributions and earnings you withdraw or that are distributed from your traditional IRA are taxable. Also, if you are under age 59 ½ you may have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.

For a Roth IRA, withdrawals and distributions are not taxable if it’s a qualified distribution (or a withdrawal that is a qualified distribution). Otherwise, part of the distribution or withdrawal may be taxable. If you are under age 59 ½, you may also have to pay an additional 10% tax for early withdrawals unless you qualify for an exception.