Gold IRAs appeal to investors who want a diversified retirement portfolio. A gold IRA is a type of self-directed IRA that allows you to invest in gold bars for retirement. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as gold stocks or gold ETFs. Popular gold IRA companies include Orion Metal Exchange, Birch Gold Group, Red Rock Secured, Gold Alliance, Oxford Gold Group, and Goldco.
Custodian banks help you manage the paperwork and tax reporting for your gold transactions to meet IRS retirement requirements. Your custodian bank can refer you to an approved institution and process the gold transfer as part of setting up your Gold IRA. If you take personal control of the physical gold from a self-managed IRA, the IRS counts it as a payout, meaning you may face taxes and penalties for early withdrawals. In some cases, the IRS is authorized to close your entire account. While you can gain exposure to gold in a normal retirement account by owning stocks or funds, you can’t hold the physical asset in an IRA or 401 (k).
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). Financial professionals use gold and precious metals as a hedge against inflation and deflation, dollar depreciation, and an evolving negative economic and political environment. For example, pre-tax funds included in a Roth IRA are taxed before they are converted to a Roth IRA, while post-tax funds are not taxed. For example, to be IRS-eligible, gold bars must have a purity of 99.5%, silver a purity of 99.9%, and platinum and palladium a purity of 99.95%.
Unlike traditional retirement accounts such as IRA and 401 (k) accounts, which limit your paper options such as stocks, mutual funds, and bonds, a gold IRA gives you the added benefit of investing in physical gold coins and bars, as well as other IRS-approved silver, platinum, and palladium metals. By opening a self-directed IRA, you can invest in alternative assets such as real estate, physical precious metals, and cryptocurrencies. Make sure you talk to your financial advisor before you decide whether investing in gold is right for you based on your individual personal and financial circumstances. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as fiat currency and stocks.
Gold IRA rules require that you store eligible precious metals with a national depositary, bank, or IRS-approved trustee. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bars. However, the IRS has introduced additional tax filing and recording requirements for gold IRAs due to the more complicated assets they own.