Investing in Gold IRA: What You Need to Know

The Internal Revenue Service (IRS) has set limits on the assets that can be purchased in a gold IRA. Investors can choose from predetermined ingots, coins, and bars. However, jewelry is not allowed to be accumulated with IRA funds. Any IRA is legally authorized to buy gold and other precious metals.

Most major custodians, such as Charles Schwab, Merrill Lynch, and JP Morgan Chase, do not offer physical precious metals as an investment option. Traditional custodians are structured to hold only paper assets and are structured as managed funds. Physical precious metals are a self-directed investment and generally require a custodian who offers self-directed IRA investments. If your custodian does not offer precious metals as an investment option, we can help you initiate a reinvestment or a direct transfer to a custodian that does.

A direct reinvestment or transfer is not subject to tax. It is easy to see that gold performs well during periods of financial uncertainty, especially when the stock market in general experiences periods of prolonged volatility. In addition, even though gold appreciates tax-free while it is in the account, it does not offer you the opportunity to grow your money through dividends. To do this, you need a gold IRA, although this specialized type of individual retirement account has additional rules to follow and fees to pay.

You may already be considering that option, but you're not sure what IRA-eligible gold means or if it's a good investment. These investments are available in a regular brokerage IRA, meaning that you won't have to do the additional work or costs of creating a self-directed gold IRA. If that doesn't matter to you, there are other ways to add exposure to precious metals to a retirement portfolio, such as buying shares in gold mining companies. Gold is generally considered a hedge against inflation and allows investors to diversify their portfolios.

This means that the price of gold would have to appreciate by at least 30% from the moment you bought it, plus the cost of the fees you pay to maintain the account, before you can start making profits. Once you have opened a self-directed gold IRA, you can transfer cash to the account to fund your purchase of physical gold. IRS rules allow funding a gold IRA with money extracted from another IRA, 401 (k), 403 (b), 457 (b) or Thrift Savings Plan. You can sell the gold or precious metals in your IRA at any time without taxes or penalties, as long as you don't withdraw the cash from your IRA.

Your depositary can refer you to an approved center and manage the gold transfer as part of creating your gold IRA. If you're wondering what “IRS-approved gold” is, keep in mind that there are minimum requirements for the fineness of the metal, along with specifications on type, size and weight. Learn more about what to look for when selecting a gold IRA company in Money's guide to the best gold IRA companies. While you don't need an IRA to invest in gold, opening one will provide you with some significant tax benefits.

Or, if you have a conventional retirement savings account and want to increase your exposure to gold, read here information on how to buy a gold ETF, an exchange-traded fund that tracks the performance of gold.