How To Convert IRA To Gold: The Ultimate Guide To Investing In Gold

June 28, 2023

One of the best ways to convert your IRA to gold is through a direct IRA rollover. You can do this by choosing an experienced custodian who will take care of the process for you. You can also do an indirect rollover where you withdraw funds from your normal IRA yourself and purchase gold for your gold IRA. Investing in gold or other precious metals offers several benefits, like diversification and a hedge against inflation. However, it comes with risks, fees, and rules before and after converting your account.

I recommend choosing Augusta Precious Metals to transfer your funds. This gold IRA company has an A+ rating on Better Business Bureau (BBB). It offers free shipping and insurance on qualifying purchases, as well as no management fees for maintaining your gold IRA.

Investing in precious metals such as gold and silver has become increasingly popular among investors. These metals have a long history of retaining their value. This is because many people use them as a safety net whenever the market is unstable. If you're looking to protect your retirement funds, then converting your IRA to gold is a wise choice.

In this guide, we'll explain exactly how to convert your IRA to gold or other precious metals. We'll talk about what a gold IRA is, its rules and regulations, and its risks and benefits. You'll also find the best precious metals companies to invest in and the steps to convert your account without penalties.

What Is A Gold IRA?

A gold IRA is an individual retirement account (IRA) that allows you to invest in physical precious metals such as gold, silver, palladium, and platinum. It’s also a self-directed IRA managed by a custodian or gold IRA company that’s responsible for handling the account and storing the gold in an IRS-approved depository.

Similar to any IRA, the gold IRA also has its contribution limits and Required Minimum Distributions (RMDs). The amount you can contribute from this account is the same as you do with a traditional or Roth IRA, but there are exceptions on withdrawals regarding Roth gold IRA.

You can also take advantage of its tax benefits, where you can either lower your taxable income with a traditional gold IRA or take tax-free distributions when you retire with a Roth IRA.

Why Convert Your IRA To Gold?

Gold is also considered a safe haven asset that can protect your wealth. This is because, in times of economic uncertainty, investors usually turn to gold as a store of value. This increase in demand makes gold’s price increase, helping you navigate the wave while other investors go under.

There are several reasons to convert your existing IRA to a gold IRA. The most obvious one is investing in physical gold with tangible value instead of just paper assets. Investing in tangible gold helps spread your risk among more asset classes, reducing your exposure to volatility in the stock market.

Furthermore, gold also provides a hedge against inflation since it has historically increased in price. This alone can offset the reduced purchasing power of your money caused by inflation.

So if you want an investment that spreads your investment risks and protects you from economic uncertainties, and inflation, gold is a smart choice.

Converting A Traditional Or Roth IRA To Gold

Some investors choose to convert their Roth IRA to gold as an alternative way to take advantage of its tax benefits. For example, when you have a Roth gold IRA, your deposits are made with after-tax dollars, meaning you won't pay taxes on your distributions when you retire.

Converting your traditional or Roth IRA to gold involves an IRA custodian to help you open a gold IRA. Once you've opened an account, its administrator will guide you through the process of transferring your retirement funds, purchasing your gold, and storing it in a third-party facility or depository to secure your precious metals.

Gold IRA Rules And Regulations

It's essential to learn and understand the rules and regulations set by the IRS if you want to own a gold IRA by converting your IRA to gold. Here’s what you need to know.

Taxes And Fines

Once you've transferred your IRA to gold, there are taxes and fines that you should be aware of. For example, if you withdraw funds from your gold IRA before turning 59 ½, you may be taxed with a 10% early withdrawal penalty. Also, gold and silver or any other precious metals are considered collectibles, which means you’ll be required to pay a capital gains tax at a maximum rate of 28%. This can be good or bad, depending on your income tax bracket.

For example, if you belong to a 15% tax bracket where your taxable income is more than $41,675 as a single, the profits that you gained on selling gold will be taxed at 15%. However, if you belong to a 32% income tax bracket, you’ll pay only the maximum 28% tax rate.

