Thumbnail - Can You Buy Physical Gold in an IRA?

Can You Buy Physical Gold in an IRA?

Disclaimer: Some or all of the companies reported here may provide compensation to us, at no cost to our readers. This is how we keep our reporting free for readers. Compensation and detailed analysis are what determines how companies appear below.

Investors are always looking for a safe way to grow their wealth into their retirement years. Aside from an employer's 401(k), the next best account to open is an IRA or Individual Retirement Account.

These accounts give investors a chance to branch out from their limited 401(k)s and invest in other stocks, bonds, and mutual funds.

Traditional and Roth IRAs have their limits, however. Investors may want to purchase real estate or precious metals as part of their retirement portfolios.

It's possible to buy physical gold in an IRA today. Consider these features of the gold IRA and how investors can benefit from them.

Before we get started, investing your savings is a serious task. When it comes to adding precious metals to your portfolio, how do you know which companies to trust?

That is why we have researched every company in the industry and selected the very few with the highest customer service standards.

This way you can easily compare the best companies in the business, and choose one that fits your needs and investment goals.


Get a FREE Gold Information Kit from our #1 recommendation, by clicking the button below:

Get the FREE Gold Kit smart investors are using to protect their retirement savings.

1. Defining a Gold IRA

A gold IRA isn't a traditional or Roth IRA. Gold IRAs have several other monikers, such as precious metals IRAs or self-directed IRAs. When investors want to buy physical gold, a SDIRA is the only account that can be opened for this purpose.

Other accounts do not have the capacity or IRS approval for physical gold. Tax incentives aren't possible without following the rules regarding buying and holding physical gold.

A gold IRA has a custodian and depository as part of the account package. The custodian purchases the precious metals on behalf of the investor. The depository holds the metals under lock and key. This secure facility keeps the gold, silver, palladium, or platinum safe as it retains its value over several years.

Investors are welcome to buy and trade in precious metals as they see fit. They don't take physical possession of it, however. The depository always holds the items.

2. Understanding Gold as a Collectible

Investors may be familiar with gold as a collectible. This precious metal and others are usually defined as collectibles. As investors look more closely at buying physical gold for an IRA, there may be confusion regarding the collectible term.

Any precious metals defined by the federal government as collectibles cannot be legally held in a SDIRA. They just don't qualify as IRS-approved investments. There are several examples of gold collectibles that appear to be of investment quality but aren't allowed by IRS standards.

These items include gold watches, necklaces, bracelets, and other jewelry. A common gold collectible is a coin.

Investors must know that only certain coins can be held in a gold IRA. An experienced custodian can go over the differences between these coins. Investors can always keep the collectibles at home while storing the IRS-approved gold at the depository.

3. Learning About Gold for an IRA

The IRS is extremely strict about the gold held in SDIRAs. These restrictions, however, make it simpler for investors to know which items qualify for the depository or not. Consider gold bullion coins for the SDIRA.

They must be official American Eagle or Canadian Maple Leaf coins. These coins are defined by a fineness level of 99.5 percent or more. Both coin selections usually come with certification so that investors know what type of metal they have to deposit.

Investors may also have similar bullion coins issued by individual states. Discuss these assets with the custodian. Not every state's coins are IRS-approved for a SDIRA.
Some gold coins look like they would qualify for the SDIRA, but they're not part of the government's approval list.

Avoid purchases of Double Eagles, British Sovereign, or South African Krugerrand coins. They fall under the collectibles category, which removes them from any investment opportunities.

Old-fashioned metals in the shape of rounds and bars are always welcome in a SDIRA as long as they have a purity level of 99.9 percent or more. Investors with qualified custodians can buy these metals with ease through the proper channels.

4. Breaking Down Traditional IRA Assets

Investors who're interested in physical gold for their IRAs should also understand why a specialized account is necessary in the first place. Traditional or Roth IRAs are managed by advisors who deal in publicly traded assets. These opportunities are usually limited to paper assets.

Paper assets are tied to the nation's currency or dollar bill. These investments include stocks, bonds, mutual funds, futures, and options. They're always linked to the stock market in some form. In essence, paper assets are a large part of the country's economy.

If investors were allowed to buy gold in a traditional IRA, there would be a mixture of paper and precious metals assets. Metals aren't linked to the stock market. They are a finite item that has a relatively steady value. Because both assets are distinctly different, they cannot mix together in a single portfolio.

Investors who want a diverse portfolio can open both gold and traditional IRAs. Investing in paper and precious metals can create a strong retirement fund in the future.

5. Finding a Gold IRA Custodian

Buy physical gold for an IRA by first finding a custodian. There are thousands of traditional IRA advisors in business today, but only a small fraction of the industry has gold IRA custodians.

