Tax-Advantaged Gold? There Must Be a Catch
A 35% tax-saving on investment gold in an IRA is always appealing but there has to be a catch – just how much DOES a gold IRA cost?
There’s no such thing as a free lunch, so when the IRS opened up the possibility of buying tax-advantaged gold bullion you’d have been wise to expect making savings on one hand, but to pay higher fees on the other.
And you typically will. Except this isn’t always the case.
We believe it would be a nonsense to make this incredible investment vehicle available, and then completely ruin it’s potential with expensive setup, maintenance and storage fees.
Thankfully that’s the position the better Gold IRA companies are taking – and leading Gold IRA specialists like Goldco charge surprisingly little for the service…
Now costs of a Gold IRA do vary considerably across the marketplace, with some companies charging as much as four figures for set up and annual fees, so what is it that makes up these costs and what do companies do in return for your hard-earned money?
Gold IRA costs consist of three main elements: the initial set up fee, ongoing maintenance fees and charges for vaulting your gold or other precious metals:
Initial Set Up Fee
This is the point at which Gold IRA specialists really earn their keep – as the process must be carried out to exacting standards to follow IRS rules.
For Gold IRA Rollovers and Gold IRA Transfers the company must set up a new self directed IRA, first liaising with your soon-to-be custodian and IRS-approved depository and then liaise with your existing 401k plan operator or IRA trustee.
After much back-and-forth communication, funds are released from your existing account and added to your new SDIRA – within strict time-frames to avoid tax penalties. This guarantees your new account maintains it’s tax-advantaged status.
The specialist will organize your vaulting and work with an approved trustee or custodian – and then with the funds in place, they will work to your specifications or discuss suggested bullion portfolios based on your needs.
With a purchase order agreed, the Gold IRA Specialist will then securely ship the metals directly to your high-security bullion depository, where they will be overseen by your IRA custodian.
Due to the work involved and dealing with several third parties, this can take 2-3 weeks to carry out – and even at a low hourly rate, fees can mount up where specialists charge by the hour.
Set up can costs can be between $500-$1000 unless you’re working with a high volume specialist.
Annual Maintenance Charges
Maintenance charges for the first year can often be included in set-up fees – but these cover the custodian’s duties across the year – to maintain your self-directed IRA on your behalf, carrying out your requests and ensuring the IRS is notified of any tax events.
Again, like fees, some companies can charge based on the work involved and so it pays to look into the fee break downs given.
Bullion Vaulting Costs
High security bullion depositories are not low-cost facilities to build, run and maintain – but they can offer the ultimate in Fort Knox-like security to ensure your metals are held safely and to IRS standards.
They will typically include full at-market-value insurance arranged through top-tier specialist insurance houses – to absolutely ensure there is no chance of loss or damage to your stored assets.
Some facilities will charge a percentage of total value held, which for $100k+ investments soon adds up, eating into capital appreciation. Others charge a fixed fee which can offer good value, especially if you’re planning to add to your holdings over time.
Percentage rates can run from 0.4% up to 2.5% and fixed fees tend to be around the $250-$500 mark.
Adding it All Up
These fees are never going to be insubstantial, but given the amount of work involved and the professional services being received it’s not surprising when set up and annual costs can exceed $1000.
Ballpark hourly rates can be equivalent to accountants or attorneys – and indeed leading Gold IRA Specialists will have in-house financial and legal professionals working on your behalf.
Some companies carry out such a high volume of Gold IRA Rollovers and Transfers, and have such good working relationships with top custodians and vaulting facilities that they benefit from excellent economies of scale.
And because the whole idea of a Gold IRA is to help you save for your retirement, they are happy to pass these economies of scale onto you, their customer.
Goldco’s set-up fees total only $260 – and include the IRA setup, your first year’s storage and first year’s maintenance. It even includes the bank’s $30 charge for a wire.
In the following years, their annual maintenance charge is only $80 – and their vaulting fee is a low $100, giving a total annual cost of $180 – and for qualifying accounts, these fees can be reduced still further.
To summarize, when calculating the cost of a Gold IRA, expect to pay $750-1000 for initial set up and first year charges, then $200-$500 maintenance and 0.5-1.0% for vaulting, unless working with a volume specialist such as Goldco.
Want more? Learn how to buy gold in the most cost-effective and tax-efficient manner – our free Gold IRA Guide and Investor Kit, can be delivered 100% free of charge direct to your doorstep.
Claim your FREE Gold
Essential guides when considering gold