Setting Up a Gold IRA

Some investors look for safe investments like precious metals when the stock market becomes unstable. While precious metals dealers, gold, silver, and palladium have ups and downs, many think they are suitable long-term investments because they hold and increase their value.

You can’t keep physical precious metals in a regular retirement account (IRA). However, special retirement accounts for precious metals IRAs allow you to invest in your retirement using gold, palladium, silver, and other valuable metals.

What is a Gold IRA?

A Gold IRA is an individual retirement savings account where people can save money when they stop working. It allows individuals to invest in gold to help grow their retirement savings. When setting up a Gold IRA, investors can use the money they haven’t paid or already paid taxes.

Simply put, a Gold IRA is a retirement account that focuses on using gold as an investment. It’s different from other retirement accounts that may include foreign assets.

What is Gold IRA Investing?

Most retirement accounts allow investors to hold specific stocks, mutual funds, and other investments. However, Gold IRAs are unique because they offer a self-directed gold IRA option.

With self-directed IRAs, account holders can buy gold bars or coins as investments. Since physical gold is involved, a custodian is needed to store the gold safely. The custodian is a third-party organization responsible for keeping the assets secure.

Gold IRAs have different rules than traditional IRAs but follow the same guidelines the IRS sets. This means there are limits on how much money you can contribute each year and restrictions for withdrawing funds.

Withdrawals from a Gold individual retirement account can be made without penalties after age 59. If you withdraw money existing retirement account before that age, you may have to pay an extra 10% tax. It’s essential to consult a tax specialist before making early withdrawals to explore other options and avoid steep penalties.

Types of Gold IRAs

Three main types of Gold IRAs exist in gold individual retirement account investing.

Traditional Gold IRAs are funded with money that hasn’t been taxed yet. Taxes are paid when the investor makes withdrawals during retirement.

Roth Gold IRAs are funded with money that has already been taxed. There are no immediate tax advantages; taxes are paid when distributions are made during retirement. SEP Gold IRAs are available to self-employed individuals or employees of small businesses.

How to Setup Precious Metals IRA

precious metals ira

Setting up an approved precious metals account involves several steps. Below, I’ll explain each step in detail to help you understand the process:

Step 1: Educate Yourself

Before setting up a Gold IRA, educating yourself about gold investing and IRAs is crucial. Understand the benefits and risks of investing in gold and the rules and regulations surrounding IRAs. This knowledge will help you make informed decisions throughout the setup process.

Step 2: Choose a Custodian

An IRA custodian is a financial institution responsible for holding and safeguarding the assets in your IRA. Look for a reputable custodian specializing in self-directed IRAs, allowing you to invest in alternative investments like gold. Ensure the custodian complies with the Internal Revenue Service (IRS) regulations.

Step 3: Open a Self-Directed IRA Account

Once you’ve chosen a custodian, you must open a self-directed IRA account. Contact the custodian and complete the necessary paperwork, including an application form, beneficiary designation, and disclosure documents. Provide any required identification and personal information as requested.

Step 4: Fund Your IRA

After opening the self-directed IRA account, there are account setup fees you must consider. There are a few options for financing your IRA:

  • Rollover: If you have an existing IRA or employer-sponsored retirement plan, you can transfer or roll over funds from that account into your new IRA with gold. Make sure to follow the IRS guidelines to avoid any penalties or taxes.
  • Contribution: You can make new contributions to your Gold IRA using cash or assets. However, the IRS imposes annual contribution limits, so ensure you stay within those limits.
  • Transfer: If you have an existing Gold IRA, you can transfer it to the new custodian. This process involves completing transfer paperwork provided by the custodian.

You can read more on this page:  funding your gold IRA.

Step 5: Choose a Gold Dealer

Once your IRA is funded, you must select gold bullion coins or a dealer from whom to purchase the gold. Look for reputable dealers with a record of providing genuine and certified gold bullion or coins. Research the dealer’s reputation, pricing, buyback policies, and storage options before deciding.

Step 6: Purchase Gold for Your IRA

Contact the chosen gold dealer and inform them that you want to purchase gold for your IRA. They will guide you through the purchasing process and provide instructions on transferring funds from your IRA to them. The dealer will buy physical gold and then ship the gold to a secure storage facility approved by your custodian.

Step 7: Select a Storage Facility

The gold purchased for your IRA must be stored in an approved depository or storage facility. Your custodian will likely have a list of approved storage providers. Choose a facility that meets the required security standards and is well-insured. The storage fees will depend on the facility you select.

Step 8: Arrange for Storage and Reporting

Coordinate with your self-directed IRA custodian and the chosen storage facility to ensure a smooth transfer of the gold to the storage facility. The storage facility will provide you with documentation certifying the ownership and authenticity of the gold, which should be reported to the custodian for IRA record-keeping purposes.

Step 9: Monitor and Review Your Gold IRA

Once your Gold IRA is set up, regularly monitoring and reviewing your investment is essential. Stay informed about the gold market and assess the performance of your investment. You can consult a financial advisor to help you manage and optimize your Gold IRA retirement portfolio.

