Precious metals like gold and silver have long been valued as ways to diversify investment portfolios and hedge against economic uncertainty. In recent years, precious metals have also become a popular asset class to include in an individual retirement account (IRA). Precious metal IRAs allow investors to fund their retirement accounts with physical bullion in the form of coins and bars.
A precious metal IRA functions similarly to a traditional IRA or Roth IRA. The key difference is that instead of holding paper assets like stocks and bonds, a precious metals IRA is funded with gold, silver, platinum, and palladium. This provides IRA owners with tangible assets that hold their value over time and offer protection against inflation.
In this comprehensive guide, we will cover everything you need to know about precious metal IRAs, including:
- The benefits of owning physical precious metals in an IRA
- IRS rules and regulations for precious metal IRAs
- The gold and silver coins and bars allowed in a precious metals IRA
- How to roll over or transfer existing IRAs into precious metals
- Choosing a precious metals IRA custodian or dealer
- Best practices for investing in precious metals through an IRA
By the end, you will understand exactly how precious metal IRAs work, how to fund one with an IRA rollover, and the key factors to evaluate when selecting precious metals for your retirement account.
The Benefits of Owning Physical Precious Metals in an IRA
There are several advantages to holding physical precious metals like gold, silver, platinum and palladium in a self-directed IRA rather than assets like stocks, bonds and mutual funds:
Precious metals have a negative correlation to paper assets like stocks and bonds. When paper investments decline, precious metals like gold often increase in value as investors flee to safe haven assets. This makes precious metals an effective portfolio diversifier.
Precious metals have historically increased in value alongside inflation. When the buying power of the dollar declines, gold and silver tend to retain their value. This makes them effective hedges against rising prices.
With a precious metals IRA, investors own the physical coins or bars rather than mining company shares or ETFs. This provides direct ownership of the metal itself.
Gold, silver and other precious metals are less volatile than paper investments and have intrinsic value. Precious metals have served as real money for centuries.
Global demand for gold and silver is high, especially in uncertain economic conditions. This creates a steady baseline level of demand for precious metals.
The existing supply of gold and silver is limited. Precious metals are difficult and expensive to mine. Supply cannot be quickly ramped up like paper investments. This supports long term price stability.
By funding an IRA with physical precious metals, investors can take advantage of these key benefits while still enjoying the tax-advantaged growth of a retirement account.
READ ALSO: How to Rollover Your 401k to a Gold IRA
IRS Rules and Regulations for Precious Metal IRAs
The IRS allows precious metals like gold, silver, platinum and palladium to be included in an IRA under certain conditions. Here are the key IRS rules and regulations:
Approved Precious Metals
Only certain coin and bar products are permitted in a precious metal IRA. These include coins minted by the U.S. Mint like the American Gold Eagle and American Silver Eagle, and bars and rounds produced by NYMEX- or COMEX-approved refiners and mints.
Coins and bars must meet minimum fineness requirements: Gold must be .995+ pure, silver must be .999+ pure, and both platinum and palladium must be .9995+ pure.
The IRS prohibits “collectible” coins and metals like numismatic coins. Only “investment grade” bullion coins and bars are permitted. Jewelry and other collector’s items cannot be included.
IRA Custodian Storage
Physical precious metals in an IRA must be stored by an IRS-approved custodian in a segregated account in the investor’s name. Home storage and safety deposit boxes are not allowed.
No Physical Possession
IRA owners cannot take physical possession of the precious metals. They can only be stored and managed by the custodian on the IRA owner’s behalf.
Investors must begin taking required minimum distributions (RMDs) from precious metal IRAs after age 72. Taxes and penalties apply to non-qualified IRA distributions.
By abiding by these rules, precious metal IRA investors can legally fund their retirement accounts with physical gold and silver to diversify their savings.
