What is a Gold IRA?

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A gold IRA, also known as a precious metals IRA, is a type of individual retirement account that allows you to hold physical gold and other precious metals to protect your savings from inflation and economic instability.

When you open a gold IRA, you will be working with a self-directed IRA custodian who will help you buy and store physical gold, silver, platinum, and palladium bullion that meets IRS requirements.

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Gold IRAs have become increasingly popular in recent years as more and more investors look for ways to protect their savings from inflation and economic instability. 

Here is everything you need to know about gold IRAs, including how they work, the benefits of opening one, and how to avoid gold IRA scams.

What is a Self-Directed IRA?


Unlike a traditional IRA that is sponsored by your employer, which only allows you to invest in a handful of mutual funds that hold stocks and bonds, a self-directed IRA (SDIRA) is controlled by you and gives you the ability to invest in a much wider range of asset classes.  

With a self-directed IRA, you can invest in real estate, private businesses, gold and other precious metals, and more.  

Self-directed IRAs are administered by custodians who allow you to hold these alternative investments. They also provide guidance on which investments are allowed and how to comply with IRS rules.

How is a Gold IRA different than a Traditional IRA?


There are a few key ways that gold IRAs differ from traditional IRAs.  

First, gold IRAs allow you to hold physical gold and other precious metals in your retirement account. With a traditional IRA, you can only invest in stocks, bonds, and other paper assets.  

Second, gold IRAs are self-directed, which means that you have more control over your investment choices. With a traditional IRA, your investment choices are limited to the mutual funds offered by your IRA sponsor.  

Third, gold IRAs have special rules regarding how the gold must be stored. The gold must be stored in an IRS-approved depository. This is to ensure that the gold is properly protected and insured.

The Benefits of a Gold IRA


A gold IRA can provide many benefits for investors. Some of these benefits include:

-A gold IRA can provide diversification for your portfolio. By including gold in your IRA, you can help protect your retirement savings from the volatility of the stock market.

gold savings going up

-Gold has historically been a safe haven asset, preserving its value during economic downturns. This makes gold a valuable addition to any retirement portfolio.  

-A gold IRA can be a hedge against inflation, as gold typically increases in value when the cost of living goes up. This makes gold a good long-term investment for retirees who are worried about maintaining their purchasing power.  

-Gold is a tangible asset that is valued by all cultures throughout the world which means the market for gold is massive and allows gold to be easily converted into cash.

Non-approved IRA Gold Bullion


Gold bullion that does not meet the purity standards set forth by the Internal Revenue Service (IRS) cannot be included in a gold IRA.

The IRS has specific purity requirements for gold bullion which for bullion bars and rounds of gold and silver must be a minimum of 99.9% fineness, and only gold that meets these requirements can be held in an IRA.  

Non-approved gold includes gold plated items, gold-filled items, and gold coins that are not considered to be investment grade. While you may be able to purchase non-approved gold bullion from some dealers, it cannot be included in your gold IRA.  

Numismatic coins are not allowed in your IRA either. The reason is that the IRS does not permit you to hold collectibles in your IRA, and they classify numismatic coins as collectibles.  

If you put numismatic coins in your IRA you will get hit with huge tax penalties, so don't do it.  

The reason why the IRS won't allow collectibles is because they don't know how to properly value collectibles. Since they don't know how to properly value collectibles, they don't know how to properly tax you on them. So just make sure not to purchase numismatic coins for your Gold IRA.

How to Avoid Gold IRA Scams


If you're thinking about investing in a gold IRA, there are a few things you should know to avoid scams and rip-offs.

First of all, be aware that there are gold dealers out there who will try to take advantage of unwary investors. 

man looking at a clipboard

They may quote you prices that are higher than the actual market value of gold, or they may try to sell you gold that is not pure. So it's important to do your homework and find a reputable gold dealer before making any decisions.  

Another thing to be aware of is gold storage fees. Some gold IRA companies will charge you a fee for storing your gold, which can eat into your investment returns over time  

IRA Eligible Precious Metals


Some examples of gold that is IRA eligible are:

  • Valcambi Gold Bars
  • American Eagle and American Eagle Proof coins
  • American Gold Buffalo coins
  • Canadian Maple Leaf coins
  • Canadian Gold Wildlife Portrait Series
  • Austrian Philharmonic coins
  • Chinese Gold Pandas

Some examples of silver that is IRA eligible are:

  • American Silver Eagle Coins
  • American Silver Eagle bullion coins
  • Chinese Silver Panda Coins
  • Canadian Polar Bear & Cub
  • British Britannia (2013 and newer)

Some examples of platinum and palladium that are IRA eligible are:

  • American Eagle Platinum Proof Coins
  • Canadian Maple Leaf

Gold IRA Rollover


A gold IRA rollover is a process by which an individual retirement account (IRA) holder transfers some or all of their assets into gold.

Gold IRA rollovers allow you to transfer your existing retirement account balance into a gold-backed IRA. Gold IRA rollovers can be done with any type of retirement account including, 401k, 403b, 457, TSP, SEP, and SIMPLE IRA accounts. 

These types of IRA rollovers are fairly straightforward and can be done by anyone with an old retirement account. All you need is a reputable gold broker to help you set up the account and transfer the funds.

Gold IRA rollovers are a great way to invest in gold and protect your retirement savings.  

It is important to note that you cannot roll over current retirement accounts that are currently being contributed to by your employer. Rollovers can only be done with old retirement accounts from former employers.  

The first step is to open a self-directed IRA with a custodian that allows gold holdings. Once you have opened your account, you will then instruct the custodian to transfer funds from your current IRA to buy gold.  

The second step is to find a reputable gold dealer or broker who can help you complete the transaction. Be sure to compare prices and fees before making your purchase.  

Once you have purchased the gold, it will be stored in a secure depository until you are ready to retire. When you are ready to retire, you can either take possession of the gold or sell it and use the proceeds to supplement your income.

For a more in-depth article explaining this process, you may want to read our gold IRA rollover guide.

Beware of Home Storage Gold IRAs


There are a few dangers associated with home storage gold IRAs that potential investors should be aware of. First and foremost, if your gold is stolen from your home, you will have no recourse to get it back.  

Also, there is a significant tax risk associated with home storage gold IRAs. When gold is kept in a physical location, it is considered to be "taxable property." This means that if the gold is sold, the owner will be subject to capital gains taxes on the sale.

Additionally, if the gold is stolen or damaged, the owner will not be able to claim a loss for the missing or damaged gold on their taxes.  

A traditional Gold IRA administered by a third-party custodian is a much better investment. With a traditional Gold IRA, the gold is stored in a secure location and the owner does not have to worry about capital gains taxes or losses due to theft or damage.  

Basically, you want to completely avoid thinking about a home storage gold IRA. Nearly everyone that attempts this runs into trouble with the IRS and gets hit with huge penalties.

Conclusion

A gold IRA is a retirement account that allows you to invest in gold instead of or in addition to other assets.

Gold IRAs are becoming increasingly popular as investors look for ways to protect their retirement savings from inflation and market volatility.

There are a few things to keep in mind if you're considering opening a gold IRA, such as the potential risks and rewards associated with gold investing, as well as the different types of gold that can be held in an IRA.

But overall, gold IRAs can be a worthwhile way to diversify your retirement portfolio and protect your savings from inflation.

If you are considering investing in a Gold IRA the most important thing to do is to work with a honest company that can guide you through the process and help you avoid unnecessary tax fines.

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