Gold IRA Decisions: What to Check Before You Commit
Key Points(5)
- Precious metals IRAs aren’t for everyone.
- Compared to other kinds of retirement accounts that invest in mutual funds or stocks, precious metals IRAs tend to come with additional costs and complications.
- That said, if you do want to invest some of your retirement money in physical gold, silver, or other precious metals, choosing a trustworthy and experienced IRA services company is an important first step.
- Before you open a self-directed IRA with a precious metals services company, it’s a good idea to take your time and do some careful research.
- The last thing you want to do is feel like you rushed into an important financial decision and end up unhappy with your investment.
Precious metals IRAs aren’t for everyone. Compared to other kinds of retirement accounts that invest in mutual funds or stocks, precious metals IRAs tend to come with additional costs and complications.
That said, if you do want to invest some of your retirement money in physical gold, silver, or other precious metals, choosing a trustworthy and experienced IRA services company is an important first step.
Before you open a self-directed IRA with a precious metals services company, it’s a good idea to take your time and do some careful research. The last thing you want to do is feel like you rushed into an important financial decision and end up unhappy with your investment.
Rather than simply skimming over marketing copy or promotional ads, take a closer look at these important factors to help you decide which gold IRA company is right for you.
Services and Costs
Service Roles
When it comes to precious metals IRAs, there are a few moving parts involved. While the specifics may vary from one company to the next, in general, there are three main services at play: a precious metals dealer that sells bullion coins and bars, a precious metals IRA custodian that manages your self-directed retirement account, and an approved IRA depository that physically stores your metals.
Some IRA service companies offer all of these services in-house, while others use affiliated companies to fill one or more roles, a service distinction considered in best gold IRA companies comparisons. Neither option is automatically better than the other, but you should have a clear understanding of who’s offering each service (and who’s making money off each service) before you open an account with any IRA services company.
In other words, you should be able to answer questions like:
- Who will serve as your precious metals IRA custodian?
- Who will act as your metals dealer?
- Will your metals be stored in a segregated or commingled account?
- How will prices be determined when you want to make a purchase?
- What are your options if you want to sell?
- Who will take care of processing paperwork for rollovers, transfers, etc.?
The last thing you want is to be in the middle of an important transaction and realize you don’t have all the information you need to feel confident in your precious metals IRA services company.
Fees and Costs
When shopping around for a gold IRA services company, you may notice that some companies advertise special offers to help sweeten the deal, like a free account set-up if you meet certain requirements.
While it might make sense to factor these offers into your decision-making process, don’t let one waived fee sway you too much. Instead, take a look at the big picture and get a sense of all the fees and costs you can expect to encounter.
Depending on the company, you may run into costs and fees associated with:
- Account set-up
- Annual IRA custodian administration
- Storage
- Insurance
- Shipping
- Purchase or transaction processing
- Selling / liquidation
For each of these costs, try to figure out whether the fees are flat or determined as a percentage of your account or metal value. Percentage-based fees, such as those associated with storage, could go up as your account value grows, while flat fees are more predictable.
Finally, if you’re only planning on rolling over a small amount of retirement funds into your new IRA, look for any account minimums and make sure they make sense for your situation. An IRA services company that’s perfect for someone rolling over six figures might not be the best fit for you if you’re only investing a few thousand dollars and annual fees will take up a sizable chunk of your total investment.
Pricing and Eligibility
Pricing and Cashing Out
As with any investment, you’ll want to have a solid understanding of how pricing works with a gold or other precious metals IRA. For example, when you’re ready to make a purchase, most dealers add a premium to the underlying metal price. You want to make sure you’re comfortable with this premium and understand how it’s determined.
Likewise, it’s a good idea to brush up on a company’s buyback policy. While some companies do offer buyback programs, prices aren't guaranteed because they will vary based on the current market value of gold, silver, etc., as well as factors like the type of coin or bar you own, current demand, product condition, and so on.
To get a sense of how this all works, ask your IRA services company to walk you through an example: what will it cost you to purchase a particular allocation, and what would the process look like if you were looking to cash out down the road? If the answer you get is anything less than clear, that may be telling on its own.
Eligible Bullion and Storage
In order to be IRA-eligible, bullion products must meet certain requirements, including minimum fineness or purity levels. On top of that, your bullion must be stored with an approved custodian because you can’t just keep IRA-held gold at home.
The Bigger Picture
As with any asset, consider how a potential investment in precious metals might fit within your overall retirement investment strategy, including your timeline, liquidity needs, other investments, and tax considerations. And keep in mind that while they may provide some diversification benefits within a retirement portfolio, precious metals can experience dramatic price swings and don’t pay interest or dividends.
All of this is to say that there’s nothing wrong with considering an investment in precious metals as a small hedge within an otherwise well-diversified portfolio. But before rolling over a large percentage of your retirement savings into gold, take your time and find a provider you can trust.
What’s important to you? Maybe it’s low annual fees, segregated storage, a wide selection of IRA-eligible bullion, or an easy IRA rollover process. Whatever your top considerations are, we recommend making a list before you speak with any representatives to make it easier to compare services companies against one another.
Before Opening the Account
Get all the information you need from any services company you’re interested in, including the company’s fees, bullion pricing, storage options, and IRA rollover process, preferably in writing. The best IRA services company won’t necessarily be the flashiest; it will just be the one that clearly lays out all your options without guesswork.