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How does a gold IRA work?

Gold ingots and coins close up
Facing uncertainty in the economy and global affairs, many investors are adding gold to their portfolios as a hedge against inflation and economic uncertainty. Anthony Bradshaw/Getty Images

Amid record inflation and fears of a looming recession, many Americans may be exploring new options to save money and invest for their future. Many are cautious of recent stock market volatility, especially those that saw their retirement savings plummet in 2022.

Facing uncertainty in the economy and global affairs, many investors are adding gold to their portfolios as a hedge against inflation and economic uncertainty. If you're concerned about the declining value of your IRA or pension, you might consider a gold IRA. Understanding what a gold IRA investment is, how it works, and how you might benefit from it can help you decide if one makes sense for you.

You can find out more now with a free wealth protection kit that contains additional information. 

What is a gold IRA?

As its name suggests, a gold IRA is a specialized retirement account that allows you to hold physical gold and precious metals, unlike traditional IRAs. These IRAs, also known as precious metal IRAs, operate like standard IRAs with contribution limits and distribution rules. However, a gold IRA holds physical bullion in your account instead of stocks, bonds and other paper assets.

If you're considering adding some sparkle to your retirement plans, remember that you must follow specific gold IRA rules. Your gold bars and coins must meet federal regulations regarding size, weight and other considerations.

Generally, there are three types of gold IRAs:

  • Traditional gold IRA: This is the most common type of gold IRA, which you fund with pre-tax dollars and pay taxes on when you withdraw funds in retirement.
  • Roth gold IRA: With a Roth gold IRA, you'll fund your account with after-tax dollars. Your money grows tax-free, and you don't have to pay taxes when you take retirement distributions.
  • SEP gold IRA: If you run a small business or are self-employed, consider a Simplified Employee Pension (SEP) gold IRA which you must fund with pre-tax dollars. You can also contribute to SEP gold IRA accounts for your employees.

If you think you would benefit from investing in a gold IRA then reach out to a professional now who can help you get started.

How does a gold IRA work?

A gold IRA is a valuable retirement tool if you wish to invest in gold. A IRA can also include silver, platinum, palladium and other precious metals, but like gold, they must be physical. 

The IRS considers gold to be collectibles and generally discourages collectibles in IRAs. However, the IRS provides the following note: "There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved nonbank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion."

When you set up your gold IRA, your custodian will facilitate the storage of gold with an  IRS-approved facility to store your gold and arrange the transfer of gold to the facility.

Who benefits from getting a gold IRA?

You may benefit from investing in a gold IRA if you're seeking the following advantages:

  • More control over investments: Gold IRAs are self-directed, meaning you manage which investments to include in your IRA portfolio.
  • Long-term investment: IRAs are long-term investments that include assets that often remain in place for years or even decades. As such, physical gold may be a strong fit for an IRA since it's not as liquid as other assets.
  • Tax deductible: Gold IRAs come with the same benefits as standard IRAs: A traditional IRA can lower your annual taxable income, while a Roth IRA allows for qualified withdrawals that are tax-free.

How can someone get a gold IRA?

A gold IRA company can help you open and fund your self-directed IRA account. The company can also help you select an IRS-approved custodian who buys gold and other precious metals on your behalf. 

The custodian performs administrative tasks to ensure your gold IRA adheres to IRS regulations. Additionally, the custodian coordinates with the depository, the facility where the gold or precious metals in your IRA are physically stored.

The IRS provides a list of approved custodians to help your search. It's wise to vet any custodian you're considering and focus on their experience, fees, and check out their Better Business Bureau rating. The gold IRA company you work with may recommend a specific custodian or depository. 

Before you sign your name for your gold IRA, make sure you understand the services the gold IRA company performs and their fees, including storage fees, insurance and administration.

Learn more now

Important gold IRA information to know

If you're planning for your retirement and wondering how to set up a gold IRA account, a gold IRA company can guide you through the process. 

Keep in mind, these gold IRA companies are financial service providers who help carry out functions on your behalf. However, they are not financial advisors bound by fiduciary duty to act in your best interests. Consider working with a reputable fee-based financial planner for investment advice to help decide if a gold IRA makes sense for you.

If you decide to invest in gold as part of your retirement plan, a gold IRA company can help you purchase the assets you include in your IRA, and you can buy gold with a rollover from another retirement account.

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