Investing in gold can be a smart way to hedge against inflation, increase your retirement account, and diversify your overall portfolio. However, taxation of gold investments outside of an IRA are taxed as collectibles, with a maximum tax rate of 28%. When investing in gold through an IRA, the taxation rules are different. The main advantage of IRAs is that investments made in the IRA are taxable when the investor withdraws them.
With a Gold IRA or Precious Metals IRA, you'll still have beneficiaries, receive quarterly statements, and be able to log in online to check your balances. To comply with the IRA's gold tax rules, you must limit your purchases of precious metals to IRS-acceptable coins and bars. Profits from investments held for more than one year are taxed as ordinary income, but with a maximum tax rate limit of 28%. If you're in a high-income tax category, you'll pay more than 28% in taxes.
You won't have physical possession of the gold you're investing in, which means your gold must be stored with an approved broker. The IRS has implemented additional tax reporting and recordkeeping requirements for self-directed gold IRAs because of the more complicated assets they own. Allegiance Gold offers a simplified process with a senior portfolio manager and an IRA specialist helping you along the way. These investments are available in a normal brokerage IRA, which means you won't have to go through the extra work and costs of setting up a self-directed gold IRA.
Once you turn 72, you will be required to accept the Minimum Required Distributions (RMD) of a traditional Gold IRA (though not a Roth). When it comes to taxation of gold investments in an IRA, you'll invest your retirement funds based on a specific tax treatment (before or after tax), and then make future distributions. IRA Gold rules require you to store eligible precious metals in a national warehouse, bank, or external trustee approved by the IRS.