How much does it cost to start a gold ira? This is one of the most commonly asked questions by people who are thinking about opening gold IRAs. I shall address this question at length in today’s post, so if you are here to find out how much it will take to open your new precious metal IRA, read on till the end to find out more.
Deciding to save and invest for your retirement can come with a lot of questions. Two of the most commonly asked questions that most investors raise are:
- How much will it cost me?
- How much will be the returns?
While it is hard to address the type of returns that one should expect, owing to the ever-changing global economic landscape, we can easily identify the costs associated with opening a gold IRA.
It is important to identify and quantify the fees and charges it will take for you to open and maintain your gold IRA since they can easily eat into your capital gains, and even lead to you having zero or negative returns at the end of the investment period.
Some of the most common fees that you should expect to pay when opening your gold IRA with any type of Gold IRA service provider include:
- Account setup and admin fees
- Precious metal product markups and commissions
- Yearly maintenance fees
- Storage fees
Gold IRA Setup and Admin Fees
Whereas you are not mandated by the IRS or the government to pay rollover or transfer fees as you move your funds from your existing retirement plan to your precious metal IRA, this does not mean that there are no account application fees to be expected.
You will often find that gold IRA custodians and administrators of gold IRAs will charge a certain fee that they refer to as the processing fee, in order to create the account. Generally, the administrators will charge different amounts based on the account features. In most cases, however, you should expect to part with around $50 in setup and admin fees.
Gold markups and commissions
There are a couple of commissions that are involved during the buying of assets using gold IRAs. You have to be ready to part with the transaction fees to cater for the purchase or sale of precious metal products through their account. These fees are often assessed on a per-transaction basis.
The more the products you purchase and sell, the higher the fees you can expect to pay. There’s no avoiding transaction fees regardless of the type of administrator you choose. The administrator or custodian is merely passing on the costs from the bullion or coin dealers, as they do the transaction on your behalf. Every time the account custodian completes the transaction on your behalf, they charge a small commission, usually about $40 per transaction.
The commissions should not be confused with markup fees over the precious metal spot prices that the precious metal dealers also often assess. In addition to the value of the precious metal products that you purchase, you will be expected to pay a premium. The premium is usually on top of the spot price of the gold, silver, platinum, or palladium bars, and may vary depending on factors such as:
- The product in question
- Current demand for the product
- The precious metal dealer’s financial objectives.
Annual account maintenance fees
Your gold IRA custodian cannot merely rely on the account setup fee that is payable only once, to oversee your gold IRA account activities. They will also request you to pay the yearly account maintenance fees, which are meant to cover:
- The administration of the account
- Processing of financial statements
- Record keeping
- Reporting to the IRS
These fees vary widely, but the typical range is $75 to several hundred dollars per year. It is a good idea to check and confirm the annual account maintenance fees. Your gold IRA custodian should clearly spell out these fees and should tell you about the means of communication they will use in case there are any changes.
Some admins and custodians offer discounted annual maintenance fees in the first year. Others discount the fees based on how big the account size is. Beware of the custodians who use sliding scale fees models to arrive at the annual fees, since these may lead to you having to pay more money for investing in larger quantities of gold and silver.
You may not even realize it, but the fees charged based on this model may end up becoming exorbitant. If anything, you should stick to a company that has reasonable flat fees, so that you don’t have to worry about giving up a lot of your funds to meet such expenses.
The IRS-approved depository will also request that you pay the annual storage fees to ensure that your precious metals are safely stored. Remember that all your gold, silver, platinum, and palladium products invested through a gold IRA must be stored in an IRS-approved depository that has off-site vaults, and that is separate from your account custodian.
Precious metal depositories usually charge the annual storage fees, and all that your account custodian does is pass them to you. Note that the fees you end up paying are dependent on the depository you select. In most cases, these fees will range from 0.5% to 1% of the value of your account holdings annually, an amount that is based entirely upon the dollar value of the type of asset you own.
Some depositories may also have differing fee schedules, depending on the type of storage that you choose. There are two types of storage, which are:
- Aggregated storage in the general vault
- Individualized segregated storage
Frequently asked questions on “The cost to start a gold IRA?”
1. How much, therefore, does it cost to start a gold IRA?
The fees required to start a gold IRA vary. There is no fixed amount of money that every investor can expect to pay to establish and maintain this unique investment account. The differences in the fees arises from:
- The different account setup fees ( from one custodian to the next one)
- Varying account maintenance fees
- Different markups and commissions
- The differing storage fees
- Unique customer needs
2. Which other fees should I expect to pay?
There are also some miscellaneous fees that you must expect, such as wire transfer fees. Most IRA custodians will assess funds that you need to wire to them or to the precious metal dealers. Wire transfer fees may cost you about $25 for any outbound transaction that you initiate. You should request your gold IRA custodian to also disclose all miscellaneous fees as well during the account opening, to avoid getting hit with extra fees that were not previously brought up.
3. What about taxes?
For starters, you may end up paying the taxes during the account opening process, or at the end of the investment horizon. This is all dependent on the IRA structure you choose, i.e. a traditional Gold IRA or a Roth Gold IRA. With a:
- Traditional gold IRA – you pay the taxes at the end of the investment period
- Roth Gold IRA- the fees are paid at the start of the investment period.
4. How long does it take to open a Gold IRA?
The gold IRA application process is quite short with most companies, and you can actually complete it in about 10 to 15 minutes. The account processing is also fast and can take about one business day for it to be completed.
From there, everything else depends on how fast you will fund your account. As long as you have a fast and reliable gold IRA custodian, the transfers and rollovers should take about 10 days to complete. Note that funding the account through a mailed physical check may take longer.
Also note that the timelines are bound to vary from one company to the next, so you should not take it up with your custodian if they take longer than you expect even when the delay is justifiable, or as a result of the way they have structured their account opening process.
That will be all for today’s post on “how much does it cost to start a gold IRA?” Did you find it informative? Do you have more questions about this topic? Kindly let me know by dropping me a comment in the section below, and I will respond to you as soon as I can.
I wish you well,
Eric, Investor and Team Member at Gold Retired!