Gold IRA Rules and Regulations

If you’re concerned about the increasing inflation rates, you may contemplate diversifying your retirement savings beyond cash, stocks, and bonds. A viable choice worth considering is the investment in gold and other precious metals through a gold IRA.

Opting for a gold IRA can be a prudent strategy to safeguard against inflation and benefit from advantageous tax advantages. However, it’s important to note that specific rules and requirements govern a gold IRA.

Let’s delve into the essential details regarding the rules associated with a gold IRA, the recommended metals to invest in, and how to manage the associated tax implications.

What Are The Gold IRA Rules And Regulations

1. Consider utilizing a self-directed IRA.

If you desire to incorporate gold and other precious metals into an IRA, it is necessary to establish a self-directed IRA unless you already possess one.

Contributions to a traditional self-directed IRA are eligible for tax deductions, and taxes are only payable when funds or precious metals are withdrawn from the IRA.

A self-directed IRA stands apart from other types of IRAs, allowing investment in assets such as real estate and precious metals and offering more diverse options beyond stocks, bonds, and similar paper assets.

Within your IRA, you have the opportunity to purchase and retain four categories of precious metals:

  • Gold
  • Silver
  • Platinum
  • Palladium

However, specific regulations govern the selection of gold and precious metals permissible for investment within a self-directed IRA.

2. The choice of IRA-eligible gold is crucial.

The IRS imposes specific criteria on gold coins and bullion that can be held in a gold IRA. Your gold IRA provider should be able to guide acceptable coins, bars, and bullion. Generally, IRA-eligible gold must adhere to the following guidelines:

  • Possess a fineness or purity level of 99.5%
  • American Buffalo coins
  • Australian Kangaroo coins
  • Credit Suisse gold bars produced at an approved facility

An exception exists for American Eagle coins—despite their purity level of 91.67%, they can still be included in a gold IRA.

An IRA custodian should hold the gold in a secure depository.

A national government mint or an accredited manufacturer should produce it.

Silver, coins, and bars must be at least 99.9% pure. For platinum and palladium, coins and bars must have a purity level of at least 99.95%. The IRS sets these limits to ensure investors acquire high-quality metals that will retain their value over the long term.

There is an additional consideration: In certain circumstances, the IRS may categorize IRA-eligible gold as a “collectible.” This typically occurs when a certified organization like the Professional Coin Grading Service has professionally graded the physical gold. Holding the graded gold within your gold IRA is not permissible.

If you wish to have your gold graded, it is generally advisable to wait until after you have liquidated your IRA assets and taken possession of your metals.

3. Investing in a gold through a gold IRA requires the assistance of a custodian.

Investing in a gold
That’s because you cannot directly add physical gold or precious metals to your account, even if they are eligible for IRAs or intended for investment purposes.

The role of a custodian, which is a financial institution responsible for safeguarding the gold IRA assets in your gold IRA, is crucial under the precious metals IRA rules governing precious metals IRAs. They can establish a self-directed IRA on your behalf, facilitate funds transfer to the precious metals dealer, and oversee the transportation and storage of your physical precious metals.

Most reputable gold IRA companies have established partnerships with reliable custodians, allowing them to offer comprehensive services as part of their offerings.

Typically, purchasing gold and other precious metals for your gold IRA involves utilizing funds already in your account. Here are the standard methods to fund a gold IRA:

  • Depositing cash: Once the funds are deposited into your IRA, you can allocate them to acquire gold and other precious metals.
  • Transferring IRA assets: If you hold stocks, cash, or gold in another IRA, you can transfer them to a new gold IRA. Subsequently, you can utilize those assets to purchase precious metals.
  • Completing a rollover: If you possess a 401(k) or another retirement account, you can roll those assets into a gold IRA and utilize them to invest in precious metals.

It’s important to note that not all gold IRA custodians are created equal. When selecting a custodian to safeguard your assets, consider the following factors:

  • Does the IRS approve the custodian?
  • Are there fees associated with storage and account management? (Hint: Most custodians charge such fees.)
  • How many years has the custodian been in business?
  • What is the experience level of the staff in managing gold IRAs?
  • Does the custodian have positive customer reviews?
  • Does the company have favorable ratings with organizations like the Better Business Bureau?
  • Does the custodian offer a buyback program in case you sell your gold back to them?

