Updated July 28, 2023

Physical Gold IRA

Can You Have Physical Gold in an IRA?

You can own physical gold in an IRA if you have a special self-directed IRA account. These IRAs allow you to invest in alternative assets, such as precious metals and real estate.

This lets you hold actual gold coins and bars and get tax benefits. The value of your gold grows either tax-free or tax-deferred. This makes it an attractive option compared to just buying gold directly.

You can only open an account with a specialized gold IRA provider. There are a lot of IRS rules when investing in gold for retirement, so your provider will make sure you stay compliant.

How likely are you to invest in precious metals?

Physical Gold vs Gold IRA

The main difference between just owning physical gold and holding it in an IRA is the tax benefits. Depending on the type of gold IRA you choose, you can save on taxes when contributing (for a Traditional Gold IRA) or when withdrawing (for a Roth Gold IRA).

In comparison, buying gold directly means you buy with post-tax dollars and pay capital gains tax when you sell.

However, in exchange for these tax benefits, there are rules. You can't hold the physical gold yourself, and you can't withdraw early. And there are also extra costs involved.

Let's go over these rules below.

Is it smart to hold physical gold?
It could be smart to hold a little bit of physical gold as a protective measure against inflation and economic downturns. Gold is a physical asset with intrinsic value. Historically, it has retained or increased value over the long term.

However, experts suggest that the ideal allocation of gold within a portfolio will vary based on your financial situation and risk tolerance. Otherwise, you could be missing out on the potential returns you could get from other investments.

IRS Rules for a Physical Gold IRA

There are some rules you have to follow in order to own physical gold in your IRA.

Here's what you need to know:

You can only invest in certain gold coins and bars that meet purity standards.
You cannot store the gold yourself at home. They must be stored in an IRS-approved depository.
You cannot transfer gold coins you already own into a gold IRA. You can only rollover funds from an existing retirement account (like a 401k) or transfer new money.
There's no maximum for gold IRA rollovers. But if you're contributing new money, the annual limit is $7,000 in 2024 ($8,000 for 50 or older).^[1]
Like a regular IRA, you cannot withdraw early before age 59-1/2. If you do, there's a 10% penalty.^[2]

Don't worry. Your gold IRA specialist will help you through the process. They'll help you open an account, purchase IRA-approved gold, and store it for you properly.

Gold IRA providers offer several types of IRAs. They usually include Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs.

How to Invest in Physical Gold in an IRA

Like mentioned before, you need to work with a gold IRA company in order to invest in physical gold. Here's how it works:

1. Choose a gold IRA custodian
Your gold IRA company will be your partner in this journey. It's a crucial decision, as this company will be safeguarding your retirement funds for potentially many years to come.

Not sure where to start? Some of the most reputable and trusted gold IRA companies are Augusta Precious Metals, Goldco, and Birch Gold Group.

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2. Fund your account
Once you've opened a gold IRA account, you need to fund it in order to purchase actual gold coins. Here's how you can fund it:

Rollover or transfer. This is the easiest way. If you have an existing 401k, 403b, IRA, or other retirement account, you can roll over funds into your new gold IRA. There are usually no tax penalties. Your gold IRA provider will help you with the paperwork.
Cash. You can also fund a gold IRA with new cash. But note that if you do this, you can only contribute up to the IRS annual maximum - $7,000 per year ($8,000 for 50 or older).

3. Buy gold coins
Once the account is funded, you can purchase gold through your gold IRA company. They'll have a variety of IRS-compliant coins for you to choose from.

They'll also transfer your gold coins to be stored in a secure IRS-compliant depository.

What is the minimum to open a gold IRA?
The IRS has no minimum, but most gold IRA companies require a minimum investment of $20,000 to $50,000. That's why rolling over assets from an existing retirement account is the best way to fund it. If you're looking to invest a smaller amount, American Hartford Gold lets you open an account with just $10,000.^[3]

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What Kind of Gold Can You Have in an IRA?

The IRS has strict rules for what you can hold in a physical gold IRA. All gold coins in a precious metals IRA must be 99.5% pure (except for American Gold Eagles, which are 91.67% pure).

