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Precious Metals IRA – How to Buy Physical Gold The Right Way And Avoid Trouble

Learn How To Purchase Physical Gold and Silver Step-by-Step

Although some restrictions apply to a precious metals IRA, you are able to purchase both Physical Gold, Silver and other precious metals inside your IRA.

Well, it’s true you do have the option of holding physical gold and silver in a retirement account, and it’s a very straightforward process. Precious metals can be highly advantageous alternative assets. However, when you decide to buy gold, silver, platinum, or any other precious metal inside your IRA retirement portfolio, there are some steps that you want to take.

The Process Begins with a Thoughtful Investing Strategy & Research

Before setting up an account or rolling over a 401k, you need to think ahead of time as to what you are placing into the portfolio of your IRA. You also need a comprehensive, personalized investment strategy because each item you purchase is going to have a financial impact one way or the other. The only way to be sure you know what are buying and whether or not it fits your financial goals is to do your due diligence.

Setting Up The Appropriate IRA Account and Funding It

Next, is to establish an Individual Retirement Account with a trusted IRA company who can act as a custodian. Once you have funded your precious metals IRA account, you will want to begin researching precious metals brokers. There are many metals brokers out there, so make sure that you choose one that you are comfortable with investing. Make sure to do your research, and you know what you’re buying before committing any funds.

Note: Once you decide that investing in metals is right for you, make sure you choose an IRA custodial firm that will allow you to add physical metals to your retirement account.

When you have an IRA, you can fund it in many different ways. This is a step that you have to figure out based on your current financial situation. It can be a rollover from a 401k account or an inherited IRA account that you roll over. It can also be funded by direct deposit or through a checking or savings account.

Once the money has been deposited, you can decide what the money is used for regarding investments. This is critical because your IRA is self-directed, you decide where to direct the funds. This means that you can choose stocks or you can choose other allowable assets, such as precious metals.

Precious metals are considered a secure tangible asset because you can access them at any time and since they have stood the test of time. Metals will likely always remain as a form of currency so that it may be a viable option for you in comparison to paper assets or more specifically non-tangible assets, such as stocks and bonds alone.

Options for Purchasing Physical Precious Metals in an IRA

You have two options when it comes to buying the precious metals in your retirement savings account.

Purchase Directly From a Standard Self Directed IRA

The first option is to have your IRA custodian hold them for you in the name of your IRA. Set up the account, fund the account, and choose the metal broker of your choice. You would send a direction of investment from you custodian to the brokerage company to let them know who will be providing the funding. An invoice will be used to ensure that everything is accountable.

All precious physical metals owned by an IRA should be held with a federally regulated depository, such as Delaware Depository.  To get the process started, you would open your IRA account with an IRA custodian and fund the account by rolling over an existing retirement account or fund it with new contributions.

Precious Metals IRA Step-by-Step Checklist:

Once the precious metals IRA account is funded, you will need to follow these steps.

  • Locate a precious metals broker or dealer to purchase from and agree on a purchase price for the assets.
  • Have the precious metals dealer send an invoice to the Custodian with the purchaser named as “Name of the Custodian for ___your name___ IRA.”

Note: In most cases, the broker will complete their due diligence, verify you have an account and ensure you have the appropriate amount of funds to complete a purchase.

  • Next, you will send a direction of investment form along with an invoice from the broker to let the Custodian know to fund the purchase through your IRA account and to tell them where to send the money.
  • The Custodian will send the funds reflected on the invoice along with shipping instructions to the broker.
  • The broker will send the metals and a copy of the invoice to the depository.
  • The depository should match up the invoice with what they receive to make sure they received what you purchased.
  • In the case of the Delaware Depository, the Depository will send the gold IRA custodian an invoice showing what they received, and we will match it with the broker invoice to make sure they are the same.

Gold Stored in Your Precious Metals IRA Be Stored in IRS Approved Depository

If you are going to have Sunwest Trust store the metals for you, then the metals are held at a Delaware Depository, which is regularly audited. Caution storing your metals at home.

