Gold IRAs appeal to investors who want a diversified retirement portfolio. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible, and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms. To invest in gold with an IRA, you must follow two IRS guidelines.
First, you can only invest in IRS-approved gold. While the list of approved options is changing, the IRS says it must be “highly refined precious metal.” An IRA backed by gold allows investors to invest their money in a wider variety of assets, but they are still subject to the same contribution limits as traditional retirement accounts. For more information on what to look for when choosing a Gold IRA company, check out Money’s Guide to the Best Gold IRA Companies.
To own gold, whether in the form of coins or precious metals, you need a genuine, self-directed IRA in an IRA, which is offered by a few custodian banks. When IRA stocks, bonds, and other standard IRA investments are threatened by inflation and stagflation, people flock to safe havens like gold and silver to protect their wealth. If you’re interested in owning gold or investing in its future value, a self-directed gold IRA account could be a good way to do so. To avoid the prospect of missing out on the rollover cutoff, many people choose to have their Gold IRA company coordinate the rollover through a direct transfer from institution to institution.
Annual fees are generally charged by the account custodian, and storage and insurance fees are more often owed to the custody account than to the Gold IRA company. A self-directed IRA is often referred to as a gold IRA or gold-backed IRA when it is specifically set up to store physical metals in the form of gold bars, coins, or polishing coins. If that doesn’t matter to you, there are other ways to add exposure to precious metals to your retirement portfolio, such as buying stocks in gold mining companies. If you withdraw gold from your IRA before you’re 59½ years old, you’ll be charged income tax on the value of that gold, as well as a 10% penalty for making an early withdrawal from a retirement account.
Or, if you have a traditional retirement savings account and want to increase your exposure to gold, read here how you can buy a gold ETF, an exchange-traded fund that tracks the performance of gold. Because of these attractive features, many investors are wondering whether they can gold physical gold in their individual retirement account (IRA). There are plenty of rules and regulatory hurdles that you’ll need to overcome if you’re thinking about buying a Gold IRA. If you’re not sure whether a gold IRA or a silver IRA is right for you, contact a fee-based financial planner who isn’t affiliated with a gold IRA company to determine whether it would be a good addition to your portfolio.
IRS rules allow funding a Gold IRA with funds from another IRA, 401 (k), 403 (b), 457 (b), or Thrift Savings Plan. One important rule to know about storing physical gold in an IRA is that your precious metals MUST be stored at an approved depository institution such as the Delaware Depository Service Company or Brink’s Global Services, not in your home or in a safe.
