Gold IRAs are a special type of self-directed IRA that allows you to invest in physical gold and other precious metals, such as silver, platinum, and palladium. Investing in a gold IRA requires the services of a custodian bank, a broker to purchase gold, and an approved depositary to store gold. Like other self-directed IRAs, Gold IRAs can be Traditional or Roth. You’ll also need to choose a precious metals dealer who will make the actual gold purchases for your IRA (your custodian may be able to recommend one for you).
Once you reach 72 years of age, you’ll be required to accept the required minimum distributions (RMDs) from a traditional gold IRA (but not from a Roth IRA). Gold IRAs are usually defined as “alternative investments,” meaning that they are not traded on a public stock exchange and require specialized expertise to value them. The ability to use gold and other materials as securities in an IRA was introduced by Congress in 1997, according to Edmund C. There are minimum requirements for the fineness or purity of metals, as well as regulations governing the size, type, and weight of your IRA gold.
Before you initiate the transfer, it’s important to calculate how much of your existing retirement savings you’d like to invest in your new Gold IRA. Surprisingly, a gold IRA doesn’t just have to hold gold, you don’t have to hold any gold in one at all. With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. Many of the custodians and brokers that open established IRAs that invest in traditional assets are unable to open and operate an SDIRA, including a gold IRA.
However, to qualify for gold IRAs, custodians must be insured, which protects your investment as long as your account does not exceed the account value specified by the custodian bank. A gold IRA company will help you set up your account and sell you the gold (or silver) coins or bars that fund it. Most gold IRA companies recommend or require that you work with a specific custodian and custodian, although some give you a choice of two or more. They also perform the necessary administrative functions to ensure that your Gold IRA complies with all IRS regulations.
Making a mistake, even if it happens accidentally, can be very costly. So it’s worth knowing what the IRS will and won’t let the IRS do with your Gold IRA. To avoid the possibility of having to pay taxes and penalties, your Gold IRA company can process the transfer on your behalf. The gold in a gold IRA must be stored in an IRS-approved depot. You can’t store it in a safe, a house safe, or under your mattress.