It should also be noted there will be additional fees added to your annual invoice. For Sunwest Trust, the fee is only $125 per year for precious metals storage.

Purchase Precious Metals Through an IRA LLC 

The other option of funding via the IRA is to purchase the metals through an IRA LLC arrangement.

So you are aware, you will have to set this special LLC first.

We strongly suggest hiring a competent IRA LLC facilitator to establish the IRA LLC structure for you, such as a tax attorney or an IRA advisory firm who specializes in setting up IRA LLCs. After completion, you will be required to send us – your IRA LLC custodian – a copy of the LLC Operating Agreement for review.

Next, you will fund the LLC, and you will send Sunwest Trust a direction of investment telling us to fund the LLC through your IRA. We will either send you a check, or we can wire funds directly to the LLC checking account that you set up at the bank of your choice.

Once the LLC entity is funded, you will need to find a precious metals broker, agree on a price and purchase the metals in the name of the LLC, instead of the name of the custodian company for the benefit of (FBO) the account holder. Make sure to purchase the metals in the name of your LLC to avoid a costly prohibited transaction.

Doesn’t the Manager of your IRA have to keep it for you?

You will take possession of the metals in the name of the LLC. However, the metals will need to be kept with an independent third party such as at a bank in a safety deposit box or another depository of your choice.

Once a year, you are required to report the value of your gold and other assets in your IRA to your custodian using an Asset Valuation Worksheet. Sunwest Trust, as a gold IRA provider will provide the valuation worksheet to clients in January of each, so you can quickly report back the value of the assets held by your LLC.

The worksheet will tell us what metals you have purchased in your LLC and their value. This is what we use to determine the fair market value of your IRA.

Regardless of which option you choose, you should to be mindful as to the name you use when buying from a metals broker. Again, if you were to use your name instead of the name of the brokerage or the IRA LLC, then you would be violating the rules within the IRA format, which can slow the overall process down dramatically. You also want to avoid any problems with the IRS, so you want to follow all of the right steps.

Once the metals have been purchased, the metals have to be held by a qualified depository, namely Delaware Depository or a bank safe. You cannot simply buy the physical assets and store them wherever you want. If you have any questions as to where they can be stored, then you can talk to the company holding your IRA account, and they should be able to help guide you to a quality source for proper storage.

What Types of Physical Metals Are Eligible For Purchase Inside An IRA?

Before you buy any physical assets for your IRA, you have to determine which one or combination are going to be the best to invest in by becoming knowledgeable about your options.

Interested in gold? Here some of your diversified opportunities for investing in a gold-backed IRA:

–         Gold Eagle Coins

–         Australian kangaroos and nuggets

–         Austrian Philharmonics

–         Gold Maple Leafs

Although, this is not a direct endorsement of Gold for America. They are a great resource to learn more about some of the physical metal and gold IRA options available to you. Interested in a complete list of allowable IRA metals?

You can also talk to gold and silver broker to determine whether you can buy certain metals in your retirement account. There may be some guidelines depending on the seller regarding the specific types of metal as well as certain quantities. You never want to purchase anything on your own, and also, you should always discuss your overall strategy again with a financial advisor first, as they could shed some additional light on the topic for your situation specifically.

In the end, you must be following the guidelines set by the IRS to make sure you are making transactions that are allowed within a self-directed IRA. For example, the minimum fineness needs to be met, which for gold has to be at a minimum of .995 fineness and silver has to be a minimum of .999 fineness.

Difference Between Gold or Silver Bullion & Collectibles

If you’ve been following our blog for a while, you’re probably tired of us writing about prohibited IRA transactions. Until you all know the IRS code for prohibited transactions by heart, I will continue to talk about these forbidden activities every chance I get. Violating this point can cost you your retirement account’s tax protection. One could quickly toss years of effort out the window by neglecting a single point; and who wants that?

