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People often use cash for their retirement investments, but precious metals like gold, silver, platinum, and palladium are worthy assets. Not only do these metals have a long history as exchangeable currency, but they also help diversify portfolios during times of inflation. Investing in gold or another metal requires a gold IRA account.
As you research the pros and cons of this particular self-directed individual retirement account, you might ask yourself, “How much are gold IRA fees?” To help you make an informed decision about this alternative asset investment opportunity, we explain the various expenses of a gold IRA in the guide below.
How to Understand Gold IRA Costs
Physical gold, silver, and other precious metals and investing them in your gold IRA are usually more costly to purchase than digital transactions involving paper assets. The increased cost exists due to the lack of stocks, bonds, and insurance requirements to transfer digital assets.
The higher investment costs should not be a deterrent against alternative asset investments. The more you know about the initial costs of buying gold, the more you will understand the fees necessary with opening and maintaining a gold IRA.
Market Maker and Spread
A market maker is a person or firm that buys and sells securities like precious metals and provides liquidity and depth to markets. Gold dealers stay abreast of the prices of metals in their possessions because they use the information to make a profit on their sales. The difference in price between what a market maker pays for gold and what they sell it for is the profit or spread.
Every bullion and coin has a different price, which can change over time. Supply and demand influence the cost of investable precious metals.
How Much Are Gold IRA Fees?
Setup and Administration Fees
You can fund your gold IRA by purchasing precious metals or rolling over funds from a standard IRA or 401(k) account. However, there are no federally mandated fees to roll over or transfer accounts. That does not mean there are no setup or administration fees you’d have to pay.
You will always be responsible for paying a setup fee for an IRA when you open the account. How much you pay depends on your account type and your choice of custodian. Expenses can range from $50 to $500 and up.
The fee is necessary because trustees must adhere to strict IRS rules for opening and maintaining a gold IRA account, including taxation, transfer of goods, and record-keeping. The investment specialist will also organize your physical gold’s vaulting or storage and arrange for the metal’s shipment to the IRS-approved depository.
You would not encounter transaction fees with every IRA, but they are typical for gold IRAs. Transaction fees are charges from an independent trustee or brokerage firm for their services when you initiate the purchase or sale of gold or other precious metals. It is similar to a commission, but they are passing the costs from the bullion or coin dealer to you.
The more transactions you make, the more money you will pay in transaction fees. The price will differ among custodians, but the average amount is $40.
Closing your gold IRA account is not free, even if you roll the funds into another account. Termination fees generally run about $150. This charge can quickly become expensive if you frequently move large amounts of money.
Gold Coin Markups
People often confuse transaction fees with coin markups, another cost that coin dealers assess. When you buy precious metals, you are not only paying to own the bullion or coin. You must also pay a specific premium on top of the spot price.
The amount for coin markups depends on the product you purchase, its metal, and the demand for the product. The prices of precious metals fluctuate daily. The greater the public’s need for a product, the higher its price will be, meaning you will pay a more significant premium or markup.
Annual Maintenance Fees
Gold IRAs carry yearly maintenance fees beyond the setup and admin expenses. The maintenance fee covers various services, including quarterly account statement processing and distribution, record-keeping, and other administrative functions.
Annual fees can vary significantly based on whom you choose to manage your gold IRA. Costs can range from $75 to several hundred dollars annually. Reputable gold IRA custodians will plainly explain their annual fee requirements and expectations in your paperwork.
Some firms and individual custodians offer discounts on annual fees or may waive the first payment based on your initial account amount. Be cautious of companies that charge sliding scale fees; they base their prices on the current value of the gold in your account. If you have numerous assets, the costs from sliding scale charges will become expensive over time.
Gold Storage Fees
People sometimes assume that they can invest in gold and retain possession of it. As per IRS regulations, invested precious metals must remain in a qualified depository until the time of withdrawal. High-security bullion vaults provide top-tier security for your assets, so you will need to pay fees for storage.
Vaulting costs may also include full insurance at market value on your assets. Depository fees may also include a percentage of the total value of your assets or a flat fee.
Adding It Together
Unfortunately, opening a gold IRA account demands paying fees. Costs associated with these accounts vary across the marketplace, with some financial institutions charging up to four figures for setup fees and annual expenses. The expenses can be substantial when you break the costs of owning a gold IRA account into its three primary elements: initial setup, ongoing maintenance, and storage fees.
Generally, your precious metals IRA account could cost you more than $1,000 to set up and pay the first annual fee. The amount is similar to having a personal accountant or lawyer on retainer.
You don’t have to pay high fees on your gold IRA account if you choose the proper custodian. Some brokerage firms, savings and loans associations, banks, and other approved financial institutions have a high volume of gold IRA rollovers and transfers, allowing them to develop robust relationships with highly qualified trustees and storage facilities.
As a result of these partnerships, financial organizations receive benefits, such as economies of scale, which they can pass to you as their client. You can receive substantial savings on maintaining your account and storage of your physical gold bullion or coins. Instead of paying four figures every year, you could spend several hundred dollars.
FAQs About Gold IRA Fees
Do Gold IRAs Have Miscellaneous Fees?
You will likely come across fees outside the typical expenses for a gold IRA, but it depends on whom you choose as your custodian. For instance, you may have to pay transfer fees when you move assets into your account. Transfer fees the custodian charges may apply to funds they wire to you or funds they send to a coin or bullion dealer or depository on your behalf.
The fee for wire transfers is usually around $25. Be sure to check for wire transfer fees and other costs in the documents you receive when opening a gold IRA. The custodian should fully disclose all expected expenses.
Are Gold IRA Fees Similar to Other IRAs?
Not exactly. Precious metals IRA accounts generally have special costs associated with that particular type of alternative asset investment. The charges you incur are not only different than a standard IRA, but they will also vary depending on your choice of custodian.
Can You Avoid Storage Fees by Keeping Your Gold at Home?
Unfortunately, storage fees will be part of your expenses if you choose to open a precious metals IRA account. According to IRS regulations, anyone with a gold IRA must not have the invested gold in their physical possession. Keeping the asset at home or in a non-approved storage facility will result in withdrawal penalties and taxation.
All physical gold, silver, palladium, and platinum you invest into a gold IRA must remain in an approved storage facility until you make a formal withdrawal. The custodian or trustee you hire to manage your investment will be responsible for completing any metal purchases you make and handling its transportation to the vault in a manner that allows easy tracking and record-keeping for the transaction.
Turn to Oxford Gold Group to Set Up Your Gold IRA Today
If you are ready to diversify your retirement investments with a gold IRA account, do not hesitate to reach out to Oxford Gold Group. Our mission is to provide every client with comprehensive information about precious metal investments to help everyday investors make the best decisions for their financial future.
We understand that no two clients are identical, so we tailor our services to meet specific needs. Our investment professionals are here to answer all of your questions, including “how much are gold IRA fees?” Contact us today to schedule a consultation.