You're also penalized if you purchase precious metals like gold and silver that don't meet the minimum purity standards of the IRS. Not doing your research beforehand can disqualify your entire account and the tax benefits that you earned.

Gold IRA 60-Day Transfer For Indirect Rollover

There's a 60-day rule when you transfer your fund from your existing retirement plan to a gold IRA without the aid of a gold IRA custodian. This process is known as an indirect rollover, where you're responsible for withdrawing and depositing your retirement funds to a new gold IRA within 60 days.

If you miss the deadline, the IRS will treat your money as ordinary taxable income, and you may get an extra 10% early withdrawal penalty if you're under 59 ½ years old.

Remember that you can only convert your IRA to a gold IRA or any IRA once every 12 months. So, it's important to choose your account beforehand to avoid penalties.

Gold And Silver Purity Standards

Investing in gold through mutual funds or ETFs isn't the same as investing in physical gold. Once you've opened an account with an IRA custodian, you must purchase IRS-approved gold that's eligible for gold IRAs.

According to the IRS, gold bars and coins should have a minimum purity of at least 99.5% to be accepted in a gold IRA (except for the American Gold Eagle coins, which can have lower purity). In the case of silver bars and coins, they must be at least 99.9% pure to be considered eligible.

Finding IRA-eligible precious metals can be difficult if you only work with a custodian-only IRA and have to find a third-party dealer or broker to buy your gold. But if you open an account with a reputable company like Goldco or Augusta Precious Metals, things get much easier since they act as both custodians and dealers, ensuring all precious metal products meet the correct specifications.

Required Minimum Distribution (RMDs)

As an investor, you must follow the minimum distributions of your IRA – including your gold IRA. These distributions are the minimum withdrawals you need to take once you turn 72 (73 if you turn 72 after December 31, 2023). These only apply when you open a Traditional IRA and SEP IRA because Roth IRAs don't require withdrawals until the owner's death (remember, you already paid taxes to the IRS, so they’re ok with that). This means that you can start taking distributions any time you want. Until recently, in case you passed away, your beneficiaries were required to follow the same RMD rules as with the other types of retirement accounts. However, the IRS eliminated this requirement starting in 2024. There will be no RMDs for Roth IRA or Roth Gold IRA beneficiaries after April 1, 2024. If you’re a beneficiary and you have an RMD due by April 1, 2024, you’ll have to take that distribution, but after that, you withdraw when you want.

If you fail to withdraw the full RMD amount, it could result in a 50% penalty of the amount that you should've withdrawn. So, you should set yourself a reminder to avoid penalties deducted from your retirement income.

Precious Metals Storage Option

Storing your gold and other precious metals at home might seem attractive since you could sell them anytime – but unfortunately, that's not how things work.

While storing gold in a gold IRA at home is possible, the IRS has specific rules and regulations for storing precious metals in these cases. It states that your investments should be kept with a reputable custodian in a secured depository, but if you want to store them at home, you’ll need to create an LLC with you as the manager. But even if you still want to, you may not be able to, because this option is only available for high-net-worth individuals with a proven track record of years managing investment funds. Furthermore, you’ll have to build a special storage space at home that meets IRS requirements.

Even though some custodians, such as Noble Gold, offer home storage, it’s usually not possible to access this storage option, and, in most cases, it’s not even worth it. We strongly recommend keeping your metals in a third-party storage facility since home storage could lead to higher storage costs and penalties if you fail to meet the extensive additional requirements from the IRS.

5 Best Gold IRA Companies To Invest In

With hundreds of gold IRA companies, finding the best one that suits your retirement goals can be tricky. That's why I've worked hard for you and created a list of the Best 5 gold IRA companies to invest in gold and other precious metals. So grab a coffee, and let's jump right in!

