Adding Silver to Your Self-Directed IRA: A Step-by-Step Guide
When you want to save for retirement, you want to invest in assets that will retain as much as, if not all of, their value and sufficiently weather a variety of economic threats. You may also want to diversify your portfolio and invest in more than just stocks and bonds.
Your solution, then, could involve investing in precious metals, specifically silver. Silver has enjoyed a longstanding reputation for holding its own value and providing a solid method for building wealth. It remains one of the most reliable and durable precious metals currently available to investors.
When you want to add it to your portfolio, you can start by opening and maintaining a precious metals individual retirement account, or IRA. Follow along with this convenient guide from Sedona Bullion to learn how to add silver to your precious metals IRA today.
Step 1: Learn about the Rules of Investing in Silver
When you open and add silver to a precious metals IRA, you can enjoy similar tax advantages that are found with cash-based retirement savings accounts. However, to enjoy those benefits, you must comply with the IRS’s rules when it comes to purchasing and adding silver to this type of account.
Specifically, the silver you invest in must meet quality and purity standards. The IRS will allow you to add silver that is 0.999 fine to your precious metals IRA. You can also invest in silver coins like the American Eagle Standard and have them meet the IRS standards for this type of account.
Further, the IRS requires you to open and maintain a precious metals silver IRA that an IRS-approved custodian or trustee holds for you. To qualify for the IRS tax benefits for it, you cannot hold your own precious metals IRA.
To find a trusted custodian, you can research online and select one with favorable client reviews. You can also find a custodian for this type of IRA from a variety of financial institutions, most notably banks and credit unions.
Step 2: Open Your Self-directed Individual Retirement Account
Your next step to investing in silver for your retirement involves opening a self-directed precious metals IRA. The custodian for your account is the actual financial institution at which you choose to open this account. The custodian will maintain the legal paperwork for your silver IRA and also select the depository at which the silver that you purchase will be held.
You also need to do your research to find out what fees are associated with you opening and funding this type of retirement account. For instance, you may have to pay fees to open the IRA before you put any funds into it. You may also have to pay the custodian an annual fee to maintain the IRA for you.
By learning about the fees upfront, you can plan ahead for how much money you actually want to put into your silver precious metals IRA. You can also anticipate how much money you can save for retirement and avoid any confusion about what you will pay in fees and when to your IRA’s custodian.
Step 3: Fund Your Self-directed Silver IRA
The next step in adding silver to your retirement investments portfolio involves funding your new silver IRA. Like any savings account, you have the option of using cash to fund it. However, depending on how much you want to add to your new self-directed IRA, you may prefer to transfer the funds from assets you already have opened and established at other financial institutions.
For example, you can transfer funds from assets like:
- A Roth IRA
- A traditional IRA
- An SEP IRA
- A Simple IRA
- A 401(k), TSP, 457 or 403(b)
Before you select the manner in which you fund your silver IRA, you may need to take into account what financial implications are involved with transferring funds from one account to another. You may be able to transfer funds with little to no penalty, depending on what kind of account from which you are transferring the money.
You also need to be aware of how much you can contribute to this account and how long it can take for those funds to transfer. Some transfers can take between one to three weeks to complete.
Step 4: Select Your Precious Metals Dealer
Your next step in the process of adding silver to your self-directed IRA involves choosing your precious metals dealer. You need to select one that is honest and has a solid reputation for providing IRS-approved quality silver at realistic prices.
The best way to find a precious metals dealer that offers the purity of silver required for this type of IRA involves getting a referral from your custodian. Your custodian should be able to provide you with several trustworthy options.
You can also select one yourself independently of your custodian. However, you need to do your research on what kinds of reviews each dealer you are considering has. You want to select someone who has high reviews from previous clients. When you choose one with favorable client reviews, you have the reasonable assurance of receiving the same level of service yourself if you buy silver from it.
You also want to select one that is transparent and forthcoming with information about pricing. Likewise, you want to choose a precious metals dealer that offers a reasonable selection of IRS-approved silver products like coins and bars.
Step 5: Choose Your Silver Depository
After you select a precious metals dealer from which to buy silver for your self-directed IRA, you then need to select a depository at which to hold it. Again, you can get a referral for a depository from your IRA’s custodian. You also have the option of choosing one yourself.
Regardless, you must ensure the depository is one that meets IRS standards. You also want to select one that has a high-value insurance policy so you can recoup the value of your silver, if necessary.
Additionally, you want to select a depository for your silver that prioritizes keeping your precious metals investment safe. You want the peace of mind of knowing that the full value of your silver is available to you and that the value will remain intact until you make changes to your self-directed IRA.
Ensuring these qualities is vital for your confidence in your self-directed silver IRA. After all, your custodian will not send the silver to you directly to hold for yourself. You must entrust someone else to hold it for you, which is why you should do your research before selecting a precious metals depository to safeguard your silver for your self-directed IRA.
Step Six: Purchase Your Silver
After you select a reputable depository, you can then go ahead and purchase your silver. In fact, you will not be the person actually purchasing the silver for your self-directed IRA. Rather, the custodian for this account will use funds from it to purchase the silver on your behalf.
You can ask for your custodian’s advice about in what forms to buy silver. You can also select the form of silver yourself, as long as it meets the required IRS purity standards.
After your custodian purchases the silver for you, it will be sent to the depository for safekeeping. The depository will hold the silver under your self-directed IRA’s name.
As an extra precaution, you want to ensure the type of silver you purchase is on your custodian’s list of approved precious metals. You also want to ensure the entire transaction complies with IRS regulations to avoid being penalized or having your account closed for non-compliance or fraud.
Step 7: Monitor Your Self-directed Silver IRA
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