The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualified retirement plan. Investors with gold IRAs can hold physical metals such as gold bars or coins as well as securities related to precious metals in their portfolio. A gold IRA is a type of self-directed IRA that allows you to invest in gold bars for retirement. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as gold stocks or gold ETFs.
For gold IRAs, government regulations specify what type of gold can be kept in the account and where it should be stored. Thankfully, Gold IRA companies make it easy to meet these requirements and add precious metals to your retirement plan. No, you can’t keep physical gold in your 401 (k). The only exposure to the metal market over 401 (k) is through paper plants or mining funds.
You must open a self-directed IRA to hold physical gold and silver. Make sure you check the list of approved gold objects with your custodian manager before you transfer gold to your IRA. You’ll also need to choose a precious metals dealer who will make the actual gold purchases for your IRA (your custodian may be able to recommend one for you). The IRS has extremely detailed regulations that dictate which coins and bars can be stored in a gold IRA.
The IRS does not allow popular gold coins such as the South African Krugerrand or British sovereign coins to be stored in a gold IRA. You can choose a mix of gold and silver, and some gold IRA companies also allow you to add platinum and palladium to your IRA. Your custodian bank can refer you to an approved institution and process the gold transfer as part of setting up your Gold IRA. If you want more flexibility with your precious metals or want to keep them at home, find out how you can buy gold outside of an IRA.
Gold IRA rules require that you store eligible precious metals with a national depositary, bank, or IRS-approved trustee. Gold IRA companies differ in that some allow you to choose between multiple custodian firms and depositories, while others require that you use custodian banks and custody services of their choice. Money’s guide to buying gold includes information on buying physical gold and getting started with gold through gold ETFs, gold mutual funds, and futures contracts or stocks in gold mining companies. However, the IRS has introduced additional tax filing and recording requirements for gold IRAs due to the more complicated assets they own.
A self-directed IRA is often referred to as a gold IRA or gold-backed IRA when it is specifically set up to store physical metals in the form of gold bars, coins, or polishing coins. While there are fewer companies that offer gold IRAs than other types of IRAs, you still have multiple options. Some gold IRA companies also refer to stocks and bonds as “paper stocks” and state that they are a single asset class. Remember that you buy your IRA gold with pre-tax dollars, so you’ll be taxed if you accept distributions, as you would with 401 (k), s, and other tax-deferred retirement accounts.