Gold IRAs Glitter as Bullion Prices Spike

BOSTON (TheStreet) -- Gold cracked $1,000 an ounce this week. A concern about faster inflation and the dramatic stock-market decline that devastated 401(k)'s and individual retirement accounts begs the question: Is gold a good retirement savings vehicle?

Though they're a lesser-used flavor of retirement plans, precious metal IRAs have been around for decades. The IRA plans allow individuals to fund their savings with a short list of federally approved metals. Until 1997, only Gold Eagle and Silver Eagle coins from the U.S. Mint were permitted. Regulatory changes broadened the scope that year to include bars with a larger weight and even some foreign-minted bullion, such as Canadian gold and silver Maple Leaf coins, the Australian Kookaburra coin and the Mexican Libertad. The list of approved metals was also expanded to include platinum.

Those accounts are self-directed, not company-sponsored, and an existing retirement account can be rolled into one. Like a traditional plan, a penalty of 10% is assessed for withdrawals made prior to age 59 1/2.

But are precious metals worth their weight when it comes to retirement plans?

An obvious concern is that the current gold rush has meant an increase in unscrupulous businesses. Without due diligence research about the plans, it's easy to overpay or otherwise be taken advantage of. Your future nest egg is too valuable to take chances with.

Regulations require that bullion be held by a third-party trust. As such, there are annual custodial fees that run in the ballpark of $100 to $160 a year.