IRA-approved gold coins include (not complete list):

American Gold Eagle
American Gold Buffalo
Canadian Gold Maple Leaf
Canadian Gold Eagle
Canadian Gold Polar Bear & Cub
Australian Gold Striped Marlin
Australian Gold Kangaroo
Austrian Gold Philharmonic
Chinese Gold Panda

Silver bullion and coins in an IRA must be 99.9% pure, while platinum & palladium coins must be 99.95% pure.

You also cannot invest in gold collectible coins in an IRA.

Where to Keep Physical Gold in an IRA?

Your physical gold in a gold IRA must be stored in an IRS-approved depository. You cannot personally store IRA gold yourself at home.

Your gold IRA company will help set you up with secure storage. They usually work with several approved depositories, so you can choose the one you want to use.

If you want, it could be possible to visit your storage and see your actual gold coins. You have to talk to your IRA custodian about arranging visits.

Can I take physical possession of gold in my IRA?
You cannot take physical possession of your IRA gold unless you are withdrawing. You can either get the actual gold coins or liquidate and get the cash. If you withdraw before age 59-1/2, there is a 10% penalty.

How is Gold Taxed in an IRA?

A gold IRA is taxed the same way as a regular IRA account. Your gold investments are not subjected to the 28% collectible tax rate. Instead, your withdrawals are taxed as ordinary income based on your tax bracket.

This can be good or bad. If you're in a high-income tax bracket, your tax rate could be even more than 28%.

Plus, also be aware of these tax rules for gold IRAs:

There is a 10% penalty for withdrawals before age 59-1/2.
You must take the minimum required distribution by age 72 (73 if you reach age 72 after Dec. 31, 2022).^[4]
You can't deduct losses on gold IRA investments.

Note that these tax and withdrawal rules are only for traditional gold IRAs. If you have a gold Roth IRA, you will not be taxed when you withdraw. And there's no minimum distribution requirement.

Can I hold physical gold in a Roth IRA?
Yes, you can open a self-directed Roth IRA and invest in physical gold. With a Roth IRA, you'll be buying gold with post-tax dollars, but your gains and withdrawals are all tax-free.

Physical Gold IRA Fees

A gold IRA has more fees than regular IRAs or just buying gold directly. Here are the fees you can expect:

Account setup fee: a one-time fee to open your account; usually $50 - $150.
Annual fee: the administrative fee for managing your account; typically $80 - $150 per year.
Storage fee: the cost for holding your gold in a depository; usually $100 - $300 per year.
Buying gold fees: potential transaction fees when you buy and sell gold; varies by the gold IRA company. And they may also charge a markup on top of the spot gold prices.

In exchange for the freedom to invest in physical gold for your retirement, you have to pay more fees. You'll have to evaluate if the fees make sense for you.

Benefits of Investing in a Physical Gold IRA

Here are some reasons you may want to consider a gold IRA:

Wealth preservation
Some experts believe that gold holds its value better than the dollar. Unlike the dollar, which loses value due to inflation, gold is a tangible asset with intrinsic value.

In 2022, inflation is higher than it has been since the 1980s, according to Pew Research. In May, inflation rose to 8.6% and experts aren't sure when those numbers will decline.

Diversification
Gold has low correlation to the stock market. It often maintains its value during economic downturns. This makes it a popular choice for those nearing retirement looking to add different types of assets to manage overall investment risks.

Tax advantages
A gold IRA can help you save on taxes. This is the main reason to invest in a gold IRA, as opposed to just buying it on your own.

With a Traditional Gold IRA, your contributions will be tax-deductible. You only pay taxes when you retire and start taking distributions.

With a Roth IRA, the reverse is true. You invest post-tax dollars, but your withdrawals are tax-free.

Another way to save for retirement and save money on taxes is by investing in a crypto IRA. Cryptocurrency has been one of the biggest investment opportunities of the century and while you shouldn't invest more than you can afford to lose, you may decide it's worth the time to do some research.

Downsides of Gold IRAs

If you want to invest in physical gold through an IRA, there are a few potential downsides:

No dividends or interest
Investing in physical gold won't generate interest or dividends. Basically, you won't see any profits until you sell.

Higher fees
Physical gold IRAs have more fees than regular IRAs from brokerages. On average, expect to pay about $200 to $300 for the annual account fee and storage fee.

