How To Buy Silver with IRA Money

How To Buy Silver with IRA Money

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The stock market is notorious for its volatility, especially in these uncertain times. Traditionally safe investments, such as Certificates of Deposit, treasuries, bonds, and money-market funds, are currently offering near-zero interest rates.

In contrast, precious metals like silver have demonstrated a more reliable store of value and are increasingly viewed as a key option for retirement investors.

Many IRA owners are now diversifying their retirement portfolios by incorporating silver in the form of coins or bars. Silver's ability to maintain its purchasing power over time offers a degree of stability, particularly when the stock market experiences downturns.

By considering silver as part of your retirement strategy, you can safeguard your investments against market fluctuations and ensure a more secure financial future.

Before we get started:

Inflation and rising interest rates has destroyed many people's savings.  Many investors feel defeated and helpless, but you can fight back.

Gold and other precious metals have been used to protect against inflation for thousands of years.  And when you hold physical in a tax-protected savings account, it gets even better.

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Table of Contents

Reasons Why Silver May Be a Safe Bet

The Silver Institute reports that the demand for silver is always on a steady rise. From 2020 to 2021, the demand increased by 19%, which jumped to 21% by 2022. The supply, on the other hand, is rather limited. For instance, when the demand shot up by 19%, the supply only increased by 5%. This means that silver should remain valuable for a long time.

Silver is flexible and can be easily converted into cash if needed. Unlike stocks or bonds that may require market conditions to sell off, silver coins or bars can be sold at any time to a dealer who will give you their true value in cash.

Silver may also offer some inflation protection. Inflation is a wealth killer. $100 in 2013 is the same as almost $128 now (6.5% as of writing this). In June of 2022, it peaked at 9.1%. Silver can help protect from inflation because its value tends to increase with time.

Moreover, silver is affordable for most investors. Gold tends to be much more expensive than silver and out of reach of the average investor. But silver can offer similar benefits while being a fraction of the cost.

Finally, investing in silver can be a great way to diversify one’s portfolio. A person can put their money on high-risk, high-reward stocks or bonds to gain handsomely in the short term, but silver can be a more stable long-term option.

Considerations Before Investing in Physical Silver

Know the dealer. Given how valuable silver is, of course, there are scammers and unscrupulous people out there looking to take advantage of unsuspecting investors. Even when a person is lucky enough to find a dealer with real metal, they can oversell it.

That is why it is crucial to research the reputation of the dealer before investing in any silver coins or bars. One should consider online reviews and word-of-mouth before making a purchase.

Understand the different types of silver investments. Silver can be bought in the form of coins, bars, and ETFs (exchange-traded funds). Coins are small collectibles that come with a face value but much higher worth when sold to a dealer.

Bars are longer versions of coins with no face value but also hold more worth than their asking price. ETFs are certificates issued by banks or brokerage firms which track the performance of certain silver investments like stocks or bonds over time.

An investor should consider the different types and decide which one is best for their retirement portfolio. If unsure, combining all three types of investments can offer the best diversification.

Know your tax status. According to IRS rules, IRA investors cannot invest their money directly into silver coins or bars; it has to be done through a third-party custodian or trustee.

The custodian must report all transactions and gains every year as part of form 5498, which is due on May 15th of each year. It is important to keep track of these transactions because failure to do so can lead to penalties or even disqualification from penalty-free distributions from the IRA account.

Know the costs associated with buying silver for your IRA. Buying silver through an IRA requires an additional layer of fees, such as custodian charges, setup fees, storage fees, etc. These can add up quickly if the investor is not careful.

Lastly, decide on account types. There are different IRA retirement accounts that an investor can use to buy silver, each with its benefits and drawbacks.

For instance, traditional IRA accounts require the investor to pay taxes when they withdraw money, while Roth IRA accounts are funded with after-tax dollars, but withdrawals are not taxable. This makes it more suitable for retirement planning.