Gold and Silver Coins Allowed in a Precious Metals IRA
When evaluating gold and silver coins for a precious metal IRA, there are a few key factors to consider:
IRA Approved Coins
The coin must be considered “investment grade” bullion by the IRS. Approved gold coins include the American Gold Eagle, Canadian Gold Maple Leaf, Austrian Philharmonic, Australian Gold Kangaroo, and South African Krugerrand. Approved silver coins include the American Silver Eagle, Canadian Silver Maple Leaf, Austrian Silver Philharmonic, and Australian Silver Kangaroo.
IRA gold coins must have a fineness of .995 or greater to qualify. IRA silver coins require a fineness of .999 or higher. This ensures the coins have a high precious metals content.
1 oz gold and silver coins are generally recommended since they have the lowest premiums over the underlying metal spot price. This helps maximize the amount of metal for the money.
Year of Issue
For maximum liquidity, stick to well-known coin series with consistent annual production like the American Gold Eagle or Canadian Maple Leaf. Older semi-numismatic coins have higher collector premiums.
Bullion coins with some wear and tear are acceptable. However,avoid extremely worn, damaged, or graded coins as those have numismatic value.
By choosing common bullion coins from reputable government mints, precious metals IRA investors can add gold and silver to their portfolio at the lowest cost.
Bars and Rounds Allowed in a Precious Metals IRA
In addition to gold and silver coins, precious metal IRA accounts can also be funded with bars and rounds. Here are the main factors to evaluate:
Only bars and rounds from NYMEX- or COMEX-approved refiners are permitted. Major refiners include PAMP Suisse, Credit Suisse, Johnson Matthey, and Sunshine Minting.
IRA gold bars must have a minimum purity of .995. Silver bars and rounds require a purity of at least .999. Higher purities reduce the impact of fees.
10 oz and 1 kilo size bars offer the lowest premiums compared to the spot metal price. Larger 100 oz bars also have relatively low premiums but require a higher investment.
Bars and rounds with well-known refiner branding and security features command higher liquidity and make verification easier. Hand pours and artistic pieces have collectible value.
By choosing widely traded bars and rounds from major refiners, precious metal IRA investors can cost effectively add physical gold and silver to their retirement savings.
How to Roll Over or Transfer an Existing IRA into Precious Metals
Now that we’ve covered the rules and best coins and bars for funding a precious metal IRA, let’s discuss the process for actually opening one and moving over your existing IRA assets:
Step 1 – Select a Precious Metals IRA Custodian
You will need to open a self-directed IRA with an IRS-approved custodian who specializes in precious metal IRAs. We’ll cover how to pick the best company in more detail later.
Step 2 – Open Your Account
Complete the IRA custodian’s account opening paperwork and fund your account with your annual IRA contribution if you wish. There is no obligation to fund your metals yet.
Step 3 – Initiate Your IRA Rollover
Decide which assets to roll over, such as your 401(k) from a previous employer. Submit your rollover request to your current IRA or 401(k) custodian.
Step 4 – Execute Your Rollover
Your IRA custodian will assist you in facilitating the process of moving your dollars or assets from the old account into your new self-directed IRA.
Step 5 – Select Your Metals
Research gold and silver coins along with precious metals bars that meet IRS rules. Pick the metals you want to add to your IRA.
Step 6 – Fund Your Precious Metals Purchase
The IRA custodian will fund your selected bullion purchase using the dollars in your IRA. The precious metals will ship to the custodian’s vault.
And that’s it! By following these steps, you can seamlessly transfer traditional IRA or 401(k) retirement funds into physical gold and silver to diversify your savings.
Choosing a Precious Metals IRA Custodian or Dealer
The company you choose to be the custodian of your precious metal IRA is one of the most important decisions you will make. Here are the key factors to evaluate:
Make sure the company is IRS-approved to act as an IRA custodian for self-directed accounts investing in alternative assets.
The custodian should provide fully insured, segregated storage in a depository vault that has passed third-party security audits.
Choose a custodian with reasonable bid-ask spreads and competitive precious metals pricing closer to the underlying spot price.
No Hidden Fees
Avoid companies that do not provide a full fee schedule upfront. The main fees should include account setup, annual maintenance, and storage.
