Gold IRA – How Does it Work?

Types of Precious Metals IRAS

Roth gold iras provide the most tax benefits as you are using after tax dollars to purchase gold and therefore your investment will grow with the tax advantages that a Roth IRA provides.

SEP Gold IRAS will pay taxes like any other retirement account, such as a 401(k) or traditional iras.

Precious Metals IRA Rules

1. Approved Metals & Purity Standards

The IRS only allows certain precious metals that meet specific purity standards:

• Gold: 99.5% purity (e.g., American Gold Eagle, Canadian Gold Maple Leaf)
• Silver: 99.9% purity (e.g., American Silver Eagle)
• Platinum & Palladium: 99.95% purity

2. Approved Coins & Bars

Only IRS-approved bullion and coins are allowed. Some collectibles and rare coins are not eligible.

3. Custodian & Storage Requirements

• The IRA must be managed by an IRS-approved custodian (a financial institution or trust company).
• Physical metals must be stored in an approved depository (not at home). Home storage can disqualify the IRA and result in taxes and penalties.

4. Contribution Limits

• Follows standard IRA contribution limits:
  • 2024 limit: $7,000 ($8,000 if you’re 50 or older)
  • Limits apply across all IRA accounts (traditional, Roth, and self-directed IRAs).

5. Tax Advantages

• Traditional Precious Metals IRA: Contributions may be tax-deductible; withdrawals are taxed as income.
• Roth Precious Metals IRA: Contributions are made with after-tax dollars; withdrawals are tax-free if eligible.

6. Required Minimum Distributions (RMDs)

• Traditional IRAs require RMDs starting at age 73 (as of 2024).
• Roth IRAs have no RMDs during the account holder’s lifetime.

7. Rollovers & Transfers

• You can roll over or transfer funds from an existing IRA, 401(k), or another retirement account into a Precious Metals IRA without tax penalties, if done correctly.

8. Prohibited Transactions

• You cannot use the metals personally (e.g., wear jewelry or store gold at home).
• Engaging in prohibited transactions can lead to penalties and disqualification of the IRA.

What are the Advantages of Owning Physical Gold?

Owning physical gold comes with several advantages, making it a popular investment choice for wealth preservation and financial security. Here are the key benefits:

1. Hedge Against Inflation

Gold has historically maintained its value over time, making it an excellent hedge against inflation. When paper currency loses purchasing power, gold prices often rise.

2. Wealth Preservation

Gold has been used as a store of value for thousands of years. Unlike fiat currencies, which can be devalued by government policies, gold retains its worth across generations.

3. Protection During Economic Uncertainty

During financial crises, market crashes, or geopolitical instability, gold tends to perform well as investors seek safe-haven assets.

4. Tangible Asset (No Counterparty Risk)

Unlike stocks, bonds, or digital assets, physical gold is a real, tangible asset that you own outright. It’s not dependent on a company, government, or financial institution.

5. Global Liquidity

Gold is recognized and accepted worldwide, making it easy to sell or trade in any country.

6. Portfolio Diversification

Gold has a low correlation with stocks and bonds, meaning it can reduce overall portfolio risk and help balance losses in other investments.

7. No Default Risk

Gold is not tied to any institution that can go bankrupt, unlike bonds or stocks. There’s no risk of default or credit collapse affecting your investment.

8. Potential for Long-Term Appreciation

Over time, gold has shown steady growth in value, particularly during times of economic uncertainty and high inflation.

9. Private and Confidential Investment

Owning physical gold provides a level of privacy not available with many other investments, as transactions can often be conducted discreetly.

10. Protection Against Government Actions

Historically, governments have devalued currencies and even frozen bank accounts during economic crises. Physical gold provides a way to store wealth outside the financial system.

>> We have both set up a this exact investment with Goldco.  Learn why we chose them in our full Goldco review.

Summary

A gold IRA (which also can be a silver IRA) is a great way to hold gold and physical precious metals inside your most important asset – your retirement account. While traditional iras allow you to purchase stock and other investments, they do not allow you to buy approved precious metals (like gold bars) and hold them.

We both hold physical gold in our portfolio in addition to silver. The gold IRA has been a spectacular wealth building vehicle for us as gold has hit all time highs while traditional investments have struggled with the new President. It’s wise to invest 5-20% of your portfolio in physical assets. Always contact a tax advisor or personal finance specialist prior to selling so you can avoid early withdrawal penalties just like any other investment such as cashing out conventional iras or traditional iras.

We confidently buy gold, just like many billionaires in addition to silver platinum and palladium. We have seen great gains in our precious metals investments and the minimal storage fees for secure storage makes this one of the best ways to have legal physical possession and adhere to the guidelines of the Internal revenue service. Many investors have used our website to buy and hold gold in their IRA.