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Precious Metals In Your IRA
Written by Andy Schectman
Individual Retirement Accounts (IRAs) and other self-directed retirement accounts are wonderful vehicles for building retirement assets. They are exempt from all capital gains taxes, which if your investments perform well over several decades can result in enormous savings. In addition, in a traditional IRA the money you invest is subtracted from your taxable income, although you do pay income tax on withdrawals during retirement.
Diversifying your retirement portfolio with precious metals can be an insurance policy against such events as wars and terrorism, inflation and deflation, and downturns in the stock market and the US dollar. Precious metals often yield large profits in these circumstances.
Once you decide that you want to include precious metals in your retirement planning, you need to determine how much you want to invest. How much depends on your annual contribution, your personal goals and your individual investment philosophy. Factors to consider are your age, total assets and risk tolerance.
Very few institutions are set up to handle the precious metals component of retirement plans. One of the leaders in the field is GoldStar Trust Company. Miles Franklin Ltd. recommends GoldStar Trust Company for investors who want IRAs that will accept precious metals. GoldStar serves as custodian for approximately 20,000 self-directed IRAs with assets in excess of 700 million. Our experience with GoldStar has always found their personnel to be professional, courteous and helpful. Additionally, GoldStar-administered IRAs are economical. GoldStar is not a coin dealer, but it will work with Miles Franklin who buys and sells precious metal coins and bullion for your IRA on your instructions.
Establishing an IRA with GoldStar Trust Company
Setting up a self-directed IRA with GoldStar is quite easy. First, call your Miles Franklin Ltd. Representative at 1-800-822-8080 and request an IRA packet. We will promptly mail to you an official GoldStar Trust Company information packet, which includes an application and other necessary forms. Afterwards there are only three steps to follow.
1. Submit the completed paperwork.
2. Fund the account.
3. Direct your Miles Franklin Ltd. broker which precious metals to buy.
Step #1 involves completing the paperwork and sending a check for $180 to GoldStar. The $180 takes care of GoldStar’s first year’s annual fee ($50), the first year’s storage ($90), and the initial transaction fee ($40.) After that, GoldStar’s annual fee is only 1/10 of 1% of your IRA’s asset value, with a minimum of $50 and a maximum fee of $150.
The metals are stored at HSBC Bank ’s New York precious metals depository, which is one of the world’s largest and is used by COMEX and other major commodities exchanges. (HSBC is one of the world’s largest banks with more than 6,000 offices worldwide.) Annual storage fees are charged at a flat fee of $90 per year regardless of the size of the account. (See "Financial Disclosure" on the IRA Fee Schedule, which comes with the IRA packet.)
Step #2 involves completing the proper forms to transfer the funds to GoldStar. Normally, the funds are transferred directly from an existing IRA or Qualified Retirement Plan.
In Step #3, the IRA investor directs Miles Franklin Ltd. which precious metals to buy. After Miles Franklin Ltd. delivers the metals to the depository, GoldStar pays Miles Franklin Ltd., and the IRA investment is complete.
What is eligible for a precious metals IRA?
American Gold Eagles are the only gold coins specifically approved for IRAs. Other gold coins, to be eligible as IRA investments, must be at least .995 fine (99.5% pure) and be legal tender coins. This provision puts Canadian Gold Maple Leafs, Australian Kangaroo Nuggets, Austrian Philharmonics and the Perth Mint’s Lunar Series on the approved list. Also approved are, minimum .995 fine gold bars, fabricated by refiners approved by The Commodities Exchange (COMEX).
Conversely, many gold coins, such as Krugerrands (91.67% pure) and old gold coins (90% pure), are not legal investments for IRAs.
American Silver Eagles are the only silver coins specifically approved for IRAs. The .999 fine clause makes Canadian Silver Maple Leafs, Australian Kookaburras and the Mexican Libertads also eligible. Bullion bars are acceptable as long as they were fabricated by COMEX- or NOMEX-approved refiners. This is necessary for the bullion to be stored and recorded at the custodial facilities of HSBC. Pre-1965 US 90% silver coins are not eligible for IRAs.
Platinum coins are eligible for your IRA as well. American Eagle Platinum bullion coins, including Proof versions are most commonly used in IRAS. Also acceptable are minimum .9995 fine platinum legal tender bullion coins such as the Australian Koala, Canadian Maple Leaf, Isle of Man Cat and Isle of Man Noble. Platinum bars that are minimum .9995 fine and fabricated by refiners approved by The New York Mercantile Exchange (NYMEX) are acceptable as well.
Last but not least, minimum .9995 fine palladium bars fabricated by refiners approved by NYMEX are accepted.
The distribution golden bonus!
Precious metal investments offer a stable foundation for safety and security. Once an investor reaches age 70 1/2, a required minimum annual distribution will apply. Here is where a little planning comes in handy! Believe it or not, when it is time to receive your required distribution, you can actually take it in the form of metals from your IRA account. For this reason, we love the American 1/10th oz. Gold Eagles and the American 1 oz. Silver Eagles-so when the time comes, you can maximize what you can take out in actual gold and silver. You will be responsible for any shipping charges from GoldStar if you choose that option.
Please call your Miles Franklin Representative at 1-800-822-8080 if you wish to start a precious metals IRA account with GoldStar Trust Company.
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