Investors should ask if the professional specializes in precious metals IRAs. This research should unearth many qualified individuals.

Be aware of any red flags with professionals who aren't skilled with gold IRAs. For example, advisors who ask about the investors' metals in their possession aren't following the IRS-approved rules.

No metals should ever be in the investor's possession. The custodian is the only individual who can buy, sell or trade the metals. Look for another custodian in this case.

Investors might also find custodians by searching for the account types online, such as gold IRAs or self-directed IRAs. These accounts are directly tied to the custodians' jobs, so it makes sense that qualified professionals might be found with this strategy.

6. Partnering With the Custodian

Finding a custodian is just the beginning of an investor's journey toward managing a SDIRA. Every professional has a slightly different set of fees. Ask the custodian about transaction, storage, and insurance charges, for example. 

Ideally, a written list of these charges is preferable. Reputable professionals remain transparent in their dealings so that customers can trust their management skills.

A chosen custodian should also have plenty of experience. Buying and trading precious metals is a specialized niche. Several years of experience should be the norm for an experienced custodian.

Along with experience comes strategy when it comes to buying precious metals. Ask the custodian about where the metals come from. Most custodians work with at least one supplier of precious metals. They should also advertise which depository is in use. All of this information gives the investor a good overview of the custodian's work ethic.

Be aware of the custodian's markup when it comes to profit margins too. There should be a fair markup so that the custodian and investor both feel properly compensated.

7. Exploring EFTs

Investors might be interested in EFTs or Exchange-Traded Funds. These accounts invest in gold, but as a commodity. Investors buy and trade EFTs on the stock market. These particular commodities are backed by gold's value, but investors don't hold any physical metals.

Because EFTs don't require physical gold storage, they're much cheaper to buy and sell. There isn't a custodian to manage the account either. The only main downfall is the fact that physical gold isn't in the investor's account.

Some investors, they end up with both SDIRAs and EFTs. Both accounts invest in gold, but just in uniquely different ways.

EFTs use the price of gold as a gauge of their value. Trading might be more frequent with a gold EFT as well.

In contrast, SDIRAs are usually held for many years with the payoff coming from a sale during retirement. Investors should decide if physical gold or their financial gain is more important when selling time arrives.

8. Avoiding Possession Pitfalls

Investors can always store gold and other metals at home. There's no law against collecting precious metals. These assets, however, won't have any tax incentives each year.

The concept of storing precious metals comes from the idea that the government might collapse at some point. Without a government, cash or currency has no value. It's simple printed paper.

Precious metals have inherent value even when civilizations dissolve. It's been seen in history before. If investors are truly concerned about having valued assets ready for trade in these extreme circumstances, holding the gold at home is a smart move.

Investors must remember that they won't be able to deposit this gold into a depository on their own. To establish a new investment strategy, they must buy physical gold through a custodian. The gold at home can remain hidden for a rainy day.

9. Researching LLC IRAs

The financial world is full of alternatives when it comes to investing in assets other than paper types. An unusual way to buy physical gold in an IRA is by forming an LLC or Limited Liability Company. This option has a few advantages for the investor.

The investor doesn't purchase the precious metals directly through a custodian with an LLC IRA. An LLC is formed, and in turn, purchases precious metals for the IRA. This strategy reduces the custodian's responsibilities. They don't have to manage every transaction.

The LLC can purchase precious metals through a business checking account.
Investors might see fewer custodian fees with an LLC IRA because of the reduced number of tasks.

However, forming an LLC is often more expensive than paying those custodian fees. The investor must look at all options before signing up for a SDIRA or choosing the LLC IRA option.

10. Following the Rules

Even the most experienced investor must follow the rules when it comes to purchasing and storing precious metals. It may be tempting to overlook the custodian's job and purchase the metals on the side.

Investors who want IRS-approved accounts cannot take these extreme steps, however. All assets must be legitimately purchased through the custodian and deposited with a reputable depository.

Any asset purchases made for an IRA, including paper and precious metals, must go through a financial third party. This parameter is in place to protect the assets and tax incentives.

These rules also extend to solo 401(k)s that are relatively rare in the marketplace.
If investors want more freedom with their precious metals, holding them in a separate account might be appropriate.

There may not be any tax incentives, but investors can move, sell or hold the metals as long as they desire. Some research on the investor's part can expedite the decision-making process.

Investors should continually research tax laws, current contribution limits, and other facets of their gold IRAs. When investors know how and when to buy gold, the account's value can only be improved over the years. Buy physical gold to see a diversified portfolio grow during even the toughest times.

Remember to read out list of the Top Gold Companies.

>> Click HERE to read our Best Precious Metals IRA Companies list <<


Get a FREE Silver & Gold Information Kit from our #1 recommendation, by clicking the button below:

Scroll to Top