ira precious metals gold and silver coin

Investors understand that diversity is essential when preparing for retirement. Then, why are so many people deterred from setting up a precious metals IRA? Unfortunately, there are plenty of misconceptions swirling around that make these accounts seem more complicated, inaccessible, and unattainable than reality would suggest.

What is a precious metals IRA?

A precious metals IRA is a self-directed retirement account that allows account holders to invest directly in physical metal assets that meet certain fineness requirements. All standard accounts limit investors to mainstream assets such as stocks, bonds, ETFs, and mutual funds. If you’re looking for greater diversity, ownership, and privacy in your nest egg, a precious metals IRA is an excellent consideration.

Common Misconceptions of Precious Metal IRAs.

Myth #1: Precious metal IRAs are risky.

Gold, silver, and other precious metals can act as an inflation hedge due to their tendency to increase in value as economic conditions turn south. In other words, your retirement account is at greater risk without exposure to precious metals. You’re not going to avoid the inevitable ups and downs of the market, but you can put yourself in the best position to ride those waves. The economic fallout following the pandemic is a perfect example of how gold and silver remain stable and even increase in value when traditional assets tank.

Myth #2: They’re expensive and complicated.

Many people incorrectly assume that precious metal IRAs are highly exclusive, expensive, and difficult to set up. It’s actually no different than setting up any other retirement plan. You can rollover a portion or all of an existing account, or set up an independent precious metals IRA. Working with an experienced precious metals advisor and IRA liaison can simplify the process as these experts handle the paperwork on your behalf. The annual expense for maintaining a precious metals IRA is a fraction of what mainstream retirement accounts cost.

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👉 Related: How Much Money Do You Need to Start a Gold IRA?

Myth #3: You can’t have a 401(k) and a precious metals IRA.

Many investors are surprised to learn that the IRS doesn’t place a limit on the number of retirement accounts you can set up. You won’t be putting your workplace retirement plan or other types of IRAs in jeopardy by setting up a precious metals IRA. Of course, you’ll be subject to the same contribution limitations and investment restrictions, but you won’t be hampered by any new rules for having more than one account. Having a standard retirement account along with an IRA for precious metals simply means you have a more diversified and robust nest egg.

Myth #4: You can only contribute to one IRA at a time.

You might be able to open up more than one retirement account, but you’re still precluded from contributing to more than one at a time, right? Nope! This is another common misconception. The IRS allows investors to move funds into as many retirement accounts as they want as long as the annual contribution limit isn’t exceeded. This flexibility makes it easier to ensure all retirement accounts continue growing. Keep in mind that the IRS increased the annual contribution limit for 2023 to $6,500 to make up for increased living costs.

Myth #5: It’s no different than a standard IRA.

A common refrain among investors who decide against a precious metals IRA is that these accounts aren’t any different from mainstream options such as a 401(k) or traditional IRA. This misconception is usually fueled by confusion regarding paper gold vs physical gold. In reality, standard retirement accounts do offer some exposure to gold but only in the form of paper assets such as ETFs, mutual funds, and mining stocks. Alternatively, a precious metal IRA lets you invest directly in physical gold assets which opens you up to numerous advantages.

👉 Related: Traditional vs Gold IRA: Understanding the Differences

Myth #6: You need to be wealthy to invest in precious metals.

Some investors don’t entertain the idea of a precious metals IRA on the assumption you need to be wealthy to invest in gold and silver. The truth is actually quite different. The minimum amount required to open up a precious metals IRA is very accessible. Although it varies between providers, SBC Gold only asks investors to start with $5,000 for a new IRA. When it comes to annual IRA contributions, there are no minimum requirements. You can contribute as little or as much as you want, as long as you stay below the annual limits.

Myth #7: You can’t roll over standard accounts to a precious metals IRA.

Don’t want to start another retirement account from scratch? No problem. You can rollover funds from your current retirement plan to a newly established precious metals IRA. Whether you have a 401(k), Roth or Traditional IRA, TSP, 403B, or any other kind of retirement account, rolling over to a precious metals IRA is fairly straightforward. You can move over a portion of a current account or rollover everything. It’s completely dependent upon your preferences and investment goals.

If you’d like to learn more about setting up a precious metals IRA, contact one of our Precious Metal Advisors or IRA Liasons by calling (888) 812-9892 or using our live chat function.