Is a Gold IRA Eligible?

Similar to traditional IRAs, gold IRAs allow investors to defer taxes until it comes time to withdraw withdrawals in retirement. But unlike its traditional counterpart, a gold IRA can be self-directed and holds physical precious metals such as coins or bullion instead of being controlled by an administrator.

Gold IRAs must only invest in IRS-approved products, such as gold bullion meeting purity requirements. Collectible coins or non-approved metals such as palladium are not allowed within an IRA.

1. You must be at least 50 years old

When considering opening a gold IRA, it’s crucial that you fully comprehend all the associated rules and regulations. For instance, you cannot move any precious metals you already own into an IRA and must work with three entities: precious-metals dealer, custodian and depository. In addition, there may also be specific funding requirements.

Most gold IRAs are funded with pretax dollars–often by rolling over funds from an old 401(k), for instance–and are tax-deferred until withdrawals in retirement. There are other options such as Roth gold IRAs that use after-tax dollars instead, or SEP gold IRAs dedicated to small businesses.

At least 5% to 10% of your portfolio should be dedicated to gold. This helps diversify and mitigate risks. You must remember, though, that any time you sell gold for cash or take physical possession of it you will incur a substantial penalty fee.

2. You must have earned income

Gold IRAs can be an excellent way to diversify your retirement savings portfolio during these uncertain economic times, yet you need to keep certain considerations in mind before investing.

At first, you must open a self-directed IRA account that allows more control over your investments. Next, find an IRS-approved custodian who can store and protect the precious metals safely.

IRS rules only permit certain coins and bullion to be included in an Individual Retirement Account (IRA), meeting certain purity requirements. You’ll likely also incur setup and maintenance fees when opening and maintaining an IRA account.

Understand that traditional IRAs have limits and that withdrawals will be subject to income tax in retirement. Furthermore, you’ll have to adhere to RMD (required minimum distribution) rules after age 73 in order to avoid incurring an early withdrawal penalty of 10% if funds are withdrawn earlier.

3. You must have a traditional IRA

Gold IRAs provide you with the ability to invest in physical precious metals while taking advantage of tax advantages associated with retirement savings accounts. Contribution limits and RMD rules are similar, yet you’ll also enjoy having them stored securely with IRS-approved depository vaults.

Fund your new gold IRA either with cash or by rolling over funds from another retirement account such as your 401(k), 403(b), 457, pension plan or Thrift Savings Plan in accordance with IRS rules. However, any rollover before age 59 1/2 will result in income taxes and penalties being levied against you.

Your IRA custodian will then purchase your precious metals from a distributor like U.S. Money Reserve and deliver them to an IRS-approved depository or vault. Some gold IRA companies provide allocated storage, keeping your metals separate from those belonging to other investors; others use commingled storage, keeping costs down but potentially restricting access.

4. You must have a custodian

Custodians are essential components of any IRA, especially precious metal IRAs. Due to IRS regulations regarding IRA investments, it’s crucial that you find one with experience managing these types of transactions; that means knowing all relevant codes and laws governing IRAs as well as other non-publicly traded assets.

Custodians play an integral role in setting up and administering gold IRAs by purchasing physical metals on your behalf and transporting them to an IRS-approved depository for safe keeping. They also manage all necessary paperwork and filings necessary to keep your account compliant with law.

Gold IRAs may not be suitable for every investor, but they can provide an effective hedge against inflation and economic uncertainty. Before investing, be sure to discuss its pros and cons with a financial professional; specialists who specialize in gold IRAs can assist in selecting an account type (Traditional, Roth or SIMPLE) as well as how much to put away in this investment strategy.


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