Opt for a custodian that specializes specifically in precious metal IRAs as opposed to other alternative assets. Their sole focus should be precious metals.
Established companies with a long history and track record of satisfied customers provide peace of mind. Avoid brand new custodians.
Only work with highly-rated custodians who have a sterling reputation based on extensive client reviews and minimal complaints.
By carefully vetting precious metal IRA custodians on these criteria, you can identify a secure, reputable company to store your gold and silver.
Best Practices for Investing in Precious Metals Through an IRA
Here are some top tips for maximizing the value of your precious metals holdings within an IRA:
- Diversify Across Metals – Consider holding gold, silver, platinum and palladium to spread risk.
- Diversify Within Metals – Own a mix of coins and bars from different countries and refiners.
- Avoid Collectibles – Stick to common bullion products with the lowest premiums.
- Focus on Physical Metal – Prioritize possession of the physical metal itself over mining stocks or ETFs.
- Use Dollar Cost Averaging – Invest fixed dollar amounts over time to smooth out market volatility.
- Consider Storage Options – Evaluate fees and security measures when choosing a custodian’s vault.
- Understand the Fees – Account for any upfront or ongoing custodial and transaction fees.
- Be Wary of Scams – Only work with validated, high-reputation IRA custodians to avoid fraud.
- Seek Professional Input – Consult a financial advisor or tax expert to ensure compliance with IRS rules.
- Create a Long-Term Plan – Precious metals complement other IRA investments as part of a balanced retirement strategy.
By following these best practices, you can successfully incorporate physical precious metals into your IRA while maximizing their unique benefits and minimizing risk.
How to Roll Over Your IRA and Invest in Gold and Silver for Retirement
Holding physical gold, silver, platinum and palladium in an IRA allows investors to diversify their retirement portfolios with precious metals. Precious metal IRAs function similarly to traditional and Roth IRAs but are funded with actual bullion instead of paper assets. Setting up a precious metal IRA is typically done through an IRA rollover which transfers funds from an existing IRA or eligible retirement plan into a new self-directed IRA account to then be used to buy precious metals. We will explain the gold IRA rollover process and provide key considerations for investing in precious metals through an IRA.
How a Gold IRA Rollover Works
A gold IRA rollover refers to the process of transferring funds from an existing IRA or eligible retirement plan like a 401(k), 403(b) or 457(b) into a new self-directed IRA set up to hold physical precious metals. The rollover effectively lets you put your current IRA dollars into gold and silver rather than other paper-based assets. Here are the basic steps:
Open a self-directed IRA
You’ll need to establish a new IRA account with an IRS-approved custodian that specializes in precious metal IRAs. Look for ones that offer segregated storage in secured vaults along with competitive precious metal pricing.
Initiate your rollover request
Contact your current IRA custodian or retirement plan administrator to begin the process. Specify the assets or dollar amount you wish to roll over.
Complete your rollover
Your custodian will handle the transfer of assets directly into your new self-directed IRA. For 401(k)s, your employer may issue a check paid out to your name that you then deposit.
Use rollover funds to buy metals
Once the dollars are in your new account, you can use those funds to purchase IRS-approved physical gold, silver, platinum and palladium.
Store your metals
Your precious metals IRA custodian will ship your bullion purchases to their vaults for insured, segregated storage on your behalf to satisfy IRS requirements.
And just like that, you’ve converted your traditional IRA or 401(k) into a diversified precious metal IRA funded with tangible assets!
Benefits of a Precious Metal IRA Rollover
Why should you consider a gold IRA rollover? Here are some of the benefits:
- Diversification with an asset class not correlated to stocks
- Inflation hedge since precious metals hold value as prices rise
- Tangible assets under your ownership versus paper investments
- Tax-deferred growth since it’s still within an IRA wrapper
- Ability to fund with existing retirement dollars without taking a distribution
By directly transferring retirement funds into physical metals through a rollover, you can enjoy significant benefits compared to keeping the status quo.
