A gold IRA allows you to invest in physical gold bullion as part of your retirement savings. Opening a self-directed IRA and funding it with gold coins, bars, rounds, or bullion provides powerful portfolio diversification. This is exactly how to buy physical gold with a gold IRA.
Purchasing actual gold bullion to hold in an IRA involves following specific steps and IRS rules. You need an approved custodian, a specialized IRA account, and certain approved precious metals dealers. By understanding the process, you can include physical gold in your retirement investments.
In this comprehensive guide, we’ll explain how buying physical gold through an IRA works from start to finish. Follow along to learn how to invest in physical bullion with a gold IRA.
What is a Gold IRA?
A gold IRA is simply an individual retirement account that allows you to hold physical precious metals as an investment. This provides IRA diversification beyond just stocks, bonds, and cash.
Gold IRAs have the same tax benefits and contribution limits as traditional and Roth IRAs. The key difference is you can fill your gold IRA with:
- Gold bullion coins and bars
- Silver coins and bars
- Platinum coins and bars
- Palladium coins and bars
Most traditional brokerage IRAs don’t allow physical precious metals. But with a self-directed IRA set up properly, you can include gold in addition to other assets.
Opening a gold IRA begins by choosing a provider that specializes in precious metals IRAs. They handle setting up the account, IRA-approved coins and bullion, and secure vault storage for your holdings.
Why Invest in a Gold IRA?
There are several good reasons to consider using a gold IRA to invest in physical bullion, including:
Diversification – Gold has a negative correlation to stocks and bonds. It provides portfolio diversification to reduce overall risk.
Inflation hedge – Historically, gold has appreciated during inflationary periods as a store of value.
Currency hedge – Gold tends to rise when the dollar declines, providing a hedge against currency devaluation.
Market hedge – Physical gold serves as insurance against stock market crashes and geopolitical risks.
Tangible asset – Gold is a real, physical asset you can hold in your hands, unlike paper assets.
Growth potential – While volatile, gold prices can see strong upside in times of crisis and uncertainty.
Retirement stability – Adding gold bullion to your IRA helps balance it for stability and longevity.
Pass on to heirs – Physical gold in your IRA can be passed down as part of your estate.
Investing even a portion of your IRA into gold bullion can provide excellent diversification, risk reduction, and growth potential. It’s a smart way to hedge your retirement accounts.
How to Buy Physical Gold in an IRA
If you want to buy physical gold coins, bars, and bullion within the structure of an IRA, follow this step-by-step process:
Step 1: Open a Self-Directed IRA
The first step is to open a self-directed IRA (SDIRA), which allows alternative asset investments beyond stocks and bonds. Leading precious metals IRA providers like Augusta Precious Metals and Oxford Gold Group can help you open a special SDIRA account to hold physical metals.
You’ll work with an account representative to open the IRA in your name as either a traditional or Roth account. This will include an IRS-approved custodian who will hold your gold on your behalf.
Step 2: Fund Your IRA
Once the SDIRA account is established, you’ll fund it with an annual contribution, IRA rollover, or transfer from an existing IRA. This puts cash into your account so you can buy your gold.
You can directly roll over a 401(k), 403(b), 457, or TSP to your gold IRA tax-free. Or transfer funds from an existing IRA account. Retirement plan rollovers are the most popular way to fund a precious metals IRA.
Step 3: Select Your Physical Gold
Now the exciting part – choosing the types of physical gold products to add to your IRA! You’ll work with your precious metals IRA dealer to pick coins, bars, and bullion approved for IRAs, such as:
- American Gold Eagle Coins
- Canadian Gold Maple Leaf Coins
- American Gold Buffalo Coins
- American Eagle Silver Coins
- Gold bars and rounds (1 oz, 10 oz)
- Silver bars (100 oz)
- Platinum American Eagle Coins
Stick with well-recognized government gold coins for the most part. Your IRA dealer can advise on which offerings align with IRS requirements.
