A gold IRA is a retirement account that allows its investors to hold gold coins, gold bars, or other precious metals as investments. You can set up a gold IRA with dollars before or after tax through a specialized custodian or broker. A gold IRA or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are stored for the benefit of the IRA account holder. It works in the same way as a regular IRA, except that it holds physical investment coins or bars instead of paper assets.
Precious metals IRAs are usually self-managed IRAs, a type of IRA in which the custodian bank allows you to manage a more diverse range of investments in the account. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible, and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms. Some IRA companies guarantee that they’ll buy back the gold from you at current wholesale prices, but you could still lose money if you close the account, which is not usually the case when opening and closing regular IRAs.
Because the gold in a gold IRA must be stored in an IRS-approved deposit, you can’t store it in a safe, a home safe, or under your mattress. Gold bars and round gold and silver coins are also allowed in an IRA if they have a fineness of 99.9%. For a gold IRA, you need a broker to buy the gold and a custodian to create and manage the account. Given that the stock market typically rises by around 7% in an average year, it would be rare for a gold IRA to outperform other retirement investments.
A custodian can be a bank, a credit union, an escrow, a brokerage firm, or a popular gold IRA company such as Birch Gold Group or Oxford Gold Group. While the price of gold rose to new highs over the summer, you’ve probably seen a number of ads recommending investing in gold via an IRA. Gold is often used as an inflation hedge, allowing investors to bet against uncertainties on the wider market. If gold seems like a solid choice for you, Sentell suggests investing no more than a third of your retirement savings in a gold IRA.
A gold IRA rollover is the process of transferring assets from an existing traditional IRA or employer-sponsored retirement plan to a new or existing gold IRA. There are currently a variety of precious metals that meet the minimum purity requirements allowed for inclusion in an IRA Gold account. If you already have an IRA or 401 (k), either Regular or Roth, you have the option to convert some or all of your balance to a Gold IRA. One option is to set up a self-directed gold IRA, which allows you to buy physical gold and silver with retirement funds.
Simplified gold IRAs for employees, also known as SEP Gold IRAs, are available to self-employed people and small business owners.