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 buy gold, and an approved custodian to store gold. Like other self-directed IRAs, gold IRAs can be traditional or Roth. One key selling point that gold IRA companies like to promote in their marketing is that when you own a Gold IRA, you own the physical precious metals.
To invest IRA funds in gold, you must set up a self-directed IRA, a type of IRA that the investor manages directly and which may own a wider range of investment products than other IRAs. The Gold IRA Company also sells you the gold bars and coins (or other precious metals) that you want to invest in your Gold IRA. Record gold sales combined with the presence of many other companies to process and simplify transactions have made investing in a Gold IRA a one-stop shop. To comply with the many regulations surrounding gold IRAs, you can’t store your gold at home or in a safe deposit box.
An IRA gold company will help you set up your account and sell you the gold (or silver) coins or bars that fund it. They also make it easier to open your Gold IRA account, but they don’t provide investment advice and you shouldn’t use the marketing material they publish as a guide in this regard. In addition to the account custodian, the Gold IRA coordinates the duties of the depositary, the institution where the precious metals are physically stored in your IRA. As with other retirement accounts, if you take gold out of your IRA before age 59½, you must pay income tax on the value of the gold, plus a 10% upfront penalty.
If you want to hold physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA), which you manage directly with a custodian bank. Surprisingly, a Gold IRA doesn’t just have to hold gold, you don’t have to keep any gold in one at all. 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 paper currency and stocks. Many people who open Gold IRAs use money from another IRA to do so, but it’s not a good idea to convert all of your nest egg into a Gold IRA.
The rules for withdrawals (selling the gold for cash) depend on whether the Gold IRA is traditional or Roth. Given that you can also hold silver coins or bars, platinum, and palladium in a gold IRA, a more correct term is technically “precious metal IRA.” There are minimum requirements for the fineness or purity of metals, as well as requirements for the size, type, and weight of your IRA gold.
