Silver IRAs give you a way to add a tangible asset to your retirement savings portfolio. Holding silver inside of this type of account helps you diversify and protect your wealth against economic uncertainty.
If you’re like most people, you are concerned about the economy, the political environment, and global instability. It’s only natural to want to protect your assets or at least reduce some of your risk. You’re not alone – recent surveys show that 77% of Americans don’t feel great about our economy.
In response to these concerns, many investors look at precious metals as a way to preserve their financial future. Gold and silver have long been considered safe-haven assets during uncertain times.
One increasingly popular approach is a Silver IRA, which lets you hold physical silver assets while also getting tax benefits. In this guide, we’ll cover how Silver IRAs can help you preserve and grow your wealth and provide a potential hedge against economic uncertainty.
What is a Silver IRA?
A Silver IRA is a self-directed individual retirement account (IRA) that allows investors to hold physical silver in bullion, including rounds, bars, and coins. You can use several types of retirement accounts for this type of IRA like:
Traditional IRA
Roth IRA
SEP IRA
SIMPLE IRA
Rollover employer plans like 401(k) or 403(b)
Why set up a Silver IRA?
Here are the key reasons why people look at investing in silver with their retirement funds:
Long-term value
Silver’s value increased by over 30% in 2024. Part of the reason is rising demand in industries like technology, solar energy, and medicine. And, like all precious metals, there’s only so much supply, and we can’t just make more. Limited supply with increasing demand drives up the value of silver over time.
Portfolio diversification
Adding a precious metal like silver to your portfolio can help reduce overall risk because it doesn’t always follow the same trends as stocks and bonds. It also gives you the security of a tangible asset. If you own stock in a company or mutual funds, they rely on the company’s performance for value.
Tax benefits
The value of silver in your Silver IRA grows tax-free, so you’ll only pay taxes when you make withdrawals in retirement. This helps your investment compound over time.
A silver IRA can also potentially reduce your taxable income; as one Redditor mentioned on r/Silverbugs, “It is the best money I have spent. I for one was in a position where I had large tax bills and I was able to substantially reduce my tax bill by loading up a SEP IRA.”
Metals in a silver IRA
You can use your IRA to buy IRA-approved metals like silver coins or bars. Their requirements for silver and other precious metals include:
Purity: Coins or bars must be at least .999 fine silver.
Approved producers: Silver bullion must come from national mints or certified refiners.
Condition: Coins must be in brilliant, uncirculated condition.
Some of the common bullion coins and bars that qualify include:
Canadian Silver Maple Leaf coins
Austrian Silver Philharmonic coins
Royal Canadian Mint silver bars
Sunshine Mint silver bars
PAMP Suisse silver bars
How to invest in a Silver IRA
There’s four easy steps to set up a Silver IRA:
Step 1. Choose a custodian
Decide on a custodian who specializes in self-directed IRAs and precious metals. The role of the IRA custodian is to manage your transactions and follow the IRS’s strict rules for these accounts. They also take care of storing your silver in an approved depository until you reach retirement age.
Step 2. Fund your account
You can fund your Silver IRA by rolling over funds from existing retirement accounts, like 401(k)s or traditional IRAs, or through direct contributions.
Step 3. Purchase IRS-approved silver
Once your account has the funds, you’ll work with a precious metals dealer like the Swiss America team to decide on which IRS-approved silver products you want to buy. You’ll then direct the custodian to buy the metals you want. The custodian makes the purchase, sets up secure storage, and provides annual government reporting for tax purposes.
Step 4. Manage your account
You can easily manage your account through our online portal which gives you real-time access to purchase history and current market pricing. When you are ready to withdraw from your account at retirement age, you can work with your custodian to liquidate your metals and receive cash. Or, you can ask the custodian to ship your metals to you.
Tax rules for Silver IRAs
General tax rules for all precious metals IRAs include:
Withdrawal age
You can start liquidating or receiving your metals at age 59½. If you try to do this earlier, you’ll be subject to a 10% early withdrawal penalty and ordinary income tax. That’s also why the IRS regulations say you can’t store your metals at home because they consider that an actual distribution.
If you set up a Silver Roth IRA, you can take out your contributions at any time without penalty since you’ve already paid taxes on those funds. But, if you have capital gains on your metals, you have to wait for the retirement age to withdraw those funds.
Required minimum distributions (RMDs)
You also can’t just leave your metals in your account forever. At some point, the IRS wants to get their money 🤓. So, they require that you start taking minimum distributions at age 73. The only exception here is if you have a Roth Silver IRA, which gives you the benefit of not having to take RMDs.
Tax treatment
For traditional Silver IRAs, your withdrawals get taxed as ordinary taxable income, not capital gains, which may affect your retirement tax bracket. You also might be able to deduct your annual contributions depending on income limits and other factors.
You don’t have to pay taxes for metals in a Roth IRA if you’ve had the account for at least 5 years and are at retirement age.
Drawbacks to a Silver IRA
No investment is perfect, so it’s always a good idea to understand the pros and cons. Be aware that holding silver in your IRA has these potential drawbacks:
Volatility in silver prices
Silver can go up and down quickly. The reason is that it has industrial demand for goods like solar panels or electric vehicles. If there’s an economic downturn and fewer people buying these products, demand for silver can drop.
Another aspect of silver prices is that the overall market is much smaller than gold, so any changes in demand or supply have a bigger impact. For example, the gold market is currently 4.2 trillion, while the total physical market is about $20 billion.
Consider your risk tolerance and what’s happening in the market to decide if silver is right for you.
Fees for storage and management
As we mentioned above, your custodian arranges for secure storage of your metals which has a small cost. You’ll also have account management fees. Many of our customers work with Gold Star Trust, and their current fees are:
One-time account set-up fee: $50
Annual maintenance fee: $90
Annual commingled storage fee: $100
They don’t charge any fees for buying, selling, or exchanging your metals.
Non-income producing asset
People buy physical precious metals as a way to protect their wealth. Many consider it to be an “insurance policy.” The drawback is that your metals won’t generate income. This is why many advisors recommend you hold about 5%-10% of your overall portfolio in gold and silver.
Why work with Swiss America?
If you want to get started with silver or other precious metals, here’s why investors choose Swiss America as their precious metals dealer:
40+ Years of experience: We’ve successfully helped investors buy metals through market changes since the early 1980s.
Satisfied clients: Our happy customers enjoy expert service and support.
Education and advice: Guidance on everything from storage and silver IRAs to portfolio integration and market trends to help you make the best decisions.
Transparent pricing: We provide competitive pricing with no hidden fees.
Precious metals: Besides silver, you can also buy gold coins or bars as well as platinum bullion for your previous metals self-directed IRA.
Silver in IRA final thoughts
Adding silver to your retirement portfolio can be a way to diversify your assets and bring the security of owning a tangible investment. Using an IRA structure gives you all the same tax breaks as IRAs that invest in traditional paper assets with all the benefits of owning a safe-haven asset.
Contact Swiss America today to find out how Silver IRA can support your retirement strategy and secure your financial future.
Silver IRAs: FAQs
Is a Silver IRA a good investment?
A Silver IRA is a great option if you want to diversify your retirement portfolio. Owning a physical asset like silver provides a way to reduce risk against stock market ups and downs.
How does IRA silver work?
A Silver IRA lets you own physical silver bullion. Your custodian stores these assets in an IRS-approved depository and you’ll get tax-deferred growth until you need to withdraw your assets at retirement age.
Can I hold physical silver in my IRA?
Yes, you can hold physical silver in a self-directed IRA. It just needs to meet IRS purity standards and must be at an approved depository until retirement age.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
