Last Updated on January 15, 2024 by Ben
Gold IRAs are also called Gold 401(k)s, Gold Roth IRAs, or Gold Self-Directed IRAs. They have been around for many years and are touted as being one of the most secure retirement investment options available today. They provide both an opportunity to diversify your investments with assets outside of stocks and bonds while also providing protection against inflation. However, there are some prices associated with opening a Gold IRA account which we will discuss below.
Understanding Gold IRA Fees
Physical metals are things like gold or silver. You can buy and invest in these metals in an IRA. The cost of physical metals is slightly higher than the cost of digital transactions, which are all online. No stocks or bonds need to be moved or insured, as they do with physical gold IRAs.
People who want to have peace of mind on their investment should buy a physical precious metal IRA. The fees are higher, but that doesn’t matter because there is no risk of anything happening to the company.
Most precious metal dealers are market makers. They always know the prices of the metals they have in their inventory. If the dealer’s buy price were the same as their sell price, they would not make any money. And they would be out of business quickly. The difference between the price a person pays for a house and what they get from selling it is called the spread.
For example, if a dealer has to sell a gold bullion coin for $2,140 and repurchase it at the same time for $2,000. Then they have a 7% spread. You need to remember that every bar and coin has a different price. This is called the spread. The spread can change over time depending on supply and demand, which means the price of coins can go up or down.
Buy/sell spreads are the difference between what you pay when you buy and what you get when you sell. Southern California dealers are usually the most expensive. This means that people who invest in gold IRAs lose lots of money to these companies every year. There is a good probability that you are already talking with a dealer that charges too much. Or, you’ve seen their ads because they have a lot of money to spend on marketing.
These companies are appealing because of the brands. They have famous people who are their spokespersons. They charge more than discount dealers, but you can spend less if you buy at a discount dealer.
What Are Gold IRA Fees and Costs?
Set-up fees are always present with IRAs. You pay this when you first open an account. The amount of the fee depends on what type of account you have selected. The cheapest set-up fee is $50, and the most expensive one is $500 up.
All IRAs do not have transaction fees. When you work with a brokerage firm or an independent trustee, they will charge you a fee for their services. This is like a commission. If you want to finance in the stock market, go to an investment website. These websites have a fee. But this fee is much lower than if you had gone to a private investor for the same service.
When you close your account, you will have to pay a fee. If you do not roll the money over into another account, you will have to pay about $150. This may become difficult if you are moving large amounts of money around often.
Mutual Fund Management Fees
Mutual fund management fees are when you own a mutual fund, and you have to pay. The rate can be as low as half of a percent or as high as two percent. The management rate is a percentage of the money in your fund. It pays for the person who looks after your money. Index funds have lower management fees than mutual funds.
Load fees are charges that mutual funds companies charge. They are similar to commissions that traditional brokerage firms charge. There are some funds that charge you the fee when you buy them. These are called front-end loads. Other funds will charge you fees later, which are called back-end loads.
Gold IRA Setup and Administration Fees
The great headline is that there are no fees when you move your IRA from a traditional account to a precious metals account. There is not even any government-related fee. However, some companies might have their own account application fees. Someone who is approved to work with precious metals IRAs might charge a fee to open an account. This is because self-directed IRAs have special rules. Every administrator who imposes a fee will have a different price. The average for this type of fee is $50, but it can be more or less.
Commissions and Markups on Coins
There are many ways to buy precious metals with your IRA account. There are transaction fees you would expect when you buy or sell coins or bars in your account. These typical fees are assessed on a per-transaction basis. You need to pay commission fees if you buy or sell something. The more you buy or sell, the more commission fees you will have to pay.
There is no way out of these fees, no matter which administrator you choose. These fees will be different for each administrator, but a good evaluation is $40 for each transaction.
These rates should not be confused with the markup over a spot that the coin dealers will also charge. Besides the worth of the gold, silver, platinum, or palladium in the coins or bars you buy, you will pay a certain amount. This is on top of the spot price for these precious metals. Everyone knows how gold prices fluctuate from day to day. The more popular a particular product is, the higher the price will be in order to keep pace with demand on the open market.
Yearly Maintenance Fees
You need to pay an application and startup fee on your precious metals IRA. But the person who helps you manage it can’t work forever. They will also charge you an annual account maintenance fee. This covers things like administration of the account, your periodic statement processing and distribution, and record-keeping of your various holdings.
These typical account administration charges range anywhere from $75 per annum up to several hundred dollars annually. When you get your information kit or account setup paperwork, make sure to look for the disclosure of annual fees. These should be plainly spelled out in the relevant paperwork that you receive.
Some companies will offer a discounted first year’s fee or even a discount on the annual fee turning on how much you have in your account. Do not choose a company that charges sliding scale fees. They get money based on the value of the metals you have in your account, and it seems like they only take a small percentage. If you have a lot of money in the bank, the more fees your bank charges. Fees can get very expensive over time, and you might not even know it.
A vault is a location where you keep your gold, silver, platinum, and palladium. The vault will also charge fees for storing and safeguarding the metals. Gold, silver, platinum, or palladium must be stored in IRS-approved depositories that are in offsite locations from your account administrator.
The company Brinks is a depositary. It charges you fees every year to pay for the costs of being a depositary. The fees depend on which depository your administrator chooses, but they are usually not very high unless you have many transactions in one year. These companies charge between half a cent and one cent each year for your gold.
The amount they charge is based on the value of the gold, not how much you have. Some companies might demand you more if you want to store your precious metals in the general vault. But it is better if you ask for individualized, segregated storage.
There are some fees you have to pay for. They are called wire transfer fees. These are the fee that custodians charge to send money to a bank or other place. Most of these custodians will charge this fee if you ask them to wire money or when they need to send it for you. You will pay a fee for every wire transfer. The amount of the fee is around $25. You need to make sure that this is included in your paperwork from your account opening and around somewhere else where you can see it clearly.
Precious metals such as gold and silver can be a great investment for anyone looking to make their money go further. However, because they’re considered more valuable than other investments, it also means that the expenses and fees associated with them are higher too.
Investing your retirement plan into gold is not an easy task, but with Gold IRAs, you have more control of how much of your investment will be tied up when buying gold coins or bullion bars.