Investing in precious metals can potentially be a good way to diversify your retirement portfolio, however, the companies that sell precious metals are not all created equal. Truth be told, it is an industry that is not at all regulated. Stop and think about that for a minute – ZERO regulation. These are companies selling you investments that will affect your future retirement. These are companies that are not licensed or registered to provide investment or trading advice. This may be why the industry has been so highly scrutinized in recent years – specifically when it comes to the pricing and the delivery of the metals you purchase.
BEFORE YOU INVEST IN PRECIOUS METALS
These are important factors to consider when selecting a dealer.
The daily spot price of metals can be found through various web sites such as https://bullionvalues.org/. These prices are important to know as you compare precious metals dealers as some dealers persuade investors to purchase metals at premiums between 40%-200% above the spot price. This can cause a heartache for clients that need to liquidate their investment when the dealer offers to purchase back the metals at a fraction of the original cost.
Many dealers have designated themselves as “IRA experts” when they have no license to do so. IRA Custodians are licensed and regulated by the Internal Revenue Service (IRS) and the Department of Labor (DOL). Precious Metals dealers are commissioned salespeople paid according to the products they sell. They have no fiduciary responsibility to you.
Most states have commodity laws that require that each commodity purchased under a contract must be delivered between 7 and 28 days. The US Commodity Futures Trading Commission issued a report to help consumers identify fraud related to precious metals dealers.
Precious Metals Dealers
Not all precious metals dealers are created equal. The companies listed below have a proven track record with our clients in providing superior customer service, reasonable pricing, and delivery of metals in less than thirty days. It is up to you as the IRA account owner to do your due diligence and research the companies you are considering working with to purchase precious metals as an investment in your IRA.
Strategic Wealth Preservation (SWP) is an offshore precious metals dealer and secure storage facility headquartered in the Cayman Islands. We specialize in the sale and secure storage of precious metals for individuals, companies, and Individual Retirement Accounts (IRAs).
SWP has partnered with Preferred Trust Company to offer American investors the opportunity to purchase and store precious metals held in a self-directed IRA, both in the United States (Texas or Delaware) or offshore in the Cayman Islands.
Contact us for more information by emailing firstname.lastname@example.org or by calling 1 (888) 445-1977. We look forward to speaking with you about your precious metals IRA.
St. Joseph Partners is an active proponent of our military, police and first responders, leading a volunteer brigade of over 100 nationwide who weekly endeavor to support and protect those who risk their lives for us.
Our investment platform is a competitively priced gold & silver dealer offering IRAs, domestic and international storage, safe installations and the full spectrum of precious metals brokerage services. We actively buy all forms of precious metals.
If you are interested in buying or selling gold or silver, compare us with other dealers – we will make your precious metals experience convenient, efficient, safe and pleasant.
Roles & Responsibilities to Having Precious Metals Investments
Asset diversification is crucial when it comes to selecting the investments that will create a strong and viable retirement portfolio. Precious metals are one type of asset that provides you with the opportunity to invest in something tangible that can weather a financial crisis. Investing in gold, silver, platinum and/or palladium minimizes your exposure to losses when other types of investments lose value. Unlike stocks and bonds, precious metals have inherent value and, metals can be held for an infinite amount of time. You control the ability to purchase and sell the metals in a tax-deferred or tax-free (Roth IRA) environment until which time you decide to withdraw your bullion or coins and take direct physical possession of them.
When you hold Precious Metals in a Self-Directed IRA there are 3 components to maintaining a compliant account with Preferred Trust Company.
Minimum Account Balance
It is the policy of Preferred Trust Company that all accounts maintain a minimum cash balance of $500.00. The minimum cash balance cannot be used to pay fees. The minimum account balance can only be obtained by transferring funds from another Qualified Retirement Account, making a contribution to the account, or selling precious metals to ensure your account complies with the policy.
Annual Depository Fee
Your precious metals are stored at a third-party Depository. The Annual Depository Fee associated with the storage of your precious metals is considered an expense related to the investment and must be paid directly from your IRA. You cannot pay the Depository directly for this fee. The Annual Depository Fee can only be obtained by transferring funds from another Qualified Retirement Account, making a contribution to the account, or selling precious metals to ensure your account complies with the policy.
Annual IRA Account Administration Fee
If your self-directed IRA exclusively holds precious metals as the only asset the Annual IRA Account Administration Fee is $300.00 a year. This fee is due in the month prior to the anniversary date you established your IRA account with Preferred Trust Company. The Annual IRA Account Administration Fee can be paid by credit card, check or wire. If you elect to send a wire, you must also include an additional $30.00 Wire Fee to the amount you are wiring.
Determining a Fair Price for Precious Metals
A spot price is typically defined as the current market price for which a commodity can be bought or sold in the present moment. The spot price of precious metals, gold, silver, and platinum each have their own spot price per one ounce that fluctuates throughout the day.
