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Understanding how a Precious Metals IRA works doesn't always come naturally to every investor. That's why we collected the most frequently asked questions about precious metals investing including: purchasing, funding and storing your precious metals. If you are considering precious metals as your next investment, or if you have been pondering some questions about how it all works, you may want to continue reading. Here are the questions and answered we collected:
THE BASICS
Q: Is a Precious Metals IRA different from a self-directed IRA?
- A: No, a Precious Metals IRA, or Gold IRA, is a type of self-directed IRA that invests and holds precious metals. When you choose to invest in precious metals with your IRA, you determine all aspects of the investment, including the type and kind of metal, the dealer from whom the metals are purchased, as well as the approved depository at which the metals will be stored.
- A: Precious metals can be held in your IRA in the form of physical gold, silver, platinum, and palladium bullion products.
- The precious metals allowed in an IRA must meet their respective minimum fineness requirement.
- Gold – 99.5%
- Silver – 99.9%
- Platinum – 99.95%
- Palladium – 99.95%
- Please refer to the Precious Metals Center website for more information on which metals are allowed in a Precious Metals IRA.
- A: Yes. When you establish an IRA with Entrust, you may invest your IRA funds into any alternative assets permitted under the Internal Revenue Code.
- A: No. You can only fund your account in the following ways: cash contribution, cash, and in-kind rollover or transfer from another custodian to Entrust.
- A: Technically, you do not own the physical metals; your IRA owns them. You may take a distribution in-kind at any time. However, it is a taxable event and you may be subject to the early withdrawal penalty.
- Some IRAs allow certificates. However, Entrust does not allow precious metals certificates.
- A: You may not take possession of the metals while they are held in the IRA. Metals purchased in an IRA are transferred directly into the depository in the name of the IRA. However, you may take a distribution of the precious metal assets, which is a taxable event and you may be subject to the early distribution penalty. There may be some restrictions for international holdings.
- A: The Internal Revenue Code requires that a custodian hold your IRA assets, including precious metals, to keep the assets in a tax-deferred environment.
- A: Entrust annually reports the value of the IRA to the IRS. Nothing else is reported to the government.
- A: There are two fees associated with establishing a new Precious Metals IRA at Entrust. Entrust charges an all-inclusive flat rate $150 annual record keeping fee, with no set-up cost and no additional transaction costs. You may accumulate metals over the years without any additional costs. There is also an annual storage fee from the depository you choose. Depending on the depository, these fees range from an average of $95 to $300.
PURCHASING & FUNDING PRECIOUS METALS
Q: How do I choose a precious metals dealer?
- A: Entrust does not sell or promote any products or vendors. Precious metals may be purchased from any dealer of your choice. Entrust strongly suggests that you perform a thorough due diligence on the dealer for security, including their business ratings, the dealer history, dealer affiliations, and proper review of the terms of agreement and pricing.
- A: Yes, you may purchase from multiple dealers of your choice.
- A: Because it is a self-directed IRA, you will need to negotiate the purchase price and the type of metals with the dealer yourself.
- A: Yes, any past employer or individual retirement plan can be rolled over or transferred to Entrust.
STORING PRECIOUS METALS
Q: How are my metals stored?
- A: Entrust does not store your metals. Entrust performs the recordkeeping and provide custody services for your IRA. The metals are stored in an approved depository. You may choose one of 5 depository companies (with 7 nation-wide locations) that are IRA approved, regulated, and insured facilities. The list of IRA approved depositories is available on the Precious Metals Center website, or you may contact the Precious Metals Center to request this list. Please note that these depositories are third parties and charge fees associated with their holding services.
- A: Entrust will email you when the metals are delivered to the depository. You may also track it through the Entrust Client Portal. Please keep in mind that once the metals have been purchased and shipped, it may take up to three weeks to fully process your precious metals purchase.
- A: Taking physical possession of metals while still in an IRA is not allowed by the IRS. Metals purchased in an IRA are transferred directly into your chosen depository in the name of the IRA. However, you may take a distribution of the precious metals assets, which is a taxable event and you may be subject to tax penalties. Please note that for IRAs with Entrust, you must choose one of 5 depository companies (with 7 nation-wide locations) that are IRA approved, regulated, and insured facilities. The list of IRA approved depositories is available on the Precious Metals Center website, or you may contact the Precious Metals Center to request this list.
- A: Entrust works with the dealers and the depository to ensure that the metals you purchased are accurately and successfully delivered to the depository. The dealer, depository and Entrust go through a multi-point verification process:
- The dealer sends the metals to the depository
- The depository determines if the metals received match the invoice
- The depository emails Entrust a delivery confirmation reporting the kind of metal and the quantity received
- Entrust enters the information into the clients account on the Entrust Client Portal
- If Entrust suspects discrepancies at any point in the process, we work directly with the dealer and depository to resolve the issues.
We encourage our readers to post any additional questions regarding Precious Metal IRAs or retirement planning in the comments section below. At Entrust, we make it easy to open a precious metals IRA. Our staff is experienced in working with IRA investors and metals dealers. We'll get you started quickly. Click here for a free consultation or please visit our Precious Metals Center for more information.
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