- Individual Retirement Accounts--or IRAs--are a great tool for retirement planning. The IRS created IRAs as a way to save for retirement. IRAs also offer deferred taxation. The owner of an IRA does not pay any income taxes or capital gains taxes on the money in the IRA until the money is withdrawn after retirement. Many types of investments are available for individual retirement accounts. Since the 1997 Taxpayer Relief Act, precious metals like gold, silver and platinum are acceptable investments for IRAs.
- Gold has been a stable investment for centuries and makes a good long-term investment. This precious metal is important for many industries and has many uses. Unlike other investments, as the demand for gold increases, so does the price. January 1998 was the start of physical gold being added to IRAs. There are several types of gold, but the two types the IRS accepts for IRAs are gold bullion and gold coins. But not all gold coins are allowed. The fineness of the gold coins must be 0.9999 percent. The gold coins must be legal tender. The acceptable coins include the American Gold Eagle, American Buffalo, Canadian Gold Maple Leaf, and Australian Gold Nugget. When the account holder reaches the age of half past 59, he can then sell part or all of his gold assets. The proceeds are taxed at the capital gains tax rate. If the account holder sells any of the gold before this age, there is a 10 percent withdrawal penalty fee.
- Some experts don't think that gold IRAs make good use of the tax advantages of IRAs. According to the "Personal Finance Magazine," Kiplinger says, "Precious metals produce no income. To make money, you must sell them for more than you bought them for--in other words, to take capital gains." Another issue is that the IRS requires the assets of an IRA to be held by a trustee or custodian like a trust company, bank or brokerage firm. Not all trustees or custodians are equipped to handle gold. If your current IRA plan does not accept physical gold, you will have to open a new IRA account with a company that does allow gold investments. There are also fees associated with gold. Physical gold has to be stored so there are annual storage fees. These fees are usually less than one percent of the total gold holdings. Other fees include insurance to protect against theft. Other fees may include maintenance fees or account set up fees. The IRS has many rules and regulations about IRAs and how these retirement plans can be used. It is important to keep abreast of any changes in the rules and not to depend on the trustee or custodian of your IRA plan.
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