Many people are convinced that putting gold in your individual retirement account (IRA) is a good idea. On the surface, gold in your IRA diversifies your assets and seemingly provides financial stability in uncertain times.
In reality, putting gold and silver in your IRA unfortunately has more cons than pros.
First of all, one of the most attractive features of owning gold is that it’s not in anyone else’s possession and you can access it at will. Putting your gold in the possession of a custodian, or a company that is legally permitted to handle accounts such as IRAs, means you have to go through another party to access your gold and silver assets in the event you may need them. Now you have paperwork standing between you and your precious metals.
Another inconvenience is if you want to hold gold in your IRA, you’ll need to set up a self-directed IRA and find a specialized self-directed gold IRA custodian. You can’t use standard custodians like Fidelity, Schwab or TD Ameritrade.
Secondly, maintaining gold in an IRA is rife with extra fees that defeat the purpose of owning any gold in the first place. The custodian charges you a fee for storing gold, which can range from a flat fee for management to varying charges dependent on what you invest in. You’ll also have to pay taxes on the value of your account upon withdrawal. After paying so much in fees, you might barely break even on your investment. You may even end up paying more than what your precious metal assets are worth. You’ll need gold and silver to appreciate significantly in order for you to profit from them, which isn’t something you can always count on.
Last but not least, there’s a required minimum distribution (RMD) for all non-Roth IRAs, after you pass age 70. The gold in your IRA will need an official valuation to determine your annual RMD. You will have to sell some of the gold to make the RMD if this is your only IRA account or if your other accounts have insufficient funds. Your precious metals should be accessible and free to be utilized as much or as little as you please, not controlled by a custodian.
Cut out the expensive middleman and don’t put gold and silver in your IRA.
Your investment should provide you with financial freedom, not be limited or subject to so many conditions and requirements. Putting gold and silver in your IRA is too complicated for how little benefit there is to it. It defeats the purpose of owning gold and the purpose of having an IRA.