Including Precious Metals in a Self-Directed IRA for a Golden Nest Egg

Published on June 20, 2019

Are you looking for a way to lay a golden nest egg? If you’re a self-directed investor seeking another alternative asset to diversify your retirement portfolio, you might consider precious metals. Precious metals have historically been an excellent way to diversify investment holdings and preserve capital.

Some reasons to consider including precious metals in a self-directed IRA (also known as a precious metals IRA) are that gold and silver can be good hedges against inflation (when paper currency is devalued) and precious metals are a good hedge against stock/bond/treasury bill volatility, since their values typically move independently of the stock market.

What some people don’t know is that not all types of metals can be held in a self-directed IRA. In order for precious metals to be eligible, they must meet certain requirements as outlined in IRC 408(m)(3). The metals can be owned in bullion form (e.g. bars) that meet a minimum fineness, or they can be in certain approved coin form—one, one half, one quarter, one tenth ounce U.S. gold coins, and/or one ounce silver coins minted by the Treasury Department.

These coins, bars and bullion are hard assets (as opposed to investments on paper) and they are held in an off-site depository that specializes in holding precious metals. To learn more about the types of precious metals allowed in an IRA, download our free guide here. Please keep in mind that the metals cannot be stored with the account holder.

Getting started with a precious metals IRA

If you are just getting started, you must first open a new self-directed IRA with a custodian and then fund the account in one of three ways:

1. Transfer funds from an existing IRA
2. Roll over funds from an employer sponsored plan (401k, pension plan, etc.)
3. Annual contribution

For clients opening a new precious metals IRA at Next Generation, our helpful guide will walk you through all the steps on how to purchase precious metals with your IRA. As outlined in the guide, once your self-directed retirement plan is open, there are a few actions to take:

• Decide which metals to buy – as noted above, your IRA can invest in certain coins, bullion, and bars. Research all your options in order to comply with IRS regulations.
• Select a dealer – we suggest you carefully research precious metals dealers to ensure you are getting the product and quality you expect.
• Choose the depository – this third-party storage facility must be IRS-approved. Depositories are equipped to safeguard your valuable investments under proper conditions, with a high level of security, inventory audits, and reporting. You may choose segregated (private) or non-segregated (communal) storage. As with all aspects of self-directed investments, the account holder is responsible for researching and selecting the depository, and providing instructions to the plan administrator. At Next Generation, we have a relationship with Delaware Depository, should our clients wish to use that entity.

• Direct your custodian to make the purchase – upon completion of your initial paperwork and asset review, the IRA custodian will execute the transaction (including payment from your account) and the dealer will ship the metals to the chosen depository.

You may liquidate your precious metals holdings at any time; and with a precious metals IRA, the account holder has the option of taking required minimum distributions in the form of bullion.

If you have questions about opening a self-directed IRA and including precious metals as one of the many nontraditional investments these plans allow, email us at NewAccounts@NextGenerationTrust.com, call (888) 857-8058, or visit https://www.NextGenerationTrust.com.