Rules and Requirements for Precious Metal IRA Rollovers
While the rollover process itself is straightforward, your new precious metal IRA must adhere to IRS regulations:
- Only approved bullion coins and bars are permitted
- Minimum fineness standards must be met
- Metals must be stored at a licensed depository by the custodian
- No collective items or personal possession allowed
- Required minimum distributions still apply after age 72
Following the rules ensures the IRS treats your self-directed IRA invested in gold and silver the same as traditional IRAs for tax purposes.
Choosing Coins, Bars and a Custodian
When executing a gold IRA rollover, pay particular attention to picking permitted coins like the American Gold Eagle, Australian Gold Nugget, Canadian Gold Maple Leaf, and bars/rounds from NYMEX- or COMEX-approved refiners. Scrutinize account fees, storage security, and reputation when selecting an IRA custodian as well.
Making Precious Metals Part of a Balanced Approach
Consider limiting precious metals to no more than 20% of total retirement savings for a balanced asset allocation. Be sure to also maintain adequate cash holdings, diversified stocks, and bonds along with your gold and silver to create stability. Consult a financial advisor to ensure your precious metal IRA rollover aligns with prudent retirement planning.
Whether you are looking to diversify your retirement savings or hedge against market risks, holding physical precious metals in an IRA can be an effective component of a balanced investment approach. Now that you understand the benefits of gold and silver IRAs, the IRS rules, and tips for selecting approved coins, rounds and bars, you can make an informed decision about funding a precious metals IRA through a rollover. With a reliable custodian securely storing your assets, a precious metal IRA provides the ability to add tangible, lasting value to your nest egg.
With some preparation and diligence, rolling over traditional IRA funds or eligible retirement dollars directly into physical gold, silver, platinum and palladium can provide portfolio diversification and inflation protection. A precious metal IRA creates tangible holdings while offering tax-advantaged growth potential.
Frequently Asked Questions
To help summarize the key details covered in this guide, here are answers to some of the most frequently asked questions about funding an IRA with physical gold and silver:
Q: What precious metals are allowed in an IRA?
A: The IRS allows certain gold, silver, platinum and palladium coins and bars in a precious metal IRA. Approved gold products include the American Gold Eagle, Canadian Maple Leaf, and Australian Gold Kangaroo. Popular silver choices are the American Silver Eagle, Austrian Philharmonic, and Canadian Silver Maple Leaf.
Q: Can I take physical possession of my precious metals IRA?
A: No. IRS rules require precious metals IRA assets to be stored by an approved custodian in their vaults. You cannot store the metals at home.
Q: How are precious metal IRAs taxed?
A: A precious metal IRA funded by a rollover follows the same tax rules as traditional and Roth IRAs. Metals appreciate tax-deferred and distributions are taxed as ordinary income.
Q: What is the process for funding a precious metal IRA?
A: First open a self-directed IRA account with an IRS-approved precious metals IRA custodian, then complete an IRA rollover from your existing IRA or eligible retirement plan to fund the account with cash. Finally, use those dollars to purchase IRS-approved physical precious metals which are stored at the custodian’s vault.
Q: What fees are charged by precious metal IRA custodians?
A: Common fees include account setup costs, annual account administration fees, precious metals storage fees, and transaction fees when buying or selling bullion. Fees vary between custodians.
Q: Can I store precious metals from my IRA at home?
A: No, the IRS prohibits keeping physical possession of IRA precious metals. A licensed custodian must handle custody and provide secured, insured vault storage.
Q: How often can I take distributions from a gold IRA?
A: Precious metals IRA distributions follow the same timing rules as traditional IRAs when it comes to required minimum distributions after age 72. However, investors cannot access funds early without tax penalties.
Q: Can I move my precious metals IRA to another custodian?
A: Yes, you can complete a custodian-to-custodian transfer to move your IRA. The new custodian handles the logistics of re-registering your metals into a new account under your name.
In another related article, How to Avoid Common Gold IRA Scams