Adhering to IRS storage regulations is crucial when holding precious metals in a gold IRA. For precious metals, storing coins and bars in your home or a safety deposit box is prohibited under IRS rules.

Taking physical possession of IRA-eligible gold and precious metals, even temporarily, could be considered a distribution by the IRS. In such cases, you may be subject to significant penalties and taxes.

To avoid this, your gold IRA custodian will arrange to secure your physical metals in an IRS-approved storage facility called a depository.

You may have the option to choose a depository or rely on the recommendation of your custodian. Regardless, the chosen facility must be approved by the IRS.

Here are a few factors to consider when selecting a depository:

  • Level of security provided by the facility
  • Insurance policies offered by the depository
  • Storage fees applicable to your metals (typically charged annually)

The depository is responsible for safely storing your gold and precious metals until you request your gold IRA custodian sell or distribute them. Your gold will be securely delivered to your home address if you opt for a distribution.

4. Exercise caution to avoid exceeding your financial capabilities

To ensure compliance with precious metal IRA rules and regulations, it is crucial not to contribute more funds than your means allow. These regulations dictate the annual contribution limits, which presently stand at $6,000. However, if you’re 50 or older, you are eligible for a higher limit of $7,000. It’s important to note that the IRS establishes these limits annually.

5. Exercise patience and retain your gold within the IRA until you reach 59 ½

Retaining your gold and other valuable metals within your gold IRA until your retirement years is advisable. Such accounts are specifically designed for this purpose. While holding precious metals in your gold IRA presents certain tax advantages, it limits access to your assets.

According to IRS guidelines, withdrawals from your gold IRA are not permitted until you reach the age of 59 ½. At that point, you must pay any applicable income taxes on the withdrawn amounts. Additionally, you can liquidate the metals in your account for cash or even take physical possession of them without incurring penalties.

One notable benefit of a gold IRA is the ability to access physical gold and precious metals, enabling you to retain them for future sales, use them during times of crisis, or pass them on to your beneficiaries.

However, it is essential to note that if you find yourself in need of accessing your funds before reaching the age of 59 ½, specific penalties may apply, including:

  • A 10% early withdrawal penalty
  • A 28% capital gains tax on any profits if the value of your metals increased while held within the gold IRA

Exceptions to the 10% early withdrawal penalty exist in specific circumstances, such as disability or when purchasing a home for the first time. Another way to avoid this penalty is by setting up annuity payments based on your life expectancy.

Upon reaching 72, mandatory distributions from your gold IRA become necessary. Failure to comply with this requirement may result in a 50% excise tax for each year you fail to withdraw the required amount.

For more information, read our gold IRA FAQ section that has many more pieces of information for gold investors.

Are Gold IRAs FDIC Insured?

One common concern among investors considering a Gold IRA is whether FDIC insurance will cover their investment. However, it is essential to note that FDIC insurance is specific to bank accounts. It does not extend to individual retirement accounts (IRAs) or their assets, including gold IRAs.

The Federal Deposit Insurance Corporation (FDIC) is a government agency that provides insurance coverage for deposit accounts in banks and savings associations. This coverage protects depositors in case of bank failures up to certain limits per retirement account ownership category.

Gold IRAs, on the other hand, are typically held with a custodian or trustee that specializes in precious metals retirement accounts. These custodians are regulated by different entities, such as the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC), depending on the specific type of IRA and the custodian’s qualifications.

While gold IRAs may not be FDIC insured, they can offer other forms of protection. For example, reputable custodians often provide additional safeguards, such as segregated storage for precious metals, third-party audits, and insurance coverage against theft or damage.

It’s crucial to thoroughly research and choose a reliable custodian for your gold IRA, ensuring they have a strong track record, appropriate licensing, and comprehensive security measures in place. By selecting a reputable custodian, you can mitigate the risks of storing and safeguarding your precious metal assets.

Remember, the primary appeal of investing in a gold IRA lies in the potential for capital appreciation and a hedge against inflation rather than relying on FDIC insurance. Always consult with a financial advisor or tax professional to understand the risks and benefits of gold IRAs and how they align with your investment goals and retirement plans.

Tim Schmidt


Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.