In 1997, Tax Payer Relief Act and related laws made it possible for investors and retirement planners to add precious metals to their Roth IRAs, dubbing it a ‘gold Roth IRA’. Diversifying your portfolio is the key to remaining safe, during a down economy, so many investors are choosing to add gold to their IRAs, specifically their Roth IRA to help hedge some of the risk in uncertain times. Generally speaking, the price of gold will rise and fall according to the prices of stock, with gold rising as stock prices are falling, and vice versa. This balance helps keep your portfolio even during market fluctuations.
Before you can start adding gold and other precious metals to your IRA, you’re going to need to speak with your IRA custodian. You’ll need to find out if the IRA accounts that you’re currently holding are even eligible. If you find out that you aren’t, you’ll need to startup a new gold Roth IRA. If you need to startup a new gold IRA, you’ll want to make sure it is managed by an advisor or custodian who has plenty of experience in dealing with precious metals.
Submit the forms necessary for your new IRA custodian to finish opening the account, and pay any storage or assessment fees required by the IRS. These storage fees are added because the IRS stipulates that gold coins and bullion must be stored at a certified depository which is separate from where your IRA is being managed. You can begin transferring funds to the new gold IRA. If you need help with transferring funds, due to tax questions or other financial decisions, you’ll want to contact a certified accountant or tax professional. Once completed, you can choose between gold coins or gold mining stock and then let your custodian know which you want to purchase.
If you want other ways to add stock to your portfolio, you could also consider buying stock in mining companies, outright. This can be risky because mining companies close up shop quite often, but if their stock prices rise, you stand to make a lot more money from the investment over gold coins or bullion. Younger planners may be comfortable with the risk, but if you are near retirement age, you should stick with what is safe, and secure, unless you have the spare funds in your account to test the waters. All investment strategies involve some level of risk, and to hedge your chances for losses, you should always educate yourself on the fundamental principal of any strategy that you may plan to implement into your portfolio, including a gold Roth IRA.
Some excellent points in this article. I set up my precious metals IRA with a firm that specializes in self directed accounts.