What Is a Gold IRA and What Are Its Benefits

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on August 10, 2023

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A gold IRA is one way to save for retirement. This is a great way to reduce your chances of missing out on the benefits of saving for retirement.

Gold as an IRA investment can also create security and stability in the case of an economic downturn. It is an easy way to diversify your asset base while hedging against inflation and interest rates.

Unlike other types of IRAs, it does not produce any income while sitting in the custodian's safe, and you will have to take a required minimum distribution (RMD) once you reach 70.5 or 72 years old.

Further, investors with gold IRAs can hold physical metals such as bullion or coins, as well as precious metals-related securities within the portfolio.

A great thing about this type of IRA is that it must be held separately from a traditional retirement account and the contribution limits and distributions are the same.

Investors can open gold IRAs through a broker-dealer or other custodian.

Have questions about Gold IRAs? Click here.

How to Open a Gold IRA?

Opening a gold IRA is a great way to save for retirement. It's easy to do, and there are many benefits to investing in gold as part of your retirement savings plan.

There are two ways to open a gold IRA: you can either do it yourself or go through a broker.

If you're doing it yourself, you'll need to find a custodian who will hold your metals for you.

The best way to find one is by doing a search online.

You should look for a custodian who has experience with gold IRAs and who offers a variety of services, such as storage and insurance.

When you open an account, you'll need to decide what type of gold you want to invest in.

You can choose from coins, bars, or bullion.

You'll also need to decide how much you want to invest.

The minimum investment is usually $5,000, but some custodians require a higher amount.

Types of Gold IRAs

There are three types of gold IRAs: traditional, Roth, and SEP. They all have different rules and benefits

The Traditional Gold IRA

Traditional Gold IRAs work with pretax dollars, which means you can contribute, and it will grow on a tax-deferred basis. Withdrawals at retirement are taxed just like any other income.

The Roth Gold IRA

As with any investment account, there are tax benefits to having a Roth gold IRA. The money you contribute is funded by after-tax sources and will remain outside of your regular income taxes until needed for retirement distributions, at which point it's taxed accordingly.

The SEP Gold IRA

A SEP IRA is a great retirement plan for those who work at smaller businesses or self-employed individuals. SEPs have the same contribution limits as traditional IRA accounts, which means you can contribute up to 25% - whichever is less.

You will also only pay taxes when taking out funds from this account during retirement.

Benefits of Investing in a Gold IRA

Security and Stability

It can be hard to predict the economic future, which is why holding gold as part of your retirement savings plan provides security and stability. As an inflation-proof investment, it can also help protect you against rising prices.

Tax-free Growth

Remember, when you hold gold within a 401(k) or traditional IRA, you don't pay taxes on any gains until retirement.

Diversification Gold is a great way to diversify your investment portfolio, which can help reduce risk.

Hedge against Volatility As we've seen in recent years, the stock market can be very volatile.

Holding gold as part of your retirement savings can help protect you from these fluctuations.

Drawbacks of Investing in a Gold IRA

High Fees

Portfolio management, storage, and insurance can all come with high fees that you might not be able to pay or afford - especially if your account is small. Keep this in mind when choosing a custodian for your metals. Ensure that there are no annual fees and that the storage charges are reasonable.

Limited Liquidity

Gold is a physical asset, and, as such, it can be difficult to sell during times of financial stress.

Difficulty in Tracking Price Fluctuations

It can be hard to track the price of gold on a daily basis. This could make it difficult to decide when is the right time to sell.

Final Thoughts

Opening a gold IRA can be a great way to protect your retirement savings. However, it's important to do your research and understand the rules and benefits of each type of account before you open one.

If you're still unsure whether a Gold IRA is a right choice for you, consult with a financial advisor. They can help you assess your current situation and make the best decision for your future.


About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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