What Is a Gold IRA?

 

What Is a Gold IRA?

Until 1997, only traditional stocks and bonds were able to be added to your Individual Retirement Account (IRA). But in 1997, Congress passed the Taxpayer Relief Act. This law allowed investors to add a select number of precious metal investments to their retirement portfolios. The number of acceptable bullion products you can add to your gold IRA has grown over the past couple decades, and investors can now prepare for retirement using hundreds of different gold products. 

Investing in a self-directed gold IRA offers retirement savers a number of distinct benefits. Aside from the benefits usually associated with investing in safe haven assets, gold IRAs offer a degree of flexibility and control over your portfolio that you don’t usually find in a traditional retirement savings account. Gold IRAs also provide investors with the safe deferred tax savings allocated to traditional IRAs. 

On this page, you’ll find a brief overview of the gold IRA, as well as answers to some of the most commonly asked questions we receive about gold IRAs. 

History of Gold IRAs – They’re Newer Than You Think!

You might assume that Americans have always been allowed to add precious metals to their IRAs, but this isn’t the case. The Gold IRA became legal under the Taxpayer Relief Act of 1997, when Congress expanded the categories of assets that are eligible for inclusion in a tax-deferred retirement account. From that point forward, gold IRAs became a multi-billion dollar industry in the United States as investors raced to add intrinsically valuable gold to their portfolios. 

The gold IRA has undergone a number of changes since it was introduced in 1997. When the Taxpayer Relief Act was passed, only select United States coins were eligible for inclusion in your Individual Retirement Account. Since then, the law has changed to allow a wide range of gold coins, bars, and rounds, including those produced outside of the United States. 

Gold IRAs Explained

Typically, a gold IRA is a self-directed Individual Retirement Account that includes investment-grade gold products that meet certain purity requirements. Because precious metals are considered alternative assets to stocks and bonds, you must open a self-directed IRA in order to add gold coins, bars, and rounds to your retirement portfolio. 

Understanding Self-Directed IRAs

A self-directed IRA is a special retirement account that allows investors to add a wider variety of assets to their portfolios. Anyone can open a self-directed Individual Retirement Account, and doing so is a requirement for any investor who wants to add gold bullion or other precious metals to their retirement portfolio. 

Requirements To Open a Gold IRA

Anyone can open a gold IRA, and the process works similarly to opening a traditional IRA. The only difference is that a gold IRA must be self-directed and that you’ll need to find an IRA custodian who is willing to work with precious metal accounts. Not all custodians accept self-directed gold IRAs, so you may need to shop around to find a custodian who fits your needs. 

Other than that, the standard IRA requirements still apply for a gold IRA. You’ll need a taxpayer ID number, and you must meet the minimum requirements to qualify for a regular IRA, including earning a taxable income. 

Opening a Gold IRA

Opening a gold IRA may seem complicated, but it really comes down to three main steps:

1. Find a Custodian and Fund Your Account
2. Locate a Gold Supplier
3. Fill Your Gold IRA Portfolio 

Let’s take a closer look at the three steps involved in how to open a gold IRA. 

Finding a Gold IRA Custodian and Funding Your Account

The first step in opening a gold IRA, like any other IRA, is to find a custodian. Your IRA custodian is an institution that keeps your IRA assets safe and makes sure that your portfolio complies with the regulations set by the Internal Revenue Service (IRS). Just like with regular IRA accounts, investors are not permitted to physically hold their IRA assets themselves. 

Remember – not all IRA custodians accept self-directed gold IRA accounts. You’ll need to find a custodian who is willing to safeguard your physical precious metal assets before opening your gold IRA. 

Once you have a gold IRA custodian, it’s time to fund your account. When you fund your gold IRA, you’ll deposit cash into your custodial portfolio so that your custodian is able to purchase gold bars, coins, and rounds at your request. Funding your account is an important first step in establishing your retirement funds using gold bullion.

Finding a Licensed Gold Supplier

Working with your gold IRA custodian, the next step in the gold IRA process is to find a licensed gold supplier to purchase metals from. Many gold IRA custodians recommend working with the same supplier for multiple years, so you’ll want to shop around to find the right gold dealer for your purposes. When in doubt, most gold IRA custodians will recommend some of their preferred suppliers. 

The cool part about a gold IRA is that it is completely self-directed. You control all of the assets that go into your retirement savings account. You’ll choose the coins, bars, rounds, and other gold products you use to prepare a nest egg for yourself. Both your custodian and gold supplier can help you build a portfolio you’ll be proud of!

Filling Your Gold IRA Portfolio 

Once you have an IRA custodian, a funded account, and a supplier, it’s time for the fun part! Next, you’ll work with your IRA custodian to add precious metals to your IRA. Despite the name, gold IRA investors are not limited exclusively to gold bullion. When you open a self-directed IRA account, you’re also able to add silver, platinum, and certain other precious metals to your retirement fund. 

Choosing between gold products can be tricky, but you’re in good hands if you chose a reputable custodian and gold supplier. By adding a variety of different precious metal products to your retirement portfolio, you can build tax-free wealth until you’re ready to retire during your golden years!

What Gold Products Are Eligible For Gold IRAs?

Not all gold is eligible for inclusion in a gold IRA. Gold products must be at least 99.5% pure, while silver products have to meet a purity requirement of 99.9% and platinum must be at least 99.95% fine. To recap, here are the minimum purities required to include precious metals in your gold IRA: 

• Gold: 99.5%
• Silver: 99.9%
• Platinum: 99.95%

Certain American-made precious metal products are exempt from these purity requirements. The American Gold Eagle Coin, for example, is only 91.67% pure but is produced on behalf of the U.S. government, making it eligible for inclusion in your precious metals IRA. 

Gold IRAs and Taxes

Generally, you’ll get the same tax advantages when investing in a gold IRA as you would with a traditional Individual Retirement Account. Contributions to your gold IRA are not taxed annually; the only taxes you’ll pay occur when you withdraw your retirement fund, and these taxes are based on your taxable income. 

Like with a traditional IRA, gold IRA withdrawals are subject to an additional fee of up to 10% if you withdraw them early – before thee age of 59.5. 

Final Thoughts: What Is a Gold IRA?

The days of only being able to contribute stocks and bonds to your Individual Retirement Account (IRA) are long gone. Nowadays, investors can add a wide range of precious metal products to their retirement savings accounts, provided that these contributions meet the minimum purity requirements set by the Internal Revenue Service (IRS). 

To open your gold IRA, you’ll need to find a custodian and open a self-directed Investment Retirement Account. Once you have this account and it is funded, you’re free to add a wide range of gold products to watch your portfolio grow!

You might also be interested in: 

• Is Gold IRA Eligible?
• Traditional vs. Gold IRAs – What’s the Better Way to Save For Retirement?
• Traditional Versus Precious Metal IRA – What’s the Better Investment?