Is a gold IRA safe? Is there anything that you should keep your eyes open for as you get started with precious metal investments through an IRA? Welcome to yet another interesting article, in which we shall be answering the highlighted questions in depth. If this sounds interesting to you, then read on to get the answers you’ve been looking for.
P.S.
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Getting the right companies to serve your needs
Much of what there is to be said about the safety of your gold IRA investments has to do with how well you manage to research your broker or custodian. As you may have already established, one needs to create a self-directed IRA to invest in gold using the IRA approach. A self-directed IRA, or SDIRA as popularly referred to, is a special kind of IRA that gives you more freedom to invest in a wider variety of assets, that you can also allocate at will, within the set guidelines.
For a gold IRA, you may need a broker to purchase the gold for you, and a custodian to create and oversee/administer your account. The custodian is also in charge of storing or holding the gold for you since storing them at home or your own vault is prohibited by the IRS. Custodians are usually financial institutions that have been approved by either the federal or state authorities to offer custodial services to individual investors as well as financial advisors. They include:
- Banks
- Trust companies
- Credit unions
- Brokerage firms
- Savings & loans associations
Note that custodians do not usually select the precious metals for their IRA clients. This is a responsibility that is left to the investor. That said, however, most well-established custodians have good relationships with hundreds if not thousands of legit precious metal dealers throughout the country, and are usually more than willing to share that list with them.
Sometimes, it can work the other way round, in that your precious metal dealer can recommend a reliable IRA custodian. You, as the investors, are however free to pick your very own custodian. This process can be quite complicated since it is a specialized service that most brokerage firms do not offer. In order to narrow down on a safe and reliable custodian, however, you’ll need to look out for the following:
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Transparency
You need to know all your costs upfront so that you can avoid all nasty surprises, which include hidden fees that can pop up right after you invest.
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Flexibility
A reliable custodian should also be flexible, and willing to accommodate your goals and needs. A one-size-fits-all gold investment solution may either slow you down or strain your financial resources.
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A proven track record
Investors need to look for firms that have an outstanding reputation. You can find reviews of many companies here on Gold Retired (our reviews are unbiased and well-researched), or you can turn to consumer trust sites such as Business Consumer Alliance, and Better Business Bureau. It is helpful to take your time to see what other customers are saying about the company, more so the complaints that have already been filed. Also look for firms that are providing sufficient educational resources, without necessarily pushing hard sells.
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Qualifications
It is always good to only deal with a company that has sufficient registration documents, including:
- Operating licenses
- Registration
- Insurance
- Bonds
If a company cannot prove that it is genuine by providing registration information, then it may not be worth considering. You may have to hunt for a company that readily provides its qualifications to offer services in the gold IRA investment industry.
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Special Costs that gold IRAs attract
Owning gold will, of course, come with some special costs, though you’ll find that these costs are not exaggerated in most well-established firms. Here are some common costs you should expect:
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Seller fees/markup
As much as gold has its going rate, you’ll find that the investment products ( bullion, coins, proofs) cost more. The markup may vary from one dealer to another, though most of them are usually striving to keep these fees as low as possible by purchasing the gold directly from recognized mints in wholesale.
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IRA set up fees
Most gold IRA service providers will charge you a one-time account setup fee that varies from one company to the next one.
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Custodian fees
You’re required to pay custodian fees annually so that your custodian can administer your gold IRA smoothly. The fees may be higher for a gold IRA, in comparison to other types of IRAs, so you should not be very shocked upon learning this. Again, the best gold IRAs in the industry strive to keep these costs as minimal as possible.
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Gold storage fees
Investors also have to meet the costs of storing gold in safe storage facilities. These may be charged annually or monthly, depending on the company you’re dealing with.
When you encounter the above fees, you should not necessarily perceive that company as being fraudulent, or incapable of not compromising on safety. You should, instead take the time to research about available alternatives, so that you can go with the one that charges the lowest fees (or the most reasonable fees) without compromising on the quality of services delivered.
Another thing that should be wary of is companies that promise to buy back your gold whenever you’re ready to cash out your investment. The common guarantee is that your bullion or coins will be purchased at wholesale prices. You could, unfortunately still end up losing some money by closing your account. The IRS is actually not for companies giving such guarantees, so you should tread carefully with such. This is not to mean that a company that guarantees to buy back your gold is automatically a scam, since some of the companies in this category have managed to successfully hold their end of the deal at the end of the investment period.
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Thank you for making it to the end of this article in which we have answered the question “Is a gold IRA safe?”. Hopefully, you found it informational and now you’re better equipped with the knowledge to help you make a decision as to whether to invest in gold through an IRA or not. What are your thoughts on gold IRAs? Are you planning to open one? Do you have any questions about how to do so? Drop your questions in the comments section so that I can respond to them ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired!
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