Gold IRA Guide – Everything You Need to Know

Gold IRA Guide – Everything You Need to Know

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Amidst a weak economy, record-high inflation rates, geopolitical chaos, interest rate hikes, and fears of a looming recession, many retirees have started exploring various ways to protect their investments and wealth. As an investor, you should know that if a recession occurs, your investment will lose value, and you may be forced to find part-time work to recover from this loss. Fortunately, there are several ways to maximize your investment portfolio and protect your wealth.

One such way is investing in precious metals like gold, silver, platinum, palladium, and rhodium. In recent years, gold has proven to be a safe store of value even during bad economic times. This explains why many investors are turning to gold IRAs. Investing in gold IRAs can help you diversify your investment portfolio and hedge against high inflation rates and stock market volatility.

In this post, we will explore what a gold IRA is, how to open one, how it works, and how you can benefit from it.

What Is a Gold IRA?

A gold IRA is a specialized, self-directed Individual Retirement Account (IRA) that allows investors to hold gold alongside their regular retirement savings. When you open a gold IRA, you’ll receive the same benefits as a traditional IRA. This means that you can use pre-tax dollars as contributions, and your investment earnings will accumulate tax-deferred. Also, the same contribution and income limits apply to both gold IRAs and conventional IRAs.

However, instead of holding paper assets, such as stocks, bonds, Exchange-Traded Funds (ETFs), and other cash equivalents, gold IRAs hold physical gold or other IRA-approved precious metals. You can also use the funds in your gold IRA to invest in other gold-related paper investments such as:

  • Stocks of gold mining companies
  • Precious metals commodity futures
  • Exchange-traded funds
  • Precious metals mutual funds

Types of Gold IRAs

Gold IRA Guide - Everything You Need to Know

There are three types of gold IRAs.

1. Traditional Gold IRAs

Traditional gold IRAs, also known as self-directed IRAs, are retirement accounts that are usually funded using pre-tax dollars. This means that you won’t be required to pay taxes on your contributions to your gold IRA, and all the earnings will grow tax-deferred. Your withdrawals will be taxed at retirement. You can start taking distributions from your gold IRA without any penalties when you attain age 59½.

For example, if you earn $80,000 a year and you contribute $5,000 to your gold IRA, you’ll only pay income tax on the remaining $75,000. Also, by the time you pay tax on the $5,000 contribution, the gold or IRA-approved precious metal you’ve purchased will likely be worth a lot more.

2. Roth Gold IRAs

Unlike traditional gold IRAs, Roth gold IRAs are funded using after-tax dollars, which means you don’t get an immediate tax benefit. However, the good news is that you won’t be required to pay taxes on your investment gains when you start making withdrawals from your gold IRA. Therefore, if gold has increased in value during that period, you’ll benefit from a huge tax advantage.

3. SEP Gold IRAs

Simplified Employee Pension (SEP) gold IRAs are only available to self-employed individuals or employees of small businesses. SEP gold IRAs are usually funded using pre-tax dollars, and you’re only taxed on the withdraws you make once you retire. As a small business owner, you can make contributions to your employees’ SEP gold IRAs.

How a Gold IRA Works

Gold IRA Guide - Everything You Need to Know

Here is a step-by-step guide on how to open a gold IRA account.

Choose a Reputable Gold IRA Company

Before opening a gold IRA, you must find a reputable gold IRA company. Currently, there are many companies that offer gold IRA services. However, the nature of these services varies from one company to the next. For instance, some companies specialize in gold IRAs, while others only sell collectible coins and other alternative assets.

Like any other industry, the precious metal industry is filled with both reputable and bad IRA companies. Therefore, before committing to a gold IRA company, ensure you do thorough research.

Open an Account With the Company

Once you’ve chosen a gold IRA company, you can proceed to contact them regarding their services and open an account. In most cases, one of the company’s representatives will help you fill out the required paperwork via the phone or live chat. You may even be able to complete a section of the application process without contacting the company.

Find a Custodian and Storage

After opening an account with your gold IRA company, you need to find a custodian and storage for your assets. As per IRS regulations, all gold IRA assets must be stored with a custodian. Fortunately, gold IRA companies like Goldco, American Hartford Gold, and Augusta Precious Metals can help you find a reputable custodian to hold your IRA gold assets on your behalf.

Ensure that the custodial company you choose has positive reviews online. This is the only way you can ensure that your self-directed IRA is set up correctly and your assets are secure.

Fund Your Gold IRA

After opening your self-directed gold IRA, the next step is to fund the account. You can fund your gold IRA with a cash contribution or rollover funds from an existing IRA account. Rolling over funds from a traditional IRA or (401)k into a gold IRA is a simple process that takes less than 60 days to complete.

This is usually done by wiring money from your old IRA to your new gold IRA. Sometimes your gold IRA company may work with your custodian to ensure that the process doesn’t take longer than it needs to.

Choose Your Precious Metal Products

After funding your gold IRA, you can buy gold and other IRA-approved precious metal products. If you’re not sure about the precious metal products to purchase, you can always contact a representative of your gold IRA company to discuss the available options.

It’s worth noting that the IRS has strict guidelines regarding the purity of the physical gold or other precious metals you can buy. To be IRS-eligible, gold bars or coins and silver must have a 99.5% and 99.9% purity, respectively. On the other hand, platinum and palladium must have a 99.95% purity to be IRS-eligible.