“It is extremely important for you to know what prohibited transactions are and how to avoid them,” Terry White, CEO Sunwest Trust.

Purchasing Collectibles in an IRA is Prohibited – PERIOD!

We’ve discussed several times about collectibles being considered prohibited transactions, but I’m talking about one exception to this rule: Gold. Up until 1997, IRA investments in gold and other precious metals were considered prohibited transactions. However, Congress passed the Taxpayer Relief Act of 1997.

One issue addressed in the bill was making certain types of gold and other precious metals eligible for IRA investment. Precious metals can be a great choice if you do your research.

CNN Money is a great source to see the movement of metal prices. Whenever you need specific personalized investment advice in regards to funding your IRA or anything else, it’s a good idea to work with an experienced attorney or a CPA. They should be able to answer the questions you have and provide you with guidance regarding making investments that are financially savvy based on your financial circumstances. Make sure to take the appropriate amount of time to explore precious metals in detail and find out what your broker has to say about such an investment.

The IRA is part of your retirement savings so that you won’t be touching it for a while. Precious metals, according to Bloomberg are anticipated to grow tremendously in value over the next 10 to 20 years, though you will want to talk with your CPA or broker to find out if it is the right move for you. While buying and selling quickly is not always advantageous, if you are looking at the long-term, then it may be right for you. Fortunately, if you set up a self directed IRA account with Sunwest Trust, then you can invest at any time in any asset that is allowed by the IRS. Therefore, since you are self directed, you have the freedom to invest when the time is right; you can invest where, when and how you want.

Sunwest Trust has developed some informative videos on the matter. Each Tuesday at 2 pm new videos are released, providing you with more insight into IRAs and other matters of money. You can view these videos online to learn about some of your options and how to take the first step in setting up a precious metals IRA. 

Sunwest Trust Was Featured by American Bullion

We recently received an email from American Bullion in Los Angeles, saying that Sunwest Trust had been featured in their infographic containing information on self directed IRAs. The infographic has a wealth of information. It contains the advantages and disadvantages, a quick history, a list of assets that can be held in an IRA, restrictions, contribution limits, and a list of custodians that can administer self directed IRAs. Best of all, it’s comprised of an easy to read format. Enjoy!

Read through the infographic and if you have any questions about self directing gold into your IRA, then please call us at 1-800-642-7167.

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Precious Metals IRA Guide

Precious Metals IRA Guide – Learn The Basics!

Frequently Asked questions About Setting up a Precious Metals IRA with Sunwest Trust

The investment to set up an account with SunwestTrust.com is $350 for the year. The custodial fee also includes depository fees, correct?

$50 set up fee. $350 if we are storing the metals. Check out our complete IRA fee schedule here.

Do you deal with one or multiple depositories or can a client choose? Where are the depositories located?

Sunwest Trust utilizes Delaware Depository.

However, if an IRA client has an IRA LLC set up, individuals can choose their own depository, however, be advised you can’t store your precious metals whether if it is either physical gold or silver IRA in your home under your mattress or even in a fireproof safe. Doing so would be considered a prohibited transaction.

Beware of the late night infomercials now running both on the radio and TV that may mislead you into thinking you can start a self-storage IRA or home storage IRA for your precious metals.

If you have a captive or primary depository, then who is it with? Where would a precious metals dealership client purchases? Why do you recommend such and such depository over another?

We only work with the Delaware Depository located in Wilmington, DE. You never touch the precious metals. The metals are shipped directly to the depository for safe storage.

If you are investing in precious metals directly through your IRA at Sunwest Trust, we require you to keep your metals at the Delaware Depository only because we know them and we have an excellent working relationship with this them. We have an auditor that visits the facility annually to make sure that everything is accounted for.

If you have an IRA LLC, you may have the gold broker send the metals directly to your LLC. When you receive your precious metals, you will need to keep them in a bank safety deposit box under the name of your LLC, or you can also use Delaware Depository. If you have an IRA LLC, we aren’t responsible for auditing on your behalf.