The bid price is how much a dealer is willing to pay for your silver, while the ask price is how much they are asking in terms of gold, silver, platinum, or palladium. The spread between the two prices is largely determined by market conditions and dealer preference.
IRS Approved Precious Metals
In 1997, Congress passed the Taxpayer Relief Act which expanded the precious metals holdings allowable in IRAs. Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce US gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, platinum, and palladium bullion. Proof coins must be encapsulated in complete, original mint packaging and include the certificate of authenticity. Small bullion bars must be manufactured to exact weight specifications and non-proof bullion coins must be in brilliant uncirculated condition and free from damage.
Gold must be 99.5% pure and must be produced by a refiner/assayer or manufacturer that is certified/accredited by NYMEX or COMEX and meets minimum fineness requirements.
Silver bullion bars must have a minimum pureness of 99.9% and must be produced by a refiner/assayer or manufacturer that is certified by NYMEX or COMEX.
Platinum bullion bars must have a minimum pureness of 99.95% and must be produced by a refiner/assayer or manufacturer that is certified by NYMEX or COMEX.
Palladium bullion bars must have a minimum pureness of 99.95% and must be produced by a refiner/assayer or manufacturer that is certified by NYMEX or COMEX.
Precious Metals Depositories and Storage Options
Selection of the precious metals storage facility is an important part of the investment process. It is up to the account owner to perform all necessary due diligence related to the depository.
Per the IRS, precious metals invested using your IRA must be held in the physical possession of a bank or an IRS-approved nonbank trustee. You may not personally store the precious metals that are owned by your IRA. This rule also applies to indirect ownership through an IRA owned LLC. Specific factors to consider when selecting a depository include location, security, licensing, insurance, storage fees and types of storage offered; segregated vs. non-segregated. It is important to understand that the custodian of your IRA does not physically store your precious metals. They are a separate entity.
Some depositories only provide segregated storage options for certain types of coins and bullion while others don’t offer segregation. It is important to understand the different depository storage options prior to purchasing the metals.
With segregated storage the bullion is inspected, packaged, labeled, and stored, physically separate and apart from the bullion of other Preferred Trust Company clients. Typically the cost of segregated storage is more than the cost of non-segregated store. The segregation of metals guarantees that you will receive the same exact bars or coins that were originally purchased upon distribution.
With non-segregated storage, fungible bullion products (which by nature are commercially interchangeable) are inspected and stored in high-security vaults. Clients that select non-segregated storage benefit from significant cost savings because the bullion is stored in bulk.
The storage of your precious metals investment at a depository will also incur a separate fee. Custodians and depositories work independently of each other and have separate fees for their services. Most storage facilities provide an invoice to the custodian annually while others bill quarterly. Since the cost of storage is a direct an expense associated with the investment the fee must be paid from qualified funds; this means that you cannot use a credit card or pay the depository directly.
Please visit our Investment Services page to learn more about specific depositories.
Required Minimum Distribution (RMD) with Precious Metals
At some point in your lifetime, you will be required to distribute the assets in your retirement account if you have a Traditional IRA. Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that they reach age 73.
So what happens if you’ve invested 100% of your retirement dollars in precious metals? You have two options:
You can take an in-kind distribution of the metals, but this will cost you. Not only will you incur processing fees assessed by the Custodian, but you will be responsible for paying shipping and handling costs for the depository to send your metals to you. Shipping costs alone can be astronomical and if you’ve drained the cash in your IRA account you will not have the funds necessary to pay the shipping costs associated with the investment, which costs are required by the IRS to come from the IRA. If you are under the age of 73 then you could contribute to the IRA to proceed with an in-kind distribution. If you are over the age of 73, the second option is your only option.
Option two involves selling a portion of your precious metals. This is probably the worst-case scenario since you may not be able to recoup the amount you paid for the precious metals – especially if you purchased them within a few years of needing to process an RMD. The saying continues to ring true today, do not put all your eggs in one basket. Having some liquidity in your IRA account when you have non-income generating investments can make a significant difference between your ability to build your retirement, taking a loss, or potentially disqualifying your IRA account.
These are great reminders that Precious Metals dealers are not custodians. They have nothing to do with the administration of your IRA. Reaching out to them to assist you in completing documents and forms related to a distribution is not a good idea. You should always contact the custodian directly. Custodians are trained and licensed to help you complete the correct forms and explain all your options.
As a self-directed custodian, Preferred Trust Company does not endorse, offer, or sell any investments. Preferred Trust Company does not provide any tax or legal advice. Resources are provided for general information. We strongly recommend that the investor seek professional advice from the appropriate legal, accounting, and / or tax professionals prior to making any investment decisions. Selection of the investments and the performance of those investments are the sole responsibility of the investor and not Preferred Trust Company.