Bank of America Gold IRA Review

Bank of America Gold IRA Review

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Bank of America got its start 240 years ago and is now the second largest bank in the United States by assets.

It offers full banking services, online and in-person through around 4,300 branches across the nation. 

Its mobile app and online banking capabilities received high ratings from customers. Bank of America has a line of products designed for individual clients as well as banking products that support business and commercial customers.

Bank of American has grown from humble beginnings to serve millions of customers. 

But do they offer IRAs that can hold physical gold and other precious metals?  Keep reading to find out.

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About Bank of America


BofA homepage

Like most of the huge mega corporation banks, Bank of America has a massive network of physical bank locations as well as ATM's so numerous they are easy to find.

In recent years Bank of America has started to offer some financial products that track the prices of precious metals due to the increase in demand from investors.

Unfortunately, Bank of America does not offer IRAs that can hold physical gold investments.

Instead, Bank of America offers financial instruments such as gold-related certificates and the ability to obtain stocks and mutual funds that supposedly have exposure to gold and silver.

These "paper gold" instruments are designed for short-term investment and not for retirement funds.

Why Put Gold in Your IRA?


Individual Retirement Accounts (IRA) protect your retirement as well as your family's financial security.

These special accounts allow you to set aside tax protected savings that you can use in the future.   

With these long term accounts it's important to allocate a significant portion to assets that are solid and reliable, so you have a secure and worry-free retirement. 

a couple listening to a financial advisor

You can have cash in an IRA, but that is devaluing at a rapid pace and inflation is out of control

You need an asset that's dependable, retains it's value, and even increases in value over time, and there is no better asset for this than gold. 

With the world's economy struggling through lockdowns, shortages, wars, and inflation, uncertainty has never been higher and investors are protecting themselves by placing physical gold in IRA's. 

A gold IRA investment prospers from these crisis that negatively affect most other assets. 

Risk is knowing the economic dangers and doing nothing to protect yourself and your family. 

Safety is knowing the economic dangers and taking action to protect your financial future, and this is easy to do with a gold IRA.

What is a Gold IRA?


If you want to hold physical gold in your retirement account, you cannot hold it in your regular IRA account. You must open up an IRA that can hold precious metals, like a Gold IRA.

Another name for this is a precious metal IRA. The gold IRA functions a lot like a regular IRA account. The limits to contribution and the rules of distribution are the same.

However, where regular IRAs can only hold paper assets such as stocks and bonds, a gold IRA can hold physical bullion. This includes gold bars and coins and other types of precious metals including silver, palladium, and platinum.

Advantages of a Gold IRA


With inflation out of control and massive unrest around the world many investors are looking to physical assets and wondering, "Can you buy gold bars from Bank of America?" They answer is no because B of A does not sell physical gold bars.

Unfortunately, when the economy is not stable, people are concerned about the security of their retirement funds. They want to be sure that their retirement assets are stable.

Owning gold or other precious metals that are approved for IRAs can provide that assurance. Over the many decades, the benefits of owning gold IRAs are documented everywhere.

Some of these benefits are described below.

  • Stability

Compared to other types of assets, the value of gold has always been stable. No one doubts the worth of gold. From the time of the early civilizations, gold has always been highly desirable and valued.

Owning gold in your retirement portfolio stabilizes and preserves its worth.

  • Diversification

Having a diversified retirement portfolio helps the account whether through a volatile market. Gold IRAs are one approach to providing diversification to a portfolio that holds mostly paper assets.

Precious metals such as gold are long-term investments that can balance the retirement portfolio.

  • Balance

History can tell you that gold has always been able to hold its value during times of economic or political instability. The price of gold has an inverse relationship to the value of paper assets.

When the value of traditional assets takes a hit, the value of gold tends to increase. Conversely, when the market is doing well, the price of gold decreases. This is how gold can keep a retirement portfolio in balance.

In addition to the advantages that gold contributes to a retirement portfolio, there are other positive effects of a self-directed IRA that relate to taxes.

