There are two ways to invest in gold using an IRA. One option is to set up a self-directed gold IRA, which allows you to buy physical gold and silver with retirement funds. A gold IRA can give you the tax benefits of a traditional retirement account, but you must comply with IRS regulations or risk fines and penalties. Buying physical gold for a retirement account can also be more expensive than investing in assets such as stocks, bonds, or mutual funds.
It’s important to be aware of all costs and expenses before you buy physical gold to keep in an IRA. 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. You can invest in gold stocks, such as stocks of gold mining companies or gold licensing companies, which help finance mines. A gold-backed IRA 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.
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. 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. Once you’ve opened a self-employed gold IRA, you can transfer cash to the account to fund your purchase of physical gold. People who believe that physically owning gold or other precious metals is safer can achieve that peace of mind with a gold or silver IRA.
After you’ve funded your account, you can let your IRA custodian know which gold bars you’d like to buy (and how much). They sell gold coins, gold bars, and the like, but they don’t offer IRA investment advice (regardless of what their websites or other marketing materials might suggest). To avoid running afoul of tax rules for proprietary transactions, self-governing IRAs, including gold IRAs, must have an IRS-approved custodian bank. 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.
Gold IRAs follow the same general rules as traditional IRAs when it comes to tax benefits. You can choose between a traditional IRA or Roth IRA contribution limit and withdrawals. You don’t want to fund a gold IRA with cash because you’ve already paid taxes on that money, and the point of using an IRA as an investment tool is to take advantage of the tax advantage that comes with using pre-tax dollars. 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. 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.
