When an economic crisis hits and the stock market crashes, people are afraid for their money and how they can protect it. If you have a retirement account that is a traditional IRA or a Roth IRA, you may be wondering whether it is protected by FDIC insurance. Here’s what you need to know. A gold IRA is a type of self-directed IRA that allows you to invest in gold bars for retirement. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as gold stocks or gold ETFs.
FDIC insurance covers traditional deposit accounts, and depositors don’t have to apply for FDIC insurance. Insurance coverage is automatic when a deposit account is opened with an FDIC-insured bank or financial institution. If you’re interested in deposit insurance through the FDIC, just make sure you invest your money in a deposit product with the bank. Many investors choose gold to diversify their portfolio, either by investing in a gold IRA or buying the metal outright
Before opening a gold IRA, remember that it’s not the only way to invest in gold with your retirement savings. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as paper money and stocks. Because the gold in a gold IRA must be stored in an IRS-approved depot, you can’t store it in a safe, a home safe, or under your mattress. When gold rises, you must also decide whether you would buy at or near the top of the market if you invested at that time
Gold IRAs follow the same general rules as traditional IRAs when it comes to tax benefits. You can choose between traditional IRA or Roth IRA contribution limits and withdrawals. The rules for withdrawing from a Gold IRA are similar to other individual retirement accounts. While the FDIC covers deposit accounts held within a traditional IRA or Roth IRA with a financial institution insured by the FDIC, not all IRA accounts fall into this category. The custodian is an IRS-approved financial institution (bank, trust, brokerage firm), but many financial services and mutual fund companies that process regular IRAs don’t do the self-directed version
A gold IRA also has similar tax benefits to a normal IRA, allowing interest to accrue tax-free until the owner is ready to retire. Some IRA companies guarantee to buy back the gold from you at current wholesale prices, but you could still lose money if you close the account, which is not usually the case when opening and closing regular IRAs. These funds buy up a basket of gold investments, such as stocks in various gold mining companies. Since IRA owners are required to accept distributions when they reach 73 years of age, they could be forced to sell gold at a lower price than they would
The IRS does not allow popular gold coins such as the South African Krugerrand or British state coins to be stored in a gold IRA.