Remember These Five Things When Opening a Silver Roth IRA

As investors search for more ways to diversify their investment portfolio, having a traditional IRA is no longer enough. The global economic downtown has put massive pressure on anyone who has their retirement savings in an ordinary fiat account.

The result of this is that physical precious metals have emerged as a likely solution, particularly precious metal IRAs. The time to invest in silver coins and bars is right now!

If you own a self-directed IRA and are considering diversifying part of that into a precious metals IRA account, there are a few things you need to know. It is not as simple as buying gold and silver from a dealer. A silver and gold IRA requires a bit more knowledge than that.

In this article, we will look at the things you need to know before opening a silver IRA retirement account, as well as what makes precious metal IRAs so special. Read on for more information about silver IRAs!

What Is a Silver IRA?

Silver Roth IRA

A silver IRA is a retirement savings account that is based on physical precious metals, in this case, silver bars and coins. It is a direct avenue into investing in gold, silver, platinum, and palladium assets using funds that you already have in an existing IRA account.

It is a type of self-direct IRA whose value is secured by its gold and silver investments. It comes with a wide range of tax benefits, very similar to what you would get in a traditional IRA, but with a few extra rules and regulations from the IRS.

The silver IRA account holder, for example, can never hold the physical silver bullion bars and coins that make up their precious metals IRA. Instead, these must be stored by an IRS-approved depository. There are other IRS regulations as well that we will discuss later.

Why Do You Need a Precious Metals IRA?

If this is your first time considering precious metals as legitimate options for your retirement account, you may be wondering why you need to invest in physical gold and silver in the first place.

Well, there are many advantages that a precious metal IRA has over other types of investment options, such as:

Long-term Growth

Historically, silver prices have continued to grow even in the face of global calamities such as the Great Depression or World War.

While it is true that the prices of gold, silver, and other precious metals fluctuate daily, it is when we look at the bigger picture over several years that we see the benefits of having your money stored in a silver IRA.

If you buy silver today, you are guaranteed that after, say, 10 years, the value of your silver will increase by a substantial margin.

Inflation Hedge

Paper assets, such as stocks, bonds, mutual funds, and ETFs are notoriously vulnerable to inflation and stock market volatility. That means during such times when the global economic turmoil is rising, investors with these assets will be feeling the heat.

However, not only will your silver individual retirement account be immune to such situations but historically, precious metals tend to do very well when fiat currencies are struggling. This is what makes silver IRA accounts a great hedge against inflation.

Liquidity

Unlike other investment options, such as buying real estate, when it comes to liquidity, silver is one of the easiest things to sell. Just look at the price of the day and someone will be ready to take it off your hands.

In case of emergency, the gold and silver markets are some of the busiest in the world. In just a few hours your silver IRA would have been liquidated and the money in your hands.

Widespread Demand

Every country in the world is in a race to increase its gold, silver, platinum, and palladium reserves. Countries like China and India are some of the biggest buyers of gold products due to their importance in their weddings and traditional ceremonies.

Silver is also very important in the medical field, where it is used for its antibacterial properties and X-ray imaging. In technology, it is a major component of solar panels and photographic materials.

These things combine to further increase the demand for silver and other precious metals worldwide.

Diversified portfolios

If you want to reduce the risk your retirement savings account is exposed to, having a diversified portfolio is the best way to do it. Many expert investors advise having between 5% and 10% of your retirement funds diversified into a precious metal IRA.

This move will serve to spread your risk out evenly across many different platforms while at the same time enjoying the benefits of having a 401(k) account and a precious metal IRA.

How to Open a Silver IRA Account

Opening a Silver IRA is very easy if you are using a legitimate and IRS-approved custodian. Most investors prefer to use conventional custodians, such as banks and other large financial institutions. However, for special types of self-directed IRA accounts, you will need to find an IRA custodian that knows how to handle a silver IRA.  Find our list of the top rated Silver IRA firms.

The process is simple if you follow these simple steps:

  • Open your precious metal IRAs with a qualified IRA custodian

  • Rollover IRA funds from a 401(k), traditional IRA, or Roth IRA

  • Select the precious metals you wish to purchase

  • Find a suitable IRS-approved depository for storing precious metals

Which Precious Metals Can Go Into a Silver IRA?

Not all precious metals can be used as part of a precious metals IRA. You need to make sure that your custodian or precious metals dealer is supplying you with the right metals of high purity.

If it’s silver, for example, it must have a purity of 99.99% before being added to precious metal IRAs. The following are some of the IRA-approved silver coins you can consider:

  • Canadian Maple Leaf Coins

  • American Silver Eagle Coins

  • Chinese Silver Panda Coins

  • Silver Britannia Coins

  • Austrian Silver Philharmonic Coins

  • Mexican Silver Libertad Coins

Silver IRA Rollover vs. Direct Transfer

One of the most important decisions you will need to make is whether to do a Silver IRA rollover or go for a direct transfer of funds.

