Should Retirement Plans For Individuals Hold Precious Metals And How?

Submitted by Dmitriy Fomichenko, founder and president of Sense Financial Services LLC. This article is primarily useful for US and Canada based readers.

Diversifying a portfolio is the first thing they teach you about investment, especially for retirement plans. With these funds, security is often prioritized over quick, short term speculation. For that reason, precious metals and other commodities have now become preferred choices for retirement plans for individuals. Traditionally, this is not allowed for qualified plans, but things have change and now investors are looking at innovative retirement plans for individuals to invest in commodities.

Why Precious metals work for retirement plans for individuals?

Retirement plans for individuals are often all about flexibility and security. Unlike a traditional 401k account with an employer, people look at retirement plans for individuals as it allows them to take better control of their retirement funds. Precious metals or commodities work because trading can be done quicker with less legality involved than other investments, say real estate for example.

A person can also choose to play safe with a buy-and-hold strategy, which can guard their nest egg against inflation. He or she can also choose to speculate and trade more often when opportunities arise.

Precious metals for an IRA

An IRA can invest in precious metals, as allowed by the IRS, as long as the precious metals are held by the IRA account itself. For example, an investor cannot use the fund from his IRA to purchase gold and silver and then hold it at his home or in a deposit box.

The problem with that is that a traditional IRA would require a trustee or a custodian, who can decide to approve and facilitate the transaction or not. Some custodians can shy away from precious metals or commodities, especially when it involves physical storage of the assets such as gold coins or bars.

Self directed checkbook IRA can be used to avoid this problem. With this, an IRA LLC will be set up so that the account holder can also act as the trustee of the account and make all the decisions on their own. This eliminates the need for custodial approval, however, account holders are recommended to study their options carefully to avoid engaging in prohibited transactions.

Precious metals for Solo 401k

Another popular option of retirement plans for individuals is Solo 401k. This is designed for self employed individuals and small business owners, and it offers even more control than an IRA. With a self directed Solo 401k, adding precious metals becomes even easier, as the account holders are already the trustee of the account. They can forgo the extra step of setting up an LLC to gain total control over their funds.

Just like an IRA, a Solo 401k can hold non-traditional assets, including precious metals, real estate, and private businesses. This flexibility makes it more attractive to investors who focus on diversifying their portfolio.

About the author: Dmitriy Fomichenko is the founder and president of Sense Financial Services LLC, a boutique financial firm specializing in self-directed retirement accounts with checkbook control. He began his career in financial planning and real estate investing in 2000. He owns multiple investment properties in various states and is a licensed California Real Estate Broker. Over the years, he has instructed hundreds of investment and financial planning seminars and has mentored thousands of investors.

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