There’s no shortage of companies offering gold IRAs and other precious metals IRAs. So how do you choose? Start with the basics. Make sure you understand:
· What type of company it is. Is it primarily a precious metals dealer that also offers IRAs? Is it an education company that partners with IRA custodians?
· Who the custodian is. Typically, IRA providers partner with a third-party custodian to administer IRAs. Make sure you understand the custodian’s role.
· Who the depository is. IRA providers partner with depositories to store clients’ metals.
· How to fund the account. Does the company support IRA contributions, rollovers from other retirement accounts, transfers from other self-directed IRA custodians, or some combination of the three? Understand the differences among these options. For example, in a rollover, you may have a deadline by which to complete the transaction. In a transfer, the money moves directly from one custodian to another without going through your hands.
· How to select metals and place orders.
· What paperwork and disclosures you can expect.
· How to sell metals or request distributions down the road.
Take your time with the process, and be wary of anyone who rushes you into a decision.
Provider Structure and Long-Term Costs
Get the Full Picture of Fees
IRA providers’ fees can include account setup fees, transaction fees, annual fees, storage fees, shipping fees, and more. Be sure to ask for a breakdown of fees based on your intended investment amount. The breakdown should include one-time fees, ongoing fees, and the costs of any metals you’re interested in. Be sure to understand any nuances. For example, storage fees may vary based on the type of metal, the amount of metal you have, how it’s stored, or other factors.
Gold and silver investment metals
One important fee to keep in mind is the dealer markup, also known as the spread. It’s the difference between the price you pay for a product and the price a dealer would pay to buy it back from you. Some IRA providers make the bulk of their money from spreads rather than account-related fees. So don’t be surprised if a company with seemingly low fees turns out to have higher metal prices than other IRA providers.
Remember, the cheapest option isn’t always the best option. While you don’t want to overpay, a provider with low fees may charge poor prices on metals, offer a limited selection of products, make it difficult to sell metals, or have other drawbacks. Look beyond sticker price, especially waived or discounted first-year fees, and compare long-term costs.
Where Will Your Metals Be Stored?
Vague answers about how metals are held and stored should raise a red flag. IRS rules generally prohibit investors from storing their own IRA assets at home, so it’s important to understand the logistics. For example, are IRA assets stored in segregated or commingled storage? In segregated storage, specific coins or bars are allocated to and identified with your IRA. In commingled storage, your assets are stored along with similar assets belonging to other IRA owners, and your holdings are tracked on paper. Neither option is inherently better, but it’s important to understand the differences.
Finally, get a sense of how long the process takes from start to finish, including opening the account, moving money, buying metals, and confirming they’ve been received at the depository. Keep in mind that prices may fluctuate while your transaction is pending. Find out what happens if prices spike or plummet before your order is complete.
Products, Liquidity, and Customer Service
Know Your Metals Options and Beware of Flashy Sales Pitches
Gold IRAs can hold other types of precious metals, too, including silver, platinum, and palladium. Certain metals are eligible for IRA ownership, while others are not. Eligibility can depend on factors like metal purity. A trustworthy precious metals IRA company should be able to educate you on your options without focusing exclusively on the metals that earn it the biggest cut.
Precious metal coins and bars
Be wary of sales pitches that tout limited editions, rare coins, or other eye-catching investments as both retirement insurance and potential moneymakers. Just because a coin or bar is rare or collectible doesn’t necessarily mean it’s a good IRA investment or easy to sell.
Ask how liquid any investment is, meaning how quickly and easily you could sell some or all of your holdings, whether to rebalance your account, sell a portion of your IRA, or receive required minimum distributions later on. Some niche products may carry hefty markups and be more difficult to price and sell than mainstream, easily-recognized bullion. After all, you’ll want any investment to be useful, not just impressive.
Try Out Customer Service Before You Invest
Precious metals IRA salespeople should be able to answer straightforward questions in a timely, no-pressure manner. They should also be willing to provide documentation, including a detailed written breakdown of fees, without hesitation; knowing how to choose a gold IRA company means testing that transparency before transferring funds. Here are some warning signs to watch out for:
· Pushiness about moving your retirement savings
· Guarantees of future economic conditions or metals prices
· Suggestions that standard IRA rules may not apply to you
· Vague answers about how your metals will be stored
· Hesitancy to break down the costs of selling metals back to a dealer
Retirement account documents and metals
Retirement Strategy and the Final Comparison
Remember the Big Picture
Precious metals IRAs can play a role in retirement planning, but they’re just one piece of the puzzle. Precious metals don’t pay interest or dividends and can experience volatile price swings. Ongoing account and storage fees can also chip away at your returns over time. As you weigh the pros and cons of a gold or other precious metals IRA, consider how it might fit alongside your other investments, employer-sponsored retirement plans, emergency fund, insurance needs, debts, and so on.
Depending on your situation, such as if you have an unpredictable work schedule or lumpy self-employment income, you may put more or less of a premium on liquidity than someone with a more consistent income stream. Ultimately, the best IRA company is the one that best helps you pursue your own strategy, rather than shrouding fees, storage details, or investment risks.
Do Your Homework Before Transferring Money
Before transferring retirement funds to an IRA custodian, make sure you understand all associated account fees and services, dealer markups on metals, and buyback policies. For peace of mind, consider developing a side-by-side comparison of at least two IRA providers. Save any quotes, fee breakdowns, and other details you receive for your records.
