Gold IRA Investing

Individual Retirement Accounts, or IRAs, are a type of retirement plan that offer several tax incentives for your retirement savings. There are several different kinds of IRAs, each with its own benefits, drawbacks and asset types.

Gold IRA investing is particularly unique because instead of holding paper assets such as stocks, bonds or mutual funds, (see our gold vs stocks section), which are typically held in the majority of IRAs, gold IRAs hold actual gold or other IRS approved precious metals as physical assets.

A gold IRA has certain features that may be important to consider when thinking about your retirement plan, and may be an appropriate choice for you and your beneficiaries.

What is a Gold IRA?

A gold backed IRA functions similarly to a traditional IRA. The major difference, however, is that while a traditional IRA holds paper currency as its assets, (i.e. stocks and bonds), a gold IRA holds physical gold or other approved precious metals like silver, platinum or palladium. These precious metals are pre-approved by the IRS, with specific fineness standards and can be held as either bullion (also called “bars”) or coins.

Investors do not have the option of adding non-approved IRS metals to their IRA.

There are four different types that have been approved for inclusion in a gold IRA:

  • Gold
  • Silver
  • Platinum
  • Palladium

Note: The I.R.S. states that all precious metals held in a gold IRA must meet applicable fineness standards (which are measured in parts per thousand) along with specific weight measurements.

You can read more about the specific requirements on our gold IRA rules page.

While gold IRAs are similar to traditional IRAs in how they function, there are differences between the two accounts in the way investments are handled. Gold IRA investing is different as investors own physical metals (bullion or coins) stored in an IRS-approved entity.

Why Should I Invest in a Gold IRA?

Most gold IRA account holders value the security that comes with holding precious metals as an asset, rather than relying on a tumultuous stock market that could quickly fall and devalue assets. Investing some portion of assets in gold and precious metals is an easy way to diversity an existing portfolio, while adding some peace of mind that comes with holding a tangible, valuable asset. Gold IRA’s are also used by investors as a long-term hedge against inflation.

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Since there is a lot of uncertainty about the current economy, with concerns over inflation and the ultimate value of a traditional IRA, a gold backed IRA can help investors feel confident that their assets will not be devalued or be completely wiped out throughout the years. Remember – unlike company stocks, gold has never been worth zero.

What is a Self Directed IRA?

A self-directed IRA gives an account holder complete control over his investments. Self-directed IRA holders can choose what to invest in, how much to contribute, and the duration of that investment – as well as selecting which types of investments to make. Self-directed IRA holders can also choose to hold precious metals along with other traditional IRA assets, as well as when to liquidate those assets.

To learn more about a self-directed ira, you can visit the wikipedia page.

Is Gold IRA Investing Tax-Free?

Yes. Creating a gold IRA out of existing assets is tax-free. Account holders can transfer or rollover most IRAs and the IRS will not tax any portion of the assets moved from one IRA to another.

Can I Rollover or Transfer a Traditional IRA or 401k into a Gold IRA?

Traditional IRAs can be transferred or “rolled over” into a physical gold IRA, also known as a gold IRA rollover, with minimal hassle. Gold IRA investing allows you to to choose which percentage of your traditional IRA you wish to transfer.

There are different opinions on what percentage of a traditional IRA should be rolled over into a gold IRA, However, since account holders are creating a self directed gold IRA, they will ultimately have the final say about the allocation of their assets.

For plans sponsored by a current employer, some restrictions may apply, but often these plans become eligible for a free rollover after a certain amount of time.

IRA types that are commonly converted to precious metals:

  • Traditional IRA
  • Roth IRA
  • Simple IRA
  • SEP IRA
  • TSP (Thrift Savings Plan)*
  • 401(K)*
  • Public Employee 403(B)*
  • Public Employee 457(B)*
  • Pension Plan*
  • Tax-Sheltered Annuity

An investor converting a traditional IRA, 401k, Roth IRA, 403(b), SEP or other qualified IRA into precious metals can easily do so (without facing penalties from the IRS) by contacting a gold IRA company who will assign an account specialist in order to the complete the legal process correctly.

Be sure to check out our gold IRA reviews page more information on companies that offer precious metal IRA services.

Where is The Physical Gold Stored?

The IRS has specific laws about how assets in any kind of IRA can be stored. The rules for precious metal IRAs require that the physical assets be in the possession of a custodian or a trustee. The IRS has stated that a custodian or trustee must be a bank, a federally insured credit union, a savings and loan association, or other entity already approved by the IRS and any credible custodian is well-protected and fully insured.

Your physical metals are stored either “co-mingled” or “segregated”. Co-mingled storage means that your gold is held with other investors assets while segregated storage means your gold is held in a private storage area just for you. Account holders do not have the option of holding their own gold assets personally until they choose to liquidate.

Can I Liquidate Gold Assets at Anytime?

A self directed gold IRA can be liquidated at any time, at the direction of the account holder. If an account holder decides to liquidate gold assets, the gold can either be physically delivered, or liquidated for cash.

The account holder does not need to provide a reason for liquidating, and can choose to take possession of the account assets at any time without penalty, as long as they fall under the legal IRA distribution rules.