If you have a Roth IRA, then it might be of interest to you to learn how to invest in gold or any other precious metal. The current global economy is still uncertain and this has caused more investors to look for a more stable and safe place to store their money. Gold is becoming extremely popular among people looking to safeguard their retirement funds. However, investing in gold is a tricky process. Below is some basic information on how to safely invest in gold through a Roth IRA.
What is a Roth IRA?
A Roth IRA is a retirement account that has a few key differences from traditional IRA accounts. Roth IRA distributions are tax-free. This is the main difference over traditional IRA accounts. You will not be able to deduct contributions to your Roth IRA on your tax return, however the Roth distributions are not taxable when you retire.
If you have a Roth IRA, you can continue to contribute after you reach 70 years of age. You also do not have to take withdrawals. A traditional IRA will require you to start taking regular withdrawals at a certain age.
Roth IRA’s Investment Limitations
A person is allowed to contribute $5,500 dollars per year. One key factor to consider when looking at Roth IRA’s is that not all of them allow for a wide range of investment opportunities.
Usually you are forced to select from stocks, bonds, and mutual funds. This creates a complicated situation for people who are looking to invest in gold.
How to invest in gold through your Roth IRA?
There are several different ways to invest in gold through your Roth IRA. One popular method of gold investment is via exchange traded funds, or ETF’s. These are baskets of stocks that are in the gold industry. Sometimes the ETF will be comprised of stocks of gold mining companies. Other times the ETF will represent physical gold.
For investors who want to invest in an ETF that deals strictly with gold, and not gold miners, then the two popular choices are SPDR Gold Trust and iShares Gold Trust. These are both traded on the stock market. You can own either of these in your Roth IRA. There is nothing in the law that prohibits owning these funds.
Roth IRA Rollover to a Gold-Backed IRA
One popular way to have full control of your gold investment and invest in physical gold bullion coins and bars is to do a rollover from your current Roth IRA to a Gold backed IRA (Also known as Precious Metals IRA). This will give you many more options as to what type of gold you want to purchase. Various gold bullion coins and gold bars, such as the American Gold Eagle or the Canadian Gold Maple leaf, will become an option for you at this point. Contact a Precious Metals IRA company to learn more about how to achieve a rollover or transfer of your current Roth IRA. Note that the IRS allows you to open a separate IRA for precious metals without any penalty.
Type of gold you are allowed to hold in a Roth IRA?
There are two types of gold investment you can have in a Roth IRA. You are allowed to invest in either gold backed mutual funds, or gold backed exchange traded funds. You are not allowed to own physical gold bullion in a Roth IRA. (See note above)
The way most investors circumvent this law is to buy a fund that represents physical gold. Funds such as GLD and IAU fulfill that desire. However, if you still want to own physical gold, then you are going to need to create a self directed IRA. This will allow you to own physical gold.
Even then, you will only be allowed to invest in investment grade gold and not collectable gold. This means that you cannot purchase collectible coins and use them in your IRA. The gold coins must be at least 99.5% purity in order to qualify.
Get Your Free Gold IRA Kit to Learn More
There are many other things you need to know when it comes to Roth IRAs and gold investing. Since we cannot cover all of them on this page, we highly recommend that you request the below kit, offered free of charge in partnership with Regal Assets, one of America’s top Gold IRA investment companies.