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People interested in buying precious metals for their IRA have more options than they may think.
Investing in gold, silver, platinum, and other precious metals is a great way to gain tax advantages while protecting their retirement savings from economic uncertainty.
Many people choose to open a self-directed IRA because it can give them more flexibility and control over their retirement accounts.
In addition, they can invest in various assets in addition to precious metals, including commercial papers, real estate, and intellectual property. However, choosing an IRS-approved custodian for an IRA account is necessary before investing.
Plus, selecting a reliable company to assist in setting up a self-directed IRA to invest in alternative assets, such as gold, is essential for successful retirement investing. Having faith in any precious metal IRA custodian is not a good idea.
Instead, customers should go a step further by researching the most reputable precious metal IRA firms. Customers can have exorbitant annual fees.
They may also have rare gold coins, collectibles, or bullion that are only permitted in a tax-advantaged retirement plan if they research IRA custodian companies before opening an account.
Here is the information customers need to know before choosing a precious metals IRA custodian.
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What is a Precious Metal IRA Custodian?
Customers need to understand what a precious metal IRA custodian is and their role in retirement investing. A precious metal IRA custodian is a financial organization that maintains, stores, and protects the investments in clients' retirement accounts.
The IRA custodian follows and respects IRS laws and regulations governing tax-advantaged accounts. They enable account holders to create self-directed IRAs under their management using their chosen assets.
Without authorized IRA custodians, customers would be responsible for complying with IRS laws and regulations. Financial service businesses can only become precious metal IRA custodians if the IRS approves them and gives these businesses a license.
Precious metal IRA custodians can be any licensed private financial company and are regulated as "non-bank custodians."
Precious metal IRA custodians have a fiduciary duty to the account holder to hold and secure their assets and never to trade or sell them without the account holder's express consent.
The Internal Revenue Code imposes stringent rules on precious metal IRA custodians. It holds them to high standards of fiduciary responsibility. In addition, custodians are subject to state auditing.
Plus, federal and state laws require custodians to adhere to capital standards and security protocols.
The Role of a Precious Metal IRA Custodian
A precious metal IRA custodian performs several functions. These functions include the following:
There are also several things a precious metal IRA custodian cannot do. These restrictions include the following:
Choosing a Fair and Reputable IRA Custodian
There are several items customers should look for in a precious metals IRA custodian. These include the following:
The website is one of the first things customers notice when searching for an IRA custodian. When choosing an IRA custodian, customers should carefully examine the website and brand design.
The website of a reputable IRA custodian should be easy to use, professionally made, and have information about the company's investment services, fee structure, and management.
The website should also have an appealing appearance and have information about the company's history.
Most consumer complaint and review sites, like Yelp, BBB, and Yellow Pages, do not list or rate IRA custodian companies because these companies rarely interact directly with customers.
Instead, IRA custodians collaborate with precious metal IRA companies and brokers. As a result, the most straightforward approach to assess an IRA custodian's reputation is to find out how long they have been in operation.
Customers should also see how many accounts and clients the IRA custodian has, how many precious metal IRA firms they are affiliated with, and other vital information that can confirm a company's legitimacy.
When selecting a precious metal IRA custodian, customers should check to see if they have a flat-rate or sliding-scale fee structure.
A precious metals IRA might be expensive to form and maintain, so customers should determine if the company imposes startup or administration costs.
Every precious metal IRA should have annual price schedules and administrative fees on its website and be easy to find. If their fees are not easy to find or are not listed, then find another precious metal IRA custodian.
If a precious metal IRA custodian is proven to be reputable, check to see if they offer discounts for setting up an account. Also, see if they waive their setup fee or have discounts for storage fees if customers maintain a minimum balance in their accounts.
Type of Accounts Precious Metal IRA Custodians Offer
There are four types of self-directed plans that precious metal IRA custodians can offer:
Anyone who earns an income can open a traditional IRA. The traditional IRA is the most prevalent type of account, allowing account holders to make annual pre-tax contributions of up to $6,000 or $7,000 if they are over 50.
Earnings can grow tax-deferred until the owner turns 72. When the account holder turns 72, they must start to receive the Required Minimum Distributions (RMDs).
Anyone with an adjusted gross income below the current IRS threshold can make post-tax contributions of $6,000 annually, or 7,000 if over 50, to a Roth IRA. Distributions are tax-free for the account holder after the age of 59.5.
A 10% early withdrawal penalty applies if the account holder takes a distribution before the age of 59.5. RMDs are not necessary with a Roth IRA.
Simplified Employee Pension Plans enable self-employed individuals and business owners to offer employees a straightforward, affordable retirement plan.
Employers can make a tax-deductible contribution of up to 25% of an employee's salary, or $58,000, in 2021. At 72 years of age, SEP IRA owners must start taking RMDs just like with a Traditional IRA.
Small firms with less than 100 employees and independent contractors are eligible to use a SIMPLE IRA. Employees under the age of 50 can contribute $13,500 annually, and those over 50 can contribute $16,500.
Employers may contribute up to 3% of an employee's salary. When the account owner turns 72, they must begin taking RMDs.
Fees
Precious metal IRA custodians implement one of two types of fee schedules:
Precious metal IRA custodians with a fixed fee schedule are the most affordable. They should be the first choice when choosing a custodian.
Every custodian applies different setup, storage, and administrative costs. Plus, most custodians also charge a transfer fee from one IRA custodian to another.
Reviews
Investors need to do their due diligence before choosing a precious metal IRA custodian. Here is a brief overview of several IRA custodians to help investors begin their search for the one that will work best for their needs.
Any mentioning of fees and services are subject to change:
Equity Trust
Westlake, OH-based Equity Trust is a market-leading provider of IRA custodial services for brokers and financial advisors. This organization has over 130,000 clients with more than $12 billion in assets under custodial management.
Equity Trust also collaborates with over 10,000 financial experts. The company specializes in self-directed precious metals IRAs, hedge funds, managed futures, real estate, and other kinds of investments.
In 1983, they met the qualifications to act as a non-bank IRA. Equity Trust charges a flat annual rate of $225, which includes storage fees. Their website is www.equityinstitutional.com.
If you'd like to learn more, read our Equity Trust Review.
The Entrust Group
The Entrust Group is an Oakland, CA-based reputable account administrator for self-directed retirement funds and tax-advantaged plans. This company boasts $4 billion in assets under management and more than 40 years of experience in this sector.
The Entrust Group currently provides services to 45,000 clients around the country.
In addition, the Entrust Group provides custody and administrative services for customers who want alternative investments, like precious metals and real estate, in their self-directed IRA.
They offer all four IRA programs for individual investors and corporations. The Entrust Group began its operations in 1981 and currently has 30 walk-in offices nationwide.
The company has a one-time $50 startup fee, a $150 annual flat rate, and storage fees. Their website is www.theentrustgroup.com.
If you'd like to learn more, read our Entrust Group Review.
Midland Trust
Chicago-based Midland Trust is an administrator and custodian that focuses on assisting its customers with self-directed IRA investments with alternative assets, such as precious metals.
The company is a custodian of thousands of precious metal IRAs. In addition, they offer bookkeeping services in addition to ongoing access to training resources for IRA professionals and investors.
Through Midland Trust's streamlined process, clients can purchase gold, silver, platinum, and palladium. Midland Trust's storage fee is within industry standards. However, they charge $50 for each buy or sale of precious metals, which is a little higher than average.
Plus, they have a segregated holding option and a secure storage area at the Delaware Facility. Midland Trust has an annual flat fee of $295 to $395, which includes the storage fee. Their website is midlandtrust.com.
If you'd like to learn more, read our Midland Trust Review.
Millennium Trust Company
Millennium Trust Company is a leader in the financial services sector that focuses on offering a wide range of custodial and administrative services to private clients, businesses, and advisers.
Since its founding in 2000, the Millennium Trust Company has built a client base of more than 305,000 accounts with over $11 billion in assets under custody.
Millennium Trust Company customers have the option to invest in conventional and non-traditional securities through different IRAs.
In addition, they provide self-directed IRAs for customers to invest in precious metals, alternative asset custody solutions, private fund custody services, automatic rollover programs, and registered investment adviser services for institutions and advisors.
Millennium Trust Company has an annual flat rate of $200 to $275, which includes storage fees. Their website is www.mtrustcompany.com.
To learn more, read our Millennium Trust Company Review.
Pacific Premier Trust
Pacific Premier Trust started as PENSCO Trust in December 1989, then merged with Pacific Premier Bank and adopted the bank's name in 2020. Its headquarters is in Irvine, California, and the company has office locations in San Francisco and Denver.
Pacific Premier Trust has nearly 44,000 client accounts and has $17.6 billion in assets in the company's custody. Pacific Premier Trust can accept one of the broadest ranges of asset classes among all custodial companies.
Their condensed list includes real estate, marketable securities, wind farms, promissory notes, and precious metals. In addition, the Depository Trust Company of Delaware, LLC, is a premier depository that provides services to Pacific Premier Trust.
However, this company has a very high annual fee starting at $750. Their website is www.pacificpremiertrust.com.
To learn more, please read our Pacific Premier Trust Review.
Important Things to Keep in Mind
Before opening a precious metal IRA, the investor must get the custodian's advice regarding the type of IRA they can best manage and the investments they feel comfortable making.
Investment alternatives, fees, and customer service should be the primary characteristics that set one custodian apart from another before selecting the appropriate IRA and assets.
IRA custodians have knowledgeable professionals available to help new and existing account owners with any questions about their retirement accounts.
In addition, potential customers should call the customer service line of several precious metal IRA custodians and ask about their services and what they offer.
Choosing a custodian with the best customer service and easy-to-use website can significantly improve a customer's success at saving for retirement.
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I started BMOGAM Viewpoints as a way to compile all my views on investing in one place. I own my home, have some real estate, and own a few stocks like most people, but what really drives my interest in investing is I have a strong love of precious metals, especially gold.