Best ForFeatures
Augusta Precious MetalsBest overall gold IRA company
Free shipping on all orders
Full access to educational resources and to a skilled Harvard-educated analytics team.
Offers a gold buyback program and lifetime customer support
Has 5 main product categories, including common gold and silver bullion, premium gold and silver, and IRA-eligible coins
APMEXBest for its free membership programFree shipping on orders above $199
Offers a free membership to its Bullion Club where you can enjoy early access to new products, exclusive flash sales, special offers, and anniversary gifts.
Its Quickship program guarantees that your orders will be shipped within 1 business day, and offers $10 credit if your order is delayed. 
GoldcoBest for free silver bonusOffers a 10% silver bonus and free shipping on deliveries
Has free secured storage for up to 3 years on qualifying purchases
Red Rock SecuredBest its Price Protection PlanFree shipping and insurance on qualifying purchases
Offers a free 1-on-1 consultation to see if investing in precious metals is right for you
Has a Price Protection Plan to pay you back for your losses in case the price of your investments goes down
Birch Gold GroupBest for complimentary educational resourcesFree gold and silver info kit
Has social media accounts and podcasts to keep you updated on the latest market trends

6 Steps On How To Convert Your IRA To Gold Or Silver

In this section, we'll talk about how to convert an IRA to gold or silver through a gold IRA since this account lets you buy other precious metals besides gold, like silver. We'll use Goldco as an example to get a glimpse of how this process works.

#1 Choose A Reputable Gold IRA Or Precious Metals IRA Custodian

The first step is to find a reputable custodian specializing in gold IRAs.

You must research and look for a company with a good reputation and an excellent record of providing storage, transparent fees, and customer service.

Any one of the five companies in the table above are good options. For example, Goldco allows you to invest in physical gold, silver, or other precious metals, and it offers a 10% silver bonus plus free shipping on certain orders. But if you’re looking for the best overall, I suggest you go with Augusta Precious Metals.

#2 Open A Self-Directed Gold IRA

After you've chosen a custodian, you'll need to go to its website and open an account – specifically a gold IRA. These are self-directed accounts, so unlike traditional IRAs that invest in assets like gold mutual funds or ETFs, this account will give you greater control over your gold assets.

It’s important to decide what type of gold IRA you’ll set up, a traditional gold IRA or a gold Roth IRA. Choose the former if you believe your income will be lower in retirement than it is now, or the Roth gold IRA if you think it’ll be higher.

Remember that there is a one-time setup fee when you create an account, so it's best to compare various custodians.

#3 Fund Your New Account

To fund your gold IRA, you can make cash deposits (this works just like making contributions to a normal retirement account), or you can transfer a part or all of your existing retirement funds to your new gold IRA. Your chosen custodian can assist you with this process by doing a direct gold IRA rollover, ensuring you won't incur any penalties for transferring.

Take into account that your transfers could take between 2 and 4 weeks to process.

#4 Choose Your Gold Or Silver Investments

Now that you have funded your gold IRA, you can select which gold or silver products you want to invest in. You don't have to worry about taking a lot of time to decide if the metals are eligible since your custodian will provide you with a list of IRS-approved gold and silver.

You should also consider other factors, such as purity, weight, and liquidity, to determine if these products align with your goals and budget.

#5 Purchase And Store Your Precious Metals

After you've made your decisions, you can purchase these products through a custodian. If you want a custodian that will handle the purchase and storage of your gold or silver, I recommend Augusta Precious Metals since it acts as both a dealer and a custodian of precious metals, saving you time and effort.

Once your metals are stored in an IRS-approved depository like Brink's Security Company, your gold IRA will continue to grow until you start making withdrawals.

#6 Keep Track Of Your Investment

As mentioned, gold or other precious metals can be volatile, so you should track them regularly. You also have to monitor market conditions and economic factors to see if keeping your metals is still worth investing in for a couple of years.

Transferring Your IRA To Gold: 3 Things To Consider

Before transferring an IRA to gold, there are 3 things you have to consider: penalties, fees, and, most importantly, risks and benefits.

