How to Buy Gold in an IRA

Investors often consider purchasing gold within an individual retirement account (IRA) to diversify their investments. Gold and other precious metals are seen as a safeguard against inflation and may experience value growth during periods of stock market volatility.

While a gold IRA offers the tax advantages of a traditional retirement account, it is crucial to adhere to IRS regulations to avoid fines and penalties. Holding physical gold in a retirement account can also be costlier than investing in stocks, bonds, or mutual funds. Before acquiring physical gold for your IRA, it is essential to comprehend all associated costs and expenses thoroughly.

It is worth noting that gold IRAs are specialized investment products that are more suitable for sophisticated investors with substantial funds, knowledge of trading and investing in precious metals, and sufficient time to enhance the likelihood of profitability.

Why Buy Gold in IRA?

One of the main advantages of gold IRAs is direct ownership of physical gold. However, suppose this aspect is not significant to you. In that case, alternative methods exist to incorporate exposure to precious metals in a retirement portfolio, such as purchasing shares in gold mining companies.

Even with a long investment horizon, there is no guarantee of profit from gold investments—particularly if you intend to rely on a gold IRA company’s buyback program to sell your gold when you need to withdraw funds from the IRA. Buyback programs typically offer wholesale gold prices up to 30% lower than the retail price. Consequently, the price of gold would need to appreciate by at least 30%, in addition to covering account maintenance fees, before you can begin to generate a profit.

According to Vanguard, the average balance of a retirement account last year was $141,542. Practically speaking, this means that the minimum investment requirements of many gold IRA companies would necessitate investing much more than the recommended 5% or less that financial advisors typically allocate to precious metals. This higher allocation could expose your retirement savings to excessive risk.

Unforeseen losses resulting from gold investments could disrupt your retirement plan. Additionally, it is prudent to consider the opportunity cost of not investing that money in other avenues, such as stocks, where it could generate dividends. Suppose you are uncertain about whether a gold IRA or a silver IRA is suitable for you. In that case, consulting with a fee-only financial planner not affiliated with a gold IRA company is advisable. They can help determine if this addition would benefit your investment portfolio.  Many people will internally debate about a gold IRA vs. physical gold, and that is a valid question, but for me, there is much more security holding inside my retirement portfolio.

If you seek information on how gold can be included in an IRA to assist in saving for retirement, continue reading.

How to Buy Gold in an IRA

Want to know more information on buying gold for IRA? Well, here are our tips.

  1. Find an Approved Custodian for a Gold IRA

To comply with tax regulations and avoid any issues related to self-dealing, it is important to have an IRS-approved custodian for your self-directed IRA, including a gold IRA. The custodian, typically a financial firm, performs investment activities and administrative tasks to ensure your IRA maintains good standing with the IRS. That is essential to preserve its tax-deferred status.

Many gold IRA companies have recommended or mandatory custodians for their customers to use. Alternatively, you can search for a custodian through the Retirement Industry Trust Association (RITA) website.

Setting up a Gold IRA Accounts

  1. Establish a Gold IRA Account

Gold IRA companies simplify the account opening process. They offer gold coins, bullion, and similar products but do not provide IRA investment advice, despite any suggestions on their websites or other marketing materials. It is crucial to conduct thorough research when choosing a gold IRA company. Refer to Money’s comprehensive guide to learn more about selecting the best gold IRA companies.

  1. Fund Your Gold IRA Account

There are several methods available to add funds to your gold IRA. You can choose one or more of the following options:

  • Rollover – Many individuals fund their new gold IRA using a portion or entire funds from an existing retirement account. IRS regulations allow you to transfer money from another IRA, 401(k), 403(b), 457(b), or Thrift Savings Plan to a gold IRA. To initiate this process, contact the administrator of your current retirement plan and inform them about the amount you wish to roll over.

Note: If you are under 59½ years old and using a rollover to fund your gold IRA, you must complete the transfer within 60 days. Failing to do so will result in a 10% early withdrawal penalty and income tax obligations on the withdrawn funds.

  • Transfer – To avoid potential delays associated with rollovers, many prefer to have their gold IRA company coordinate a direct institution-to-institution transfer. This method transfers the funds directly without passing through your hands, eliminating concerns regarding taxes or penalties.

It’s important to consider the amount you want to allocate to your new account when performing IRA rollovers or transfers. Traditional IRAs offer the ability to build a diversified retirement portfolio, whereas an IRA solely focused on precious metals lacks diversification since it represents a single asset class. Additionally, while gold can appreciate tax-free within the account, it does not generate dividend income. As a general guideline, limiting your investment in precious metals to 5% to 10% of your overall portfolio is recommended to ensure appropriate diversification.

  • Cash – Funding a gold IRA with cash is not advisable because the money has already been subject to taxes. Using an IRA as an investment vehicle is to benefit from the tax advantage provided by using pre-tax dollars.
  1. Calculating Gold IRA Fees

Regrettably, most gold IRA companies lack transparency regarding their fees on their websites. Therefore, obtaining the specific details may require a couple of phone calls. The typical fees include account setup and maintenance charges, storage, and insurance. Additionally, when purchasing your precious metals, you can expect to incur a markup that varies depending on the company and the type of item.

It is essential to be cautious of companies that assert they do not impose fees for account maintenance or storage and insurance. Although this statement may technically hold, it does not imply that you will not be subject to paying such fees. Annual fees are generally associated with the account custodian, while storage and insurance fees are typically owed to the depository rather than the gold IRA company.

  1. Buying Gold in an IRA: Regulations and Guidelines

Investing in a gold IRA involves navigating many rules, regulations, and restrictions. Understanding what is permissible and what could potentially result in costly errors is crucial for safeguarding your retirement savings.

Approved Gold for an IRA

You can hold coins and bullion within a precious metals IRA, not limited to gold alone. While often referred to as a “gold IRA,” this account includes silver, platinum, and palladium.

To qualify as “IRS-approved” gold, certain criteria must be met. The metal must possess a minimum fineness requirement and adhere to specific guidelines regarding type, size, and weight. The minimum purity level for gold is 99.5%, while silver must be 99.9% pure. Platinum and palladium, respectively, must attain a purity of 99.95%.

According to STRATA Trust Company, a reputable custodian for gold IRAs, the precious metals in your account must be certified or accredited by a national government mint or one of the recognized precious metals authorities, such as NYMEX, COMEX, NYSE/Liffe, LME, LBMA, LPPM, TOCOM, or ISO 9000.

Common examples of IRA-approved gold include American Eagle-proof coins, bullion, and Canadian Maple Leaf coins.

Holding Physical Gold in an IRA

Individuals seeking exposure to precious metals in their retirement accounts have various options. They can invest in mining company stocks, mutual funds specializing in such stocks, or opt for a gold ETF. However, for those who prefer physical possession of gold or other precious metals due to perceived security benefits, a gold or silver IRA offers that peace of mind.

The primary advantage of owning precious physical metals is direct ownership. However, it’s essential to note that storing and insuring these metals can be costly. When the time comes for required minimum distributions (RMDs) during retirement, the expense of shipping them to you can also add up.

Age and Retirement Limitations

Self-directed IRAs, including gold IRAs, adhere to the same contribution and distribution limits based on age as traditional IRAs. For individuals under 50 years old, the maximum contribution for 2022 is $6,000, whereas those aged 50 or older can contribute up to $7,000.

Tax Implications

Withdrawing gold from your IRA before reaching the age of 59½ incurs income tax on the value of the gold, in addition to a 10% penalty for an early withdrawal from a retirement account.

Gold IRA Withdrawal

Upon reaching 72, you must take distributions from your gold IRA. Two options are available to you. The first is an “in-kind” distribution, which involves physically shipping your gold to you. However, knowing that you will be responsible for shipping and insurance costs is important.

The alternative option entails liquidating your gold and having the gold IRA company send you the funds. It is worth noting that most IRA companies buy back gold; however, the price at which they purchase gold is typically lower than the selling price.

Bottom Line: Is Gold a Good Investment?

The question is whether you should make an IRA investment in gold. Gold has held its status as a valuable commodity for centuries, exhibiting a relatively stable value over time. Furthermore, it performs well during periods of stock market decline, making it an attractive option for diversifying investment portfolios. However, financial advisors advise against allocating more than 10% of one’s assets to gold.

A gold IRA may be worth considering for those interested in incorporating gold into their retirement investment strategy. This type of retirement account functions similarly to traditional or Roth IRAs but holds physical gold bullion or coins instead of paper assets. To gain a deeper understanding, researching how to identify the best gold IRA company would be beneficial.

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started IRA Investing to share his expertise in using his Self-Directed IRA for alternative investments. His views on retirement investing have been highlighted in USA Today, Business Insider, Tech Times, and more. He invested with Goldco.