No self-storage
You can't keep the gold yourself. You'll have to keep your gold in an IRS-approved depository. So if you suddenly need to sell, you won't be able to liquidate super fast.

Withdrawal rules
Finally, the last concern is the same for all retirement accounts: you can't withdraw without penalty until the age of 59 1/2.^[5]

What to Look for in a Physical Gold IRA?

While many physical gold IRAs have a lot in common, there are some factors to keep in mind that will help you choose between them.

Supported Metals
In addition to gold, precious metals IRAs usually include silver, platinum, and palladium. The gold IRA company should have IRA-approved coins available.

Minimum Investment
There's usually a minimum investment of at least $10,000 to $25,000. But some are over $50,000. Decide how much gold you want to invest in.

Fees
Gold IRAs have various fees, including setup fees, annual custodian fees, storage fees, and transaction fees. Many Gold IRA providers don't list their fees on their websites, so you'll need to call a rep.

Reputation & User Reviews
Read real customer reviews on resources such as the Better Business Bureau, Trustpilot, and the Business Consumer Alliance. It can help you find out what people are saying about an IRA provider.

Storage
You can't store IRA gold at home, so you'll need a depository.^[6] Many Gold IRA providers have relationships with depositories for you to choose from.

Buyback Program
If your IRA provider has a buyback program, it ensures you won't have to find your own buyer when you want to liquidate.

Best Physical Gold IRAs

Now that you know more about how physical gold IRAs work, let's look at some of the best providers.

Augusta Precious Metals
Augusta Precious Metals is a gold and silver IRA provider with a strong reputation with a majority of 5-star reviews. They're especially known for their excellent customer service.

All potential customers get a free 1-on-1 web session to learn all about gold, the market, and the risks. They want to make sure you're making the right choice for your future.

If you do go ahead and open a gold IRA, Augusta offers lifetime support.

The main downside is the fairly high minimum investment of $50,000.^[7]. If you don't want to invest that much, you might consider another provider.

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Goldco
Goldco is another highly rated gold IRA provider, with a minimum investment that falls between the other two, at $25,000.^[8] Goldco offers SEP and SIMPLE IRAs in addition to traditional and Roth IRAs.

A standout feature is that Goldco promises to buy back your gold at the highest price. This gives you more confidence in your purchase, knowing that you're not stuck with your gold.

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Birch Gold Group
Birch Gold Group is one of the older gold IRA providers with 20 years of history. It only has a $10,000 minimum, so it's good if you just want to invest a little bit in gold.^[9]

Birch pairs you with a dedicated precious metals specialist who will stay with you the entire time you're with Birch. You'll get someone who understands your goals and can help you make the best decisions for your future.

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Bottom Line

A physical gold IRA could be a good way to invest in gold, silver, and other metals for retirement. You get tax benefits, but remember that you need to follow IRS rules.

If you're considering this, it's important to work with a reputable gold IRA provider. You want to make sure you stay compliant with the IRS. Check out our list of the top 7 gold IRA companies.

References

^ Internal Revenue Service. Retirement Topics - IRA Contribution Limits, Retrieved 09/02/2024
^ Internal Revenue Service. IRA FAQs - Distributions (Withdrawals), Retrieved 7/23/2023
^ American Hartford Gold. Does American Hartford Gold have a minimum Gold IRA initial contribution amount?, Retrieved 7/23/2023
^ Internal Revenue Service. Retirement Topics - Required Minimum Distributions (RMDs), Retrieved 7/23/2023
^ Internal Revenue Service. IRA FAQs - Distributions (Withdrawals), Retrieved 7/21/2022
^ Internal Revenue Service. IRA FAQs: Investments "If my IRA invests in gold or other bullion, can I store the bullion in my home?", Retrieved 7/21/2022
^ Augusta Precious Metals. Are there minimum and maximum orders?, Retrieved 7/21/2022
^ Goldco. How Much Does a Gold IRA Cost?, Retrieved 7/23/2023
^ Birch Gold Group. What is the Cost to Set Up and Maintain a Precious Metals IRA?, Retrieved 7/23/2023

Jeremy Harshman is a creative assistant at CreditDonkey, a credit card comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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