Remember, the steps mentioned above are general guidelines, and it’s crucial to consult with a qualified tax professional or financial advisor who can provide personalized investment advice based on your specific circumstances and the current tax laws and regulations.

How Long Does It Take to Open a Precious Metals IRA?

Opening a Gold IRA typically requires a relatively short amount of time. The application process can be completed swiftly, usually within 10 to 15 minutes. Furthermore, the processing time is fast, with most accounts opening within a single business day.

The timeline beyond this point depends on the speed of your funding. If your existing IRA custodian responds promptly, transfers and rollovers generally take seven to 10 business days. However, it may take longer if you fund your account with a physical check sent by mail.

It’s important to note that these timeframes can vary depending on the IRA company you choose. Therefore, you should inquire with the firm you are considering to get accurate estimates for their account opening and processing procedures.

When Can You Withdraw From Your Account?

Regarding withdrawals, according to Internal Revenue Service (IRS) rules, you can begin taking penalty-free distributions from your account once you reach the age of 59.5. Any withdrawals made before that age will incur a 10% penalty.

Once you reach the age of 70.5 (or 72, depending on your birthday), you will be required to take a minimum distribution each year. The specific amount will depend on factors such as your age, the type of account, and other relevant considerations. You can receive these distributions in cash or in the form of the metals you have purchased, known as “in-kind” distributions.

Suppose you want to start a gold IRA account to diversify your investment portfolio, protect against inflation, increase your long-term wealth, or achieve other investment goals. In that case, it is crucial to thoroughly compare your investment options. Gold IRA companies can differ significantly, and selecting the best one for your specific investment objectives is vital to ensure a comfortable and hassle-free retirement.

What Are Other Ways to Own Gold Indirectly?

Most gold IRAs require fees. By paying more, you can invest in paper assets related to gold using your gold IRA funds.

These assets include exchange-traded funds (ETFs), stocks of gold mining companies, futures contracts for other precious metals, and mutual funds focusing on gold. These options offer indirect ways to own gold.


ETFs represent a specific amount of gold. They are bought and sold like stocks. Another indirect way is through gold mutual funds, although not many funds solely focus on owning physical gold. Both ETFs and mutual funds have low risks and are easy to handle.

Another low-risk option is investing in gold and silver mining companies. These companies specialize in refining or mining precious metals.

Gold Futures Contracts

Gold futures contracts are agreements to buy or sell a specific amount of gold in the future. Instead of buying shares, futures contracts are traded as contracts.

Gold options are related to futures contracts. They allow buyers to purchase a futures contract within a specific timeframe rather than immediately.

Gold Jewelry

Another way to own gold is by buying gold jewelry. Nearly half of the world’s gold production is used for making jewelry. Buyers can purchase gold at retail prices to invest. However, the markup is significant, around 400%. Another option to sell gold is to look for gold pieces at auctions or flea markets.

Determining the Ideal Allocation of Precious Metals in Your IRA

When considering an investment in precious metals for your Individual Retirement Account (IRA), it is advisable to exercise caution and approach it conservatively. Financial experts generally recommend allocating no more than 5% to 10% of your retirement funds toward precious metals, depending on your specific financial circumstances.

Experts advocate this modest percentage for gold investments for several reasons. A well-designed investment portfolio aims for diversification, mitigating unnecessary risk associated with putting all or most assets solely into one type of asset. Hence, any reputable financial advisor would not advise you to allocate all your resources to precious metals.

While gold and other metals have historically demonstrated long-term value retention, their performance may lag behind different asset classes, particularly stocks, especially when factoring in reinvested dividend growth. Consequently, individuals seeking ongoing development in their existing retirement accounts or funds might undermine their potential by holding an excessive amount of precious metals.

Lastly, it is essential to recognize that these “haven” metals may not always provide the expected security. Although investors often flock to them during economic turmoil, historically, their volatility has been comparable to that of stocks. Additionally, while gold stocks see their prices rise during market struggles, they decline when stocks recover. Therefore, individuals pursuing security and inflation hedging may find alternatives like high-quality bonds or Treasury Inflation-Protected Securities (TIPS) more suitable.

Nevertheless, several options are available to incorporate physical and precious metal and metals into your IRA.

Final Thoughts

Gold IRAs are considered alternative investments requiring specialized expertise to evaluate and are not publicly traded. While gold can offer high returns, it is crucial to remain cautious and not be swayed by its allure, as gold prices can unexpectedly decline.

When investing in gold, it is essential to assess whether you would be entering the market at or near its peak. Seeking guidance from a financial advisor is advisable to determine how gold fits within your portfolio’s overall objectives.

Diversification is essential, and allocating all your assets to a single investment is not advisable. If gold seems suitable, experts recommend giving no more than one-third of your retirement funds to a gold IRA. Additionally, experts suggest that no more than 10% to 15% of your total portfolio should be invested in gold, whether in physical or paper form (paper form is not permitted in a gold IRA).

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.