The choice you make will largely depend on your individual circumstances and the IRS restrictions regarding funding precious metal IRAs. You are only allowed, for example, a single gold IRA rollover per year, meaning if you have already done it in the past 12 months this option is closed to you for the time being.

If you do manage to rollover funds from your 401(k), you must not let those funds sit in your bank account for more than 60 days or you will incur a 10% penalty on the value of the rollover.

Certain situations, such as being self-employed and not having a 401(k) make a transfer the only possible way of funding your precious metals IRA. Whatever the case may be, your IRA custodian will advise you on the best possible options to fund your physical silver purchases.

Five Tips To Opening a Precious Metals IRA

Now that you have decided that a precious metals-based self-directed IRA is the right option for you, it is time to look at the following tips for opening a silver and gold IRA:

Research Precious Metal IRAs

Opening any type of self-directed IRA is a lifetime investment, even more so when you intend to purchase precious metals.

You need to dedicate some time to properly research everything there is to know about precious metal investments, self-directed IRAs, Roth IRAs, traditional IRAs, how to pay taxes as precious metals investors, and anything else you can think of.

Silver is generally a safer investment than stocks, bonds, or other paper assets. However, it does have its risks, especially if you were to purchase physical silver that is not eligible for a self-directed IRA account!

Consider Storage Facility Fees

One thing you cannot escape when you open a precious metal IRA is the need to find an IRS-approved depository to hold your physical precious metals for you.

This is an absolute requirement of the IRS which cannot be changed unless you are willing to pay hefty penalties. As such, the fees charged by storage facilities will play a role in your choice of self-directed IRA custodians.

A reputable silver IRA company will have its preferred depository that you will make use of, eliminating the need for you to find one and arrange transportation yourself. Remember the following important points:

  • A depository must be IRS-approved

  • There are two options regarding storage facilities, which are either a commingled or segregated facility

  • In a commingled vault, metals from different owners will be kept together

  • A segregated vault only keeps metals from one owner, and they will be the same ones removed when the owner chooses to make withdrawals

  • There is a wide variation in prices and fee structure which you will have to consider carefully

Select Account Type

You can have one of three types of silver IRA accounts, depending on your circumstances. These are:

1. Traditional IRA

  • Suitable for individual taxpayers

  • Annual individual contributions must be $6,000 or less

  • Contributions are tax-deductible

  • Up to $7,000 per year in contributions for anyone 50 or older

  • Withdrawals are taxed according to your current income tax rate

2. Roth IRA

  • Mainly used by individual taxpayers

  • No age restrictions if you have eligible income

  • Contributions are non-tax-deductible

  • No required minimum distributions

  • Tax-free qualified distributions

  • Withdrawal after retirement has no income taxes

  • No capital gains taxes on contributions with after-tax dollars

3. SEP-IRA

  • Stand for “Simplified employee pension”

  • In 2022, SEP IRA contributions cannot exceed 25% of compensation or $66,000

  • The tax rules are similar to a traditional IRA

  • Used by self-employed people mostly

Custodial Fees and IRS Rules

Every IRS-approved custodian must comply with certain rules if they are to retain the operational license. Some of these rules result in the investor being charged certain custodial fees that you need to be aware of, such as:

  • One-time mandatory setup fee

  • Cash-out fee if you liquidate

  • Storage fees

  • Annual custodian fees

  • Transaction fees

  • Premiums on coins (above spot price)

Choose a Reputable Self-directed IRA Custodian

Lastly, you need to choose a reputable custodian to help you roll over funds from your existing IRA to your new Silver IRA and everything that follows thereafter.

Some common choices for custodians include banks, brokerage firms, loans and savings associations, trust companies, and credit unions. Making the wrong choice here is a sure way to guarantee that you will lose your money in the long run.

Consider the following when choosing a silver and gold IRA company:

  • Years of experience with silver Roth IRAs

  • Custodial fees and other associated costs

  • Selection of precious metals

  • Availability of an affordable storage option

  • Various perks, such as buy-back options

  • Insurance against theft or destruction of your silver and gold tangible assets

  • Customer reviews on platforms such as the Better Business Bureau

  • No hidden fees

  • Availability of IRS-approved bullion, coins, and bars

Some Great Silver IRA Custodian Options

If you are having trouble choosing the best IRA custodian to handle your retirement accounts, you can consider the following options:

  • Goldco: Read why Goldco is a legit #1 company.

  • APMEX: Wide-ranging bullion and coin selection

  • Kitco: Most experienced IRA custodian on this list

  • GoldSilver: Great source of educational material

  • JM Bullion: Good for diversified precious metals IRAs

Final Word

Now that you know there is a better way to preserve wealth without the need for a high-risk tolerance or worrying about inflation, it’s time for you to make the right choice for your future. Thanks to its high demand, rarity, and technological importance, you can never go wrong with a silver IRA.

Just make sure you choose your custodian carefully, paying special attention to fees and storage facilities. Do your research and then get ready to purchase silver products that are IRS-approved. You can easily secure your future with a good independent custodian by your side.

Goldco