While you can gain exposure to gold in a normal retirement account by owning stocks or funds, you can’t hold the physical asset in an IRA or 401 (k). For more information on what to look for when choosing a Gold IRA company, check out Money’s Guide to the Best Gold IRA Companies. If you withdraw gold from your IRA before you’re 59½ years old, you’ll be charged income tax on the value of that gold, as well as a 10% penalty for making an early withdrawal from a retirement account. They sell gold coins, gold bars, and the like, but they don’t offer IRA investment advice (regardless of what their websites or other marketing materials might suggest).
There are plenty of rules and regulatory hurdles that you’ll need to overcome if you’re thinking about buying a Gold IRA. Annual fees are generally charged by the account custodian, and storage and insurance fees are more often owed to the custody account than to the Gold IRA company. So if your portfolio consists of both gold and paper investments, a loss on the gold side is offset by the gain in other assets. According to the latest PLR, the rules that prohibit direct IRA investments in gold do not apply if the gold is held by an independent trustee.
Gold IRAs are usually defined as alternative investments, meaning that they are not traded on a public stock exchange and require specialized expertise to value them. Gold bars and round gold and silver coins are also allowed in an IRA if they have a fineness of 99.9%. To own gold, whether in the form of coins or precious metals, you need a genuine, self-directed IRA in an IRA, which is offered by a few custodian banks. However, the coins or gold bars must be held by the IRA trustee or custodian and not by you as the IRA owner.
For example, you could have an IRA that is invested in precious metals and another IRA that invests in liquid assets such as publicly traded stocks and mutual funds. The timeline for starting to claim the required minimum distributions (RMDs) of a traditional Gold IRA depends on your age or the year you were born. Therefore, the transaction is characterized as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (you). In practical terms, this means that the minimum account accounts with many gold IRA companies would require to invest much more than the 5% or less that financial advisors generally recommend investing in precious metals, which could put your nest egg at too high risk.
