Costs to Start a Gold IRA: Costs to Open This Retirement Account
For many investors, gold is one of the precious metals that can be used to invest their retirement savings according to their retirement plan. A gold IRA is a specialized individual retirement account that allows investors to hold physical metal with 99.5% purity according to the requirements of the IRS. Investors can hold IRS-approved coins, bullions, bars, or combinations of these in their investment portfolios, for example, American Buffalo, American Gold Eagle, and Kangaroo coins.
Along with diversification, another major benefit of including self-directed IRAs like Gold IRAs consisting of Gold bars, coins, or bullions in a retirement portfolio is their ability to hedge market volatility and inflation risks. An investor can open a Gold-IRA through a broker using pre-tax or after-tax dollars. The broker or custodian will be responsible for managing the account efficiently. While Gold IRAs have numerous benefits, including higher control, tax advantage, long-term return diversification, and hedging, one of the major disadvantages is the variety of custodian fees.
Before investing retirement funds in precious metal IRAs like Gold IRAs, an investor must review and consider the costs associated with the investment process. An investor can also negotiate some of the potential annual costs.
To begin the setup process of a newly established IRA, a custodian might ask the investor for application fees or 401K rollover. Even though the application or setup fees vary from custodian to custodian, the average custodian fee is around $50 in the USA.
In order to purchase or sell special metal assets like gold bullion, coins, or bars, a custodian would charge a transaction or purchasing fee from the investor. This fee is also called the spread or seller fee. The transaction fee also varies from transaction to transaction. The custodians charge 33% of the gold purchase price of the asset or a flat rate. The average purchasing fee is around $40 in the USA.
Annual Storage Fee
According to the guidelines given by IRS, the actual metal must be held at an IRS-approved location by a third party, i.e., an IRS-approved depository. These depositories charge an annual amount from the investors to hold and safeguard the physical gold and include insurance fees as liability insurance. Storage cost depends on the depository chosen and the amount of asset that has been stored. The average storage fee in the USA is 0.5-1%, depending on the amount of precious metal held.
Depending on every outgoing wire, an investor is supposed to pay wiring fees to the IRA custodian. The average wiring fee in the USA is $25 per wire.
Annual Account fee
Custodians overlook the bookkeeping, administration, and overall account maintenance task as part of their job. To do this, they charge a fee that varies because discounts are sometimes given based on the size of the account. Every custodian's account fee, also known as the maintenance fee, is disclosed in the account paperwork. The average account fee ranges from $70-$300 in the USA.
Gold IRA Resources
- How to Convert Your IRA to Gold in 3 Steps
- Should You Get a Gold IRA?
- How Many IRAs Can You Have? Roth Ira & Gold IRA?
- Can You Store Your IRA's Gold at Home?
- How to Avoid Gold IRA Scams