How to Start Buying Silver with Your IRA

The first step is to open a new IRA account with a custodian or trustee that specializes in precious metals investments. A custodian can be a bank, trust company, or other financial institution. They are responsible for the security and safekeeping of the investor’s silver investments.

The second step is finding a dealer. As mentioned, a dealer can break or make this investment plan worthwhile. The investor should research online reviews, speak to the dealer directly, and ensure they are reputable. More importantly, the dealer must be certified by legitimate organizations like the PMA (Precious Metals Association).

The third step is buying silver. This can be done with coins, bars, or ETFs. Coins are easier to buy since they come in different sizes and values. Bars usually have higher values but require more storage space. ETFs track investments with certificates over time instead of physical ownership of silver.

If buying coins or bars, the next step would be choosing a depository to store the silver. This is an extra layer of security that is beneficial to have, even if the custodian offers storage services. ETFs, on the other hand, are stored in a brokerage account.

Lastly, keep track of all investments and report them on form 5498 every year without fail. This record-keeping will help make sure everything stays within IRS regulations and avoid any issues or penalties due to negligence.

How to Make a Withdrawal from a Precious Metals IRA

Of course, after investing and you start seeing some growth, the goal of any investor is to eventually make a withdrawal. To do this, an investor must use a distribution form provided by the custodian.

This form should include all information about the silver investment, such as dates and amounts purchased, depository (where it was stored), and other details.Once the form is completed and submitted, the custodian will process the request and distribute funds from the IRA account accordingly.

The money can then be used for whatever purpose desired. It is important to keep in mind that withdrawals made before the investor is 59 ½ years of age are subject to fees or penalties depending on how much was withdrawn and when it was done so.

Another method that investors use to make withdrawals is through depository purchases and sales. This method involves selling silver stored in a depository to another person and then transferring the funds directly from the buyer’s account into the IRA account.

It’s important to note, however, that ETFs do not allow for depository purchases and sales since the silver cannot be taken out of the exchange. Instead, the investor will need to sell shares as they would with any other stock.

Optimizing Your Silver Investment

With careful planning, investors can optimize their investments for maximum benefit. They should consider setting up automatic purchases of physical silver over time or adding ETFs to their portfolio for greater diversification.

For instance, an investor could buy silver coins every month and then, at the end of the year, sell them off all at once for a chunk of cash. This would ensure a steady income and also minimize taxation due to capital gains laws.

An investor could also roll over a portion of their 401(k) into a precious metal IRA. This essentially means that their retirement funds are being used to buy silver and other precious metals, allowing them to reap the full benefits of a secure investment.

Apart from investing in physical silver, one can also invest in ETFs or miners. ETFs track investments with certificates over time instead of physical ownership of silver, while miners provide exposure to metal prices without having to own any silver directly.

Estate Planning After Investing in Silver

Estate planning is the process of planning for the future of your assets and estate when you are no longer alive. This includes naming a beneficiary or successor custodian for your silver investments. This will ensure that all assets remain secure and are transferred smoothly upon death.

It is also advised that investors regularly review their investments and make adjustments as needed. If an estate plan fails to meet current laws and regulations, the investor’s family or heirs could end up losing a large amount of money due to excessive fees and taxes.

In Conclusion

Investing in silver with an IRA is a great way to secure one’s financial future by diversifying their portfolio. With careful planning and some strategic decision-making, investors can ensure that they are making the most out of their investments while avoiding excessive taxation or penalties.

If needed, financial experts and attorneys can provide extra guidance and advice along the way.

Remember to read our list of the Best Gold Investment Companies to work with, before investing your hard-earned savings!

>> CLICK HERE to read our list of the Top Silver & Gold Investment Companies. <<

Charles Turner

Hi, I'm Charles Turner, founder of Turner Investments.  I created Turner Investments to provide education and guidance to individuals interested in personal finance.

My goal is to make Turner Investments a valuable resource for anyone looking to learn more about personal finance and make smarter investment decisions.

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