If someone does not know where they are going to purchase their precious metals from, then can you or are you prepared to offer a list of sellers to check out?

No, we do not recommend specific brokers or investments.

Do you have RIAs that refer gold and silver IRA business to Sunwest Trust?

Yes, but they are not affiliated with Sunwest Trust. Having a competent advisor who can help you manage your asset purchases, generally is to your advantage.

What is the process of purchasing gold and silver in an IRA with Sunwest Trust?

We require a direction of investment from you and an invoice from the metal’s dealer. We send funds and shipping instructions to the dealer. The metals go straight to Delaware Depository, and they match up the metals with the invoice we send them to make sure everything is accounted for.

Do you allow the gold/silver sellers/dealers to verify client accounts and verify funds in the account before purchase?

Yes, this protects both you and the seller of the metals from a possibly fraudulent or errant transaction.

What about the service on gold and silver IRA accounts? How would you say you differ from the IRA service competition?

We will allow clients to purchase metals from any broker that they want, and so the onus is on our clients to do the appropriate amount of due diligence before selecting a purchasing source for their precious metals. Neither does Sunwest Trust require that you as an investor use a specific metal’s dealer.

Do you offer segregated IRA accounts for gold and silver versus real estate, or are they one in the same?

We do not provide segregated IRA accounts for gold and silver investing versus real estate investing. If one wanted to segregate their purchases into two separate IRA asset classes, then an individual could open two different IRA accounts with us. However, there would be two separate annual custodial fees. Otherwise, you could just account for the value of the assets on your own within one account.

Can I purchase precious metals with personal funds and then put them in my IRA and get reimbursed? No. All contributions to IRA accounts must be in cash. You cannot purchase something and turn around and assign or contribute it to your IRA. If you are purchasing precious metals directly through your IRA, you will need to send us a direction of investment form and an invoice for the metals. Next, we will send a wire or check to the metals broker, along with instructions explaining where to send the coins.

Can open a self-directed IRA LLC to purchase precious metals?

Yes, in this scenario, you would buy the coins in the name of the LLC and write a check directly out of your IRA LLC checking account. You would have to store the coins in the depository or bank safety deposit box of your choice.

Can my IRA Own Bitcoins? Why or Why Not?

Bitcoins are one of 1,400 types of digital or cryptocurrencies available to purchase. However, finding an IRS-approved IRA custodian who will allow you to acquire and hold bitcoins within an IRA  can be challenging. For example, Sunwest Trust has decided not to allow IRA account holders to invest in bitcoins through their IRA retirement account.

We hold this position because bitcoins are essentially cryptocurrencies, which means there are no physical assets backing them or keeping other people from creating more just like it.

Also, digital currency values fluctuate wildly and the markets are volatile.

If an individual; however, chooses to invest in bitcoins through an IRA LLC (aka a Crypto IRA LLC) arrangement. Sunwest would not have any direct control over either funding the investment or the investment transaction.

Again, buying cryptocurrencies inside your IRA is definitely not an asset that Sunwest encourages. However, if you are truly self directed in an IRA LLC, you might choose to make an investment in bitcoins with an IRA.

Terry White

About Terry White

I started my business career after getting my degree in Accounting from the University of New Mexico in 1983. My first job was as a controller for a local title company, and in 1987 I started First Financial Escrow, Inc. Over the years I played a part in several startup companies including First Financial Equities, Inc., First Financial Trust, Inc., First Financial Marketing, Inc. and Asset Ventures, Inc. In 1997 First Financial Escrow, Inc. was able to purchase the escrow accounts from Sunwest Bank and changed its name to Sunwest Escrow. As the market changes, Sunwest has grown and changed along with it. Besides my wife, Sheila, we have three boys, two daughters-in-law, one grandson, another grandson on the way and a future daughter-in-law. Sunwest is my passion, and I enjoy coming to work every day to see what will happen next. I enjoy fly fishing, spending time in Colorado, biking and watching my boys play soccer.