Step 4: Place Your Order
When you’ve selected the precious metals to purchase, it’s time to place the trade order through your IRA. Your account rep will collect payment from the cash in your IRA to finalize the buy order.
Many gold IRA companies have online portals that make ordering quick and convenient. You can select various coins and bullion right online to fund your account.
Step 5: Metals Delivery & Storage
Once you purchase metals within your IRA, they must be stored in a secure, IRS-approved vault facility. This is arranged by the gold IRA provider and custodian. Your metals will be segregated and insured for safety.
For larger investors, private vault storage can be arranged. Otherwise, you can select among vaults located in strategic regions like New York, Salt Lake City, Delaware, Canada, or abroad. Storage fees apply based on your gold holdings and location.
And that covers the full process for investing in physical gold with an IRA! The gold IRA company handles all the logistics, allowing you to simply choose your preferred bullion products and fund your account.
Top Gold IRA Companies
If you’re ready to invest in physical gold via an IRA, these industry-leading gold IRA companies can help execute the process seamlessly:
- Augusta Precious Metals – One of the highest-rated gold IRA providers. Zero account fees and very transparent pricing.
- Oxford Gold Group – Great educational resources on gold IRAs. Responsive support and diverse coin selection.
- Birch Gold Group – High marks for customer service and satisfaction. Competitive storage fees.
- Noble Gold – Wide array of gold and silver coins and bullion available. Excellent customer experience.
- Advantage Gold – Leading buyback program for liquidations. Strong track record with gold IRAs.
- Goldco – Low minimums to open a gold IRA. Recommended dealer for over 15 years.
Consider going with one of these respected gold IRA companies if you want a smooth, hassle-free experience investing in physical precious metals for retirement.
Which Gold Bullion is Allowed in an IRA?
The IRS has strict rules for which types of gold and other precious metals can be included in an IRA. Allowed gold IRA metals must meet minimum fineness standards and be produced by approved mints. Here is what’s allowed:
- American Gold Eagle Coins
- American Gold Buffalo Coins
- Australian Kangaroo/Nugget Coins
- Austrian Philharmonic Coins
- Canadian Maple Leaf Coins
- Credit Suisse Gold Bars
- Pamp Suisse Gold Bars
- Sunshine Minting Gold Bars
- 1 oz Gold Bullion Rounds
- 1 oz Gold Bars & Rounds
- American Silver Eagle Coins
- Australian Silver Koala Coins
- Austrian Silver Philharmonic Coins
- Canadian Silver Maple Leaf Coins
- Mexican Libertad Silver Coins
- 100 oz Silver Bars & Rounds
- 10 oz Silver Bars & Rounds
- 1 oz Silver Rounds
- American Platinum Eagle Coins
- Isle of Man Noble Platinum Coins
- Canadian Platinum Maple Leaf Coins
- Australian Platinum Koala Coins
- 1 oz Platinum Bars & Rounds
- Canadian Palladium Maple Leaf Coins
- Australian Palladium Koala Coins
- Isle of Man Noble Palladium Coins
- 1 oz Palladium Bars & Rounds
These are generally the precious metals approved for IRAs. Always consult with your gold IRA provider to ensure any coins or bars meet IRS fineness standards before purchasing. Stay away from collectible, numismatic, or rare coins in your IRA.
How Do I Buy Physical Gold in an IRA?
To summarize the steps for buying physical gold in an IRA:
- Open a self-directed IRA with a gold IRA company. This creates your account.
- Fund your IRA with a contribution, rollover, or transfer to create cash to work with.
- Browse gold IRA-approved coins, bars, and bullion to select what to purchase.
- Place your order for the precious metals through your IRA.
- The metals will be delivered to an approved vault in your name for secure storage.
- Repeat steps 3-5 to continue adding physical metals over time!
It’s best to work closely with a gold IRA company who can advise on IRS rules, provide pricing guidance, direct you to approved precious metals, and handle all the logistics seamlessly. This makes the process of buying physical gold in an IRA very straightforward.
What is Included