If the sharp selloff in stocks late last year has you looking for other places to invest your retirement money, self-directed IRAs are worth a look. These accounts allow you to switch some of your Wall Street assets for tangible assets such as gold, silver, and real estate.
Nervous investors are making the switch in increasing numbers. In addition to the diversification away from paper assets, it is easy to transfer funds from an existing IRA.
And the cost of maintaining the account is often well below what Wall Street charges to “manage” the funds.
Banks and brokerages successfully cultivated the idea that IRAs should contain only conventional securities – stocks, bonds, and mutual funds. The vast majority of retirement funds are invested in those assets, and financial institutions get a rake on every nickel invested. It is no accident that paper is the ONLY option in most accounts.
Annual maintenance and storage fees for $100,000 in IRA funds invested in physical gold, including the storage at Money Metals Depository, are roughly 35 basis points (.0035) for the first year and 20 basis points (.002) ongoing. The maintenance and management fees built into many ETFs and mutual funds are triple that amount.
Word is getting out about the “Self-Directed IRA” alternative. In return for assuming personal control over investments, people can buy a wider range of assets – including many options their stock brokers and financial planners either don’t mention at all or speak of dismissively.
Today, there are several good IRA companies offering self-directed plans, so it is worth covering how an investor might go about choosing one.
You’ll want to start by evaluating the basics. Choose a firm with a reputation for providing great service and competitive fees. You might give extra points to a firm that is well-established in the industry.
We do not recommend using custodians charging more than $150 in annual fees or those charging more than $50 to process a transaction.
There are some very good IRA firms we vetted who charge fees significantly below those levels.
The capability to enroll, view, and manage transactions online will be a major consideration if you prefer the convenience of managing affairs electronically.
If you prefer to deal in person, inquire by phone to see if you can reach a service rep easily and get good care.
You should avoid IRA custodians who want to steer you into particular products or programs. Some “rare” and “proof” coin dealers have special arrangements with custodians to steer people into high-premium coins.
Those over-hyped coins generally do not perform well for anyone but the dealers selling them and should be avoided like the plague. The Wall Street Journal just published an extremely damning article about the proof coin market.
Likewise, we would steer well clear of any custodian pushing “self-storage” metals IRAs and downplaying the risks associated with that program. Taking physical possession of metals held inside an IRA means taking significant risks that the IRS will disqualify your IRA down the road, subjecting you to taxes and penalties on your entire IRA balance.
IRS officials are already signaling their disapproval of the self-storage IRA scheme. If they decide to clamp down on self-storage (or LLC IRAs) it will be YOU holding the bag, not your custodian – despite the handsome fees you paid for the set-up and administration.
Many clients may want to store metals closer to where they live. However, we suggest there are more important considerations...
- Storage fees should be low, of course.
- Further, you should choose a reputable depository that offers segregated storage, outside of the COMEX custodial network and whatever tangled web of rehypothecation that could entrap your metals there.
- Lastly, the depository should take physical security seriously.
Money Metals Depository meets all of the above recommendations and more.
MMD uses a Class III vault located directly below a County Sheriff’s department.
Segregated storage is the only type we offer, and our facility in Idaho is far away from the COMEX system of vaults, Wall Street bankers, and Washington DC politicians.
Here’s another factor that distinguishes MMD from many other depositories, especially those that use pooled or unallocated storage methods...
When you buy and store coins or other bullion products which are in good condition but don’t store them in a segregated account (like those available at MMD), the depository staff can arbitrarily select scratched, dented, or tarnished items from the pool to send back to you.
With segregated storage, the coins and bars you send in are the exact property you get back when the time comes.
If you would like to store your IRA metals with Money Metals Depository and take advantage of zero shipping costs and instant delivery from Money Metals Exchange, you’ll want to choose New Direction IRA in Colorado, Advanta IRA in Florida and Georgia, or Mountain West IRA in Idaho.
Any of the above three IRA custodians can serve clients nationwide and come highly recommended by our IRA clients for low fees and great support.
If you need a specific recommendation on an IRA custodian based on your circumstance, please just give one of our Specialists a call at 1-800-800-1865. We will be happy to make a recommendation based on your preferences.
And to get started with a precious metals IRA, visit this page.
About the Author:
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.