One of the best things about working with a gold IRA company instead of an average precious metal dealer is that the former is aware of these IRS rules. Therefore, they will guide you through every step to ensure that you don’t invest in something that you shouldn’t.

Choose an Approved Depository?

The precious metals you invest in must be stored in an IRS-approved depository. Such depositories are usually secure and fully insured. A representative from your gold IRA company will present you with several depository options where you can store your physical gold or other precious metals. You can choose a depository in the U.S. or outside the country.

Most of the time, investors choose depositories in their region. However, choosing a depository in specific regions can present various tax benefits. For instance, if you choose a depository in Delaware or Texas, you won’t pay sales tax for physical gold shipped to or stored in the state.

Monitor the Performance of Your Gold IRA

Once you’ve purchased gold and other precious metal products, your gold IRA company will work with your custodian to ensure your gold IRA adheres to the IRA rules and regulations. For instance, the gold IRA company receives funds in your account and ships precious metals products to your depository.

On the other hand, your custodian performs administrative tasks and places your precious metals into your vault. Once your precious metals are placed in your vault, you don’t need to do anything else. This is because the storage fees and other account fees will be deducted directly from your holdings. This means you can let your physical gold and other precious metals sit until you make a withdrawal.

However, like any other investment, it’s important to monitor your gold IRA investment over time. This way, you can make the necessary adjustments to ensure that your investment portfolio remains well-balanced throughout. This process can be much easier depending on the custodian you use for your gold IRA.

Some custodial companies usually provide their clients with online tools that they can use to track the performance of their investments. In contrast, other custodians require you to call them directly to inquire about the progress of your investment.

Benefits of Gold IRAs

Gold IRA Guide - Everything You Need to Know

Gold IRAs offer several benefits to investors nearing retirement and those starting their careers. These benefits include.

True diversity

The biggest setback you can face while saving for retirement is a financial loss that will take years to recover from. Therefore, it’s important to consider diversifying your investment portfolio. You want to ensure that your retirement savings contain assets that are uncorrelated from each other. This way, when some of the assets go down in value, others will go up.

Gold and other precious metals are uncorrelated with financial assets such as stocks and bonds. In fact, the value of precious metals usually goes up when the stock market crashes. This makes gold IRAs the ideal asset to protect your investment portfolio when there is a looming recession.

Protection Against Inflation

Financial assets like stocks and bonds usually depend on the country’s currency system, the Federal Reserve, and the government. When inflation rises, it reduces the purchasing power of the dollar and the value of financial assets like stocks and bonds.

On the other hand, the value of gold is not affected by these factors. This means that gold will maintain its value regardless of how poorly the economy performs. In fact, gold has been one of the best-performing assets during the highest inflationary periods of the last century.

Control Over Your Investments

When you save for your retirement years using (401)k, your options for diversifying your investments are very limited. But, when you open a gold IRA, you have more control over your investment portfolio since you can decide what types of precious metal products you want to invest in.

Additionally, having a gold IRA allows you to transfer your assets easily and without any tax implications. For instance, if you want to roll over your (401)k account into your gold IRA, you can do it. You can also sell the precious metals in your gold IRA and buy stocks or bonds whenever you want.

Positive Growth Potential

As aforementioned, gold is one of the best-performing assets of the last century. In the last 20 years, gold has grown twice as much as the stock market has. With that being said, investing in gold IRAs means that you get to benefit from gold’s stability and growth potential.

No Third-party Risk

The decisions of the banks, CEOs, or board of directors do not directly impact the value of gold. Unlike online assets, no one can embezzle physical gold or other precious metals away from you. Additionally, you can convert gold to cash in the shortest time possible.

Factors to Consider When Choosing a Gold IRA Company

Gold IRA Guide - Everything You Need to Know

Choosing the right gold IRA company to work with can be overwhelming. To ensure you make the right decision, consider the following factors.

Review and Reputation

A good gold IRA company must have a good reputation. Before settling for a particular company, look up their reviews on sites like Better Business Bureau, Trustlink, Consumer Affairs, Trustpilot, and many others. These reviews will tell you everything you need to know about the company and their customer service.

Transparency With Fees

A good company must be transparent with its fees. It’s even better when a gold IRA company publishes the formula they use to come up with their prices. It’s in your best interest to avoid gold IRA companies that charge their clients' hidden fees and commissions once they make investments.

Proper Licensing

Before investing in a gold IRA, ensure that you look for a company that is properly licensed and insured. If a gold IRA company cannot provide the right documentation, the chances are that it is not legit.

Our Recommendations

If you’re looking for a reputable gold IRA company to work with, here are our top recommendations.

#1. Goldco


Goldco is undoubtedly one of the best-managed and designed gold IRA companies you can find out there. The company offers competitive pricing, 10% back in free silver coins for new clients, and extensive educational resources to help you make a more informed decision regarding your financial future.

#2. Augusta Precious Metals

Augusta Precious Metals

Clients who work with Augusta Precious Metals benefit from a transparent fee structure, low fees, and a money-back guarantee on all purchases. Additionally, the company offers plenty of educational resources like articles and free webinars to help educate clients on how to invest in gold IRAs.

#3. American Hartford Gold

American Hartford Gold

Most companies that don’t require a minimum investment usually have a bad reputation among clients. However, this is not the case with American Hartford Gold. In addition to having high customer ratings, this company values customer service and doesn’t charge shipping/tracking fees.

Generally, gold IRAs are more complicated than traditional IRAs. However, the process becomes easier when you find a reputable and transparent gold IRA company that works well for you and your financial goals.

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