#1 Tax Penalties

As mentioned before, you must work with a reputable custodian that allows you to invest in precious metals like gold. That way, it will guide you when you open a gold IRA to store your precious metals in a secured facility. If you do this transfer incorrectly, you may face tax penalties such as a 10% early withdrawal penalty and ordinary income tax for your distributions.

Thus, to avoid these penalties, you should work with a custodian like Goldco or Augusta Precious Metals, which specialize in transferring IRAs to gold and dealing with IRS-approved precious metals.

#2 Fees And Expenses

Even after you transfer your IRA to a gold IRA, there are still fees and expenses to keep your account active and in good standing. These include:

  • One-time setup fees – you must pay a one-time setup fee when you open a new gold IRA. Depending on the custodian you're working with, this may cost between $50 to $150.
  • Storage fees – you cannot take your gold at home, so you need to pay a storage fee to keep your precious metals secured. This fee costs between $50 to $250 annually.
  • Maintenance fees – your custodian will be looking after your account so that it will charge you between $50 to $300 annually.
  • Markup fees – when you purchase or sell gold or silver from a dealer or a gold IRA custodian, you don’t usually pay the spot market price. These companies sell at a slightly higher price and buy at a slightly lower price than the precious metal’s spot price. This markup fee depends on which kind of gold investment you will buy, whether gold coins or bars.
  • Shipping fees – delivering your precious metals to a storage facility may incur a fee. This fee depends on the facility or custodian, but some custodians, like Augusta Precious Metals, offer free shipping.

#3 Risks

Investing always implies risk. When you transfer your IRA to a gold IRA, there are several risks involved.

Although gold has historically increased in price in the long term, any type of gold investment can be volatile, and its price can be unstable in the short term. This means there’s a risk of losing money for transferring your IRA to gold.

So before you transfer your account, you must weigh its potential risks and benefits and get familiar with this type of asset. Don’t let anyone persuade you to invest in something you don’t know enough about.

In Summary

Converting your IRA to gold is a smart way to diversify your retirement portfolio and spread risk. It’s also a way to secure a part of your nest egg in a safe-haven asset that’s resilient to market fluctuations. However, it also comes with risks, as all investments do.

Although converting your IRA to gold may offer several benefits, such as diversification and tax benefits, you must be aware of its rules and regulations and, most importantly, weigh its potential benefits and risks before making your decision.

Transferring an IRA to a gold IRA involves a reputable custodian of your choice that will help you handle the process of opening an account and transferring the funds. This will allow you to invest in precious metals as an alternative investment. If this is something you're considering, you can't go wrong with Augusta, our #1 top-rated gold IRA company.

Convert IRA To Gold FAQs

Can I transfer my IRA to gold?

Yes, you can transfer your IRA to gold through a gold IRA rollover. To avoid tax penalties, you must choose a direct rollover so your funds will be transferred directly to your new gold IRA through the help of your custodian.

How do I roll my IRA into a gold IRA?

You can roll your IRA into a gold IRA by working with a reputable custodian. It will handle the rollover process from opening a gold IRA, funding the account, and purchasing your metals to store them in an IRS-approved depository.

Can you roll a traditional IRA into a gold IRA?

Yes, you can roll any IRA, including a traditional IRA, into a gold IRA. This involves an IRA custodian that will help you set up an account and facilitate the transfer of your funds from your existing IRA.

What are the pros and cons of a gold IRA?

There are a lot of pros and cons of a gold IRA. Its advantages include portfolio diversification, tax benefits, hedging against inflation, and long-term wealth. However, you should be aware of its disadvantages which include high fees and expenses, tax penalties, and price volatility.

Can I roll my IRA to gold or silver?

Yes, you can roll your IRA to gold or silver by doing a direct rollover with a reputable custodian. This type of rollover is recommended to lessen your risk of tax penalties when you transfer your account.

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