As we mentioned last week a precious metals IRA or gold IRA can be a great alternative to the typical investments in a retirement account. Through a precious metals IRA or gold IRA which is more commonly reffered to as a self directed IRA you can invest your IRA into alternative investments that many don't know about. The most popular investments inside a self directed IRA are real estate, gold, silver or other approved precious metals and even private placements. There are many options available to those wanting to invest in something other than stocks and bonds with their IRA or 401k. Below is part two of some of the most common questions I get asked when setting up a gold IRA or precious metals IRA, again usually refered to as a self directed IRA. Check out part one of Precious Metals IRA and Gold IRA Investing
Q. What role does the vault play in the relationship?
A. The vault is where we store all of our metals for our IRA clients. The vault plays a very important role in the relationship between our clients and their metals. They are responsible for insuring and securing all of our metals. They also receive all of our clients metals, confirm the validity of the metals, track and catalog all of our clients metals
Currently our clients have locations available to store their metals. Once is with Brinks in Salt Lake City Utah. The other is with the Delaware Depository in Delaware.
Q. What type of assurances/ titles will I receive from the custodian or vault?
A. When a client purchase metals inside their IRA those metals are shipped directly to the vault location of their choice. That vault confirms the metals are legitimate and then reports to us, via email, that the metals have arrived. As soon as the metals arrive the client receives an email with a certificate on how much metals they have bought, the type of metal, and the location of the metal. The client also has the ability to go online to view all the metals that they have purchased
Q. Are storage costs based on value or ounce amount?
A. The storage fee is based on the value of the metals. Below is fee for storage fees:
Monthly Storage of Metals Fee
Asset Value of Metals Gold Only Silver Only Both Metals
< $25,000 $8 $10 $10
≥ $25,000 $12 $18 $18
Q. What type of disclosures are required when it comes to IRS reporting?
A. Each year the IRA custodian is required to send the IRS a document called a 5498 form. It looks similar to a 1099. The information that is provided to the IRS is the following:
• Clients personal information (name, address, SSN)
• Contributions to the IRA
• Rollover Contributions
• Roth IRA Conversions
• Fair Market Value
The IRS does not require that we catalog all of the assets inside the IRA just the current value as of the end of the year.
Q. With regard to reporting and disclosures, are self-directed IRAs more private?
A. A self directed IRA is not any more private that an IRA with Fidelity or Schwab but all IRA in general are very private. My last answer explained that the IRS does not require us to report the assets inside the IRA, just the current value. As a result the IRS is unaware of what you have purchased inside your IRA. This keep your IRA very private from the outside world.
Hopefully some of these questions and answers have helped to shed the light on precious metals and gold IRAs. If you are interested in opening your own gold IRA feel free to contact us as we can help you invest in gold or other precious metals with your IRA or 401k.
Author: Ben Barker, Self Directed IRA Professional