Lear Capital Details the Difference Between Directly Purchasing Gold and Holding It in an IRA


If you’ve been thinking about buying gold coins, bars, or rounds for investment purposes — but aren’t sure whether keeping them at home or holding them in a gold IRA would be best — Lear Capital founder and Chairman Kevin DeMeritt says there are a few key elements to consider.

Investors sometimes choose physical gold, silver, and other precious metals assets because of the performance they’ve historically shown. Precious metals’ prices have tended to be less impacted by external influences — such as economic foibles or the fallout from unfolding international conflicts — that can send other types of investments, like the stock market, reeling.

During the past 22 years, gold’s value, for instance, has risen 566%, according to Lear Capital data.

Even if you don’t plan to retire anytime soon, examining what possible savings options — involving purchasing precious metals, or another approach — can help you achieve your desired outcome is key, Kevin DeMeritt says.

“People typically don’t invest enough time figuring out how to grow their retirement account,” he says. “Some put it away, and get a monthly statement, but people should really take a look at their strategy every year.”

If you’re wondering how purchasing gold for use in an IRA, the following breakdown provides some clarification.

Gold-Backed IRA Investments

Traditional IRAs can involve investment options such as stocks and bonds, certificates of deposit, and exchange-traded funds. The government does not allow you, though, to invest traditional IRA funds in life insurance or collectible items, like gems or antiques.

You can, however, incorporate an array of investment items into a type of IRA known as a self-directed IRA — including precious metals like gold, if they have a certain purity level.

After setting up a self-directed IRA, you can roll funds from another retirement account — including a Roth, SEP or SIMPLE IRA; 401(k); 403(b); 457(b); pension plan; or Thrift Savings Plan account — into the new IRA, which you can then use to purchase physical gold, silver, or platinum assets.

With a Lear Advantage IRA, for instance, investors can transfer a portion of a current IRA to obtain precious metals assets of $15,000 or more, potentially with help from a dedicated Lear Capital account team member who’s available to guide them through the process.

Precious metals-backed IRAs offer a few notable benefits, including some tax advantages.

Until you retire and take a distribution from the account, the taxes you pay on your precious metal investments will be deferred.

You can also sell items from your IRA to adjust the proportion of precious metal assets-related and other investments, if you’d like to at any point, to focus on certain stocks you feel might provide immediate gains, for instance — or investment options like gold, which, due to its history of having generally risen in value, you may consider more of a long-term savings portfolio component.

“Gold typically has an inverse relationship to stocks and other types of assets,” Kevin DeMeritt explains. “In times of war or terrorism, usually you’re going to find the markets become extremely volatile; nobody knows what’s going on from day to day. The asset that gives you some stability while all of those uncertainties are happening typically is gold.”

Although you retain full ownership of the items, you won’t have immediate access to precious metal assets you purchase as self-directed IRA investments; the items must be kept remotely at an Internal Revenue Service-approved, insured private facility, which can offer secure storage and insurance for the assets.

When you reach the eligible age when you can take a mandatory distribution, you can either have the precious metals assets shipped to you or liquidate them and receive cash for their value.

Purchasing Collectible Coins or Other Items You Keep at Home

Investors might choose to purchase coins and other physical precious metals assets as an investment — but not necessarily make them part of an IRA.

If you’re keeping coins and other items in the anticipation they’ll appreciate over time, without an IRA being involved, you’re legally allowed to retain them at home, instead of within an official storage facility — although you’ll be responsible for securely maintaining and potentially insuring the items to prevent losses in the event of a fire, theft or another issue.

Because of the way the IRS classifies collectible items and the associated tax considerations, you also may not be able to take advantage of the same tax benefits you’d receive if you held precious metals assets in a self-directed IRA — which is a savings approach, Lear Capital’s founder says, that investors, particularly ones nearing retirement age, are increasingly considering.

“People who are retiring want some stability in their portfolio,” Kevin DeMeritt says. “Through these past 10 or 15 years, they’ve been after capital appreciation so they have more and more to retire on. We’re starting to see people take some portion of their investments and move it over to have the diversification and security of precious metals.”

Which Option Is Right for You?

Deciding whether you should purchase and house physical precious metals assets yourself or incorporate them in an IRA for the associated tax, protection, peace of mind, and other benefits generally will depend on a number of factors — including your personal retirement goals and the amount of time you’re willing to spend securing the assets and managing their care.

If your current bandwidth won’t allow for that kind of a time investment, working with a precious metals-related service provider like Los Angeles-based Lear Capital can help you ensure your self-directed IRA account is successfully established and funded — and the associated items are safely stored in the manner that’s required by the IRS.

“Simply give us a phone call,” Kevin DeMeritt says. “One of our representatives will get you the paperwork to transfer whatever portion of that IRA or 401(k) or 403(b) you would like to roll over to a physical precious metals IRA. It’s a pretty easy process. You don’t have to [roll over] your whole IRA; you transfer any portion that you feel comfortable with. We always recommend that you speak to your financial adviser to help determine what’s appropriate for you.”