Can You Hold Gold in an IRA?

Learn everything you need to know about holding Gold in an Individual Retirement Account (IRA). Find out how it works & what rules apply.

Can You Hold Gold in an IRA?

A gold or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are held in custody for the benefit of the IRA account owner. It works just like a normal IRA, only instead of holding paper assets, it contains physical coins or ingots. The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualifying retirement investment. Investors with gold IRAs can hold physical metals, such as bars or coins, as well as securities related to precious metals within the portfolio.

A gold IRA should be kept separate from a traditional retirement account, though the rules involving things like contribution limits and distributions remain the same. Investors can open gold IRAs through a stockbroker or other custodian. Specialized Custodians Standard custodians, such as Fidelity, Schwab, or TD Ameritrade, will not handle physical gold in an IRA. Therefore, if you want to keep gold in your IRA, you must first set up a self-directed IRA, and then you need to find a custodian who specializes in self-directed gold IRAs.

A quick Google search for “self-directed gold IRA” yields a lot of results. American Bullion and APMEX are two of the most well-known companies that offer this service. Gold is money that cannot be printed or degraded, making it an ideal way to save for retirement. To take an in-depth look at the role of gold in asset conservation under adverse economic circumstances, we recommend the Black SwansYellow Gold study: How Gold Performs in Periods of Deflation, Disinflation, Stagflation and Hyperinflation”.

The study draws on the historical record to show why many see gold as an investment for all seasons. You can buy gold coins and bullion, and other precious metals*, in a self-directed or 401 (k) IRA established with a trust company. People with retirement plans usually have a conventional 401 (k) IRA with a bank or brokerage firm that specializes in bank deposits, stocks, mutual funds, annuities, and other assets. In many cases, these investors have little or no say in the investments that are made.

A self-directed plan allows the individual to make their own investment decisions and adds to the investment options available. Precious metals are among those options. All rules related to tax treatment apply to conventional retirement plans and apply to self-directed plans. Conventional plans generally do not allow diversification into physical gold due to the special circumstances that accompany ownership of precious metals: storage, insurance, and custodial responsibilities.

Usually, the customer who plans to retire and wants to buy precious metals in physical form must first transfer funds from their current trustee to a new trustee who allows these special transactions. Right now, there are several trust companies that offer self-directed plans. Self-Directed Trustees Don't Provide Investment Advice; they simply provide administrative and reporting services and work with suppliers such as USAGOLD who offer specific and permitted investments in precious metals (listed here) under the Internal Revenue code. Of course, trustees charge fees for their services; those charges are usually listed on their websites.

As a result, the client planning to retire can get an idea of the costs before committing. At USAGOLD we see the checkbook IRA as a risky and problematic approach to precious metal retirement planning and a poor choice for our clientele; the traditional self-directed IRA located in a strong trust company remains the safest avenue for the retired investor and the one most likely to achieve the expected results. Gold IRAs are called self-directed IRAs but you can use them to purchase certain IRS-approved gold bars and precious metals. They can also be used to purchase real estate, businesses, and other assets.

Once you turn 72 you will be required to accept the Minimum Required Distributions (RMD) of a traditional Gold IRA (though not a Roth). Examples include American gold eagle coins, Canadian gold maple leaf coins, American silver eagle coins, American platinum eagle coins, and gold, silver, platinum, and palladium bars (bars) that meet applicable purity standards. American Eagle Bullion gold coins are the only gold coins however that are an exception to purity guidelines. The IRS has issued private letter resolutions to major gold ETFs stating that IRAs can own ETFs.

After you fund your account you can tell your IRA custodian which gold bars to buy (and how much). To own gold whether in coins or bullion in an IRA you need a true self-directed IRA offered by some custodians. With many scams and misleading ads it's essential that you do your research before opening a Gold IRA account; Gold IRAs are usually defined as “alternative investments” meaning that they are not traded on a public exchange and require special experience to value them. The ETF can also buy store and insure gold at a much lower price than you or an IRA custodian can buy; however coins or bars must be held by the trustee or custodian of the IRA rather than by you as the owner of the IRA.

In addition if this is the only IRA or if there is not enough liquidity in the other accounts you will have to sell some of the gold to get the cash and make the RMD; therefore if your portfolio is balanced with investments in gold and paper a loss on the gold side will be balanced by the gain experienced by other assets.

Erica Nicky
Erica Nicky

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