After people went through the crash of the housing market and financial turmoil in 2008, investors became more interested in adding a gold IRA just to make their retirement portfolio more balanced and stable.

Gold IRAs can also hold other types of IRS-approved assets, which is another benefit.

Opening a gold IRA is a smart way to diversify and balance your retirement portfolio. Investors who have experience dealing with gold and precious metals take advantage of gold IRAs as a way to preserve their wealth.

They recognize the many benefits that gold IRAs can offer.

Gold ETFs versus Physical Gold


There are different methods of investing in gold. Among these methods are purchasing physical gold, gold mutual funds, gold ETFs, gold options, and gold futures. Each method has advantages and disadvantages.

The choice ultimately depends on the risk tolerance of the investor and his personal goals for his retirement account. 

  • Exchange Traded Funds (ETFs)

ETFs have gained in popularity because they have high liquidity, they are transparent, and they have low management fees. ETFs are a kind of mutual fund that you can trade on the stock exchange.

They provide investors with a way to invest in oil futures, foreign currency, and precious metals.

A gold and silver ETF lets an investor invest in gold without actually needing to handle or move any gold at all. 

Some investors do not quite understand ETFs especially the fact that owners of a gold ETF have no ownership of any physical gold. They just own an asset that is guaranteed by gold. The shareholder cannot redeem any actual gold because they do not own any.

The physical gold does exist, only gold ETF investors cannot get to them unless they are one of the authorized participants.

  • Direct Ownership of Physical Gold

Investors can buy physical gold in many ways including jewelry, coins, and bars. Gold coins are popular because the coin's value directly relates to the gold spot price. Bullion coins are recognized around the world and they are easy to trade.

Owning physical gold has similarities to owning a gold ETF in that it can be a good hedge against high-interest rates and inflation. However, they offer a lot more.

Direct ownership of actual gold allows investors to have absolute control over their gold investment. They can lock up the metal in their safe and keep it under their control. They can see it and hold it.

The gold coins provide a level of security and stability when the economy is in turmoil. In extreme cases, the coins can even be used as currency.

Unlike an ETF, a physical gold IRA lets the IRA owner redeem their physical gold and silver assets.

How Does A Self-Directed IRA Work?


A self-directed IRA is very similar to a regular IRA, except it allows investors to invest in non-traditional assets. There are two types of IRAs:

Traditional IRA: This kind of IRA lets you invest your pre-tax dollars. That means the money you invest is not counted as taxable income for the tax year. The growth of the investment is also tax deferred. 

When you reach 59 1/2 years of age, you can withdraw the funds and pay tax on the amount withdrawn at regular income tax rates. 

Roth IRA: This kind of IRA lets you invest post-tax dollars. This means you pay income tax on your money before you invest it in your Roth IRA. The money invested can grow tax-free. 

When you reach retirement age and withdraw the funds, it will not be subject to any income tax.

No matter which IRA you invest in, there is a cap to your contribution every year. The IRA contribution cap in 2022 is $6,000.

How a Gold IRA Works


A gold IRA works similarly to a regular IRA. The contribution cap is the same. But instead of putting money into your plan every year, you convert that contribution into gold and silver that will be part of your IRA.

This is where you can accumulate wealth. The IRS restricts the type of coins and bars that can be used in a gold IRA. A dealer of precious metals can point you to the precious metal products that are approved by the IRS.

Most dealers of gold buy products from wholesalers who then deliver the products to a custodian vault that is approved by the IRS.

The custodian is a third party that manages the gold IRA account, deals with the paperwork, and makes sure that procedures are compliant with the IRS.

Precious Metals that are Eligible Investments for IRAs


A lot of investors in the U.S. like to hold precious metals in IRAs because they can enjoy the growth that is tax-deferred or tax-free. Through a self-directed IRA, you can invest in physical gold and take advantage of these tax benefits.

What does it mean for something to be IRA eligible? It means the products have to comply with the strict precious metal criteria set forth by the IRS on what type of precious metal products are allowed.

When you are looking for IRA-eligible products, just look for bullion with the label "IRA Approved."

Below is a list of some of the bullion products approved by the IRS for IRAs.

Gold Coins:

  • American Gold Buffalo coins
  • American Gold Eagle coins
  • Austrian Gold Philharmonic coins
  • Australian Kangaroo/Nugget coins
  • Mexican Libertad coins (.999+ purity)
  • Canadian Gold Maple Leaf coins
  • British Gold Britannia coins (.9999+ purity)

Some gold coins that are not IRA eligible include gold-proof coins, coin collections that are slabbed (sealed in a plastic case), certified coins, and graded coins.

Gold Bars

Gold bars that are at least .995 pure.

Gold bars that are accredited by NYMEX, LPPM, LME, COMEX, TOCOM, LBMA, or a government mint.

How does a Gold IRA Rollover Work?


When a retirement account that is not an IRA transfers funds to an IRA, this is called a rollover. It can be direct or indirect. When a person wants to move funds from his 401(k) plan at a former employer directly to an IRA, this is a direct rollover.

This can be done at any time.

With an indirect rollover, you can only do that once every twelve months. The whole amount of the 401(k) distribution must fund the IRA within that year. Because it is an indirect rollover, the amount could be subject to tax withholding.

In general, the following types of retirement accounts can rollover funds to a self-directed IRA:

  • IRAs: traditional, Roth, SEP, SIMPLE
  • A qualified retirement plan from an employer (e.g. 401k)
  • A deferred compensation plan of a local or state government (457 plan)
  • An annuity plan with tax shelter (403b)

Each day, about 10,000 people retire. This amounts to rollovers totaling about $500 billion every year. Rollovers are just about the most popular way to fund IRAs.

Services of Bank of America


b of a wealth management section of the website

BofA is a leading global financial institution. They offer a wide range of banking options for saving, lending, and investing.

Checking Accounts

Bank of America offers three types of checking accounts that can be opened with less than $100.

  • Advantage SafeBalance: provides a debit card, no checks. No overdraft fees. The monthly fee is $4.25; the fee is waived for students below 25 years of age.
  • Advantage Plus: General checking account. The monthly fee is $12 but is waived if the minimum daily balance is $1,500 or if the direct deposit is $250 or more.
  • Advantage Relationship: interest checking. The monthly fee is $25 but is waived if you maintain a combined balance of $10,000 from qualifying saving and checking accounts that you link.

If you are a member of their Preferred Rewards program, all checking account monthly fees are waived. 

If you use the ATM of another bank, the transaction will cost you $2.50 in addition to the fees from the other bank. These fees cannot be reimbursed or waived with your BofA checking account.

Who is the Ideal Customer for Bank of America?


If you want your bank to have a lot of physical presence around the country, Bank of America would fit the bill. It is also good for you if you have the following mindset:

  • You want an institution that is big and well-known
  • You have no qualms about following lots of banking rules
  • You're not bothered by the fees because you know how to avoid them
  • Investors that want to purchase paper assets, not physical gold and silver

Pros and Cons


Pros

  • Around 16,000 free ATMs and 4,100 branches
  • Highly rated mobile app and helpful savings tools

Cons

  • CDs and savings accounts have low-interest rates
  • Overdraft fee is $35 which can be charged up to 4x every day
  • Transfer limits are low
  • Do not offer gold IRAs

Conclusion

Bank of America's interest rates on their CDs and savings accounts are lower than what online banks offer. However, they do offer a wide range of banking services. They charge monthly fees, but they are easy to avoid.

They offer nice online banking tools and offer a lot of services to customers who prefer to bank in person. It is a good choice for college students if they can get their monthly fees waived.

Bank of America is a good option for people looking for traditional banking services and high fees.

They are not a good option if you are looking for a gold IRA, but don't worry, there are a few companies out there that specialize in these retirement investments that we recommend.

You can get a Free Gold Investors Guide from our top gold and precious metals company recommendation by clicking the link above or you can read our article of the top companies we reviewed this year:

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