A gold IRA is a self-managed individual retirement account that invests in both physical gold and other precious metals. A gold IRA often has higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. A gold IRA is a type of self-managed individual retirement account (IRA) that allows you to own gold bars. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs).
Gold IRAs are a special type of self-directed IRA that allows you to invest in physical gold and other precious metals, such as silver, platinum, and palladium. Investing in a gold IRA requires the services of a custodian bank, a broker to purchase gold, and an approved depositary to store gold. Like other self-directed IRAs, Gold IRAs can be Traditional or Roth. To do this, you’ll need an individual gold retirement account, commonly referred to as a Gold IRA, although this account has its own additional rules and fees.
Before you initiate the transfer, it’s important to calculate how much of your existing retirement savings you’d like to invest in your new Gold IRA. Most gold IRA companies recommend or require that you work with a specific custodian and custodian, although some give you a choice of two or more. These investments are available in a normal brokerage IRA, which means you don’t have to go through the work and additional costs of setting up a self-directed gold IRA. Surprisingly, a gold IRA doesn’t just have to hold gold, you don’t have to hold any gold in one at all.
In addition to the account depository, the Gold IRA Company coordinates the tasks of the custodian, the facility where the precious metals in your IRA are physically stored. Therefore, the first step to operating a Gold IRA is to search for a custodian or trustee that offers Gold IRAs. Given that you can also hold silver coins or gold bars, platinum, and palladium in a gold IRA, the correct term is technically “precious metal IRA.” The IRS does not allow popular gold coins such as the South African Krugerrand or British sovereign coins to be stored in a gold IRA.
A gold IRA works just like any retirement account with the added benefit of giving you more control over your investment, including physical gold coins and bars, as well as other IRS-approved silver, platinum, and palladium metals. By setting strict parameters for defining IRA gold, the IRS can ensure that people hold investment-grade assets in their self-managed gold IRA, as opposed to collectibles, which are not eligible for any preferential tax treatment. With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. All Gold IRA rollovers follow the same rules as converting to a traditional IRA or a Roth IRA.
A gold IRA consists of a single asset class, and by eliminating the diversity you get with a traditional investment portfolio, you’re at higher risk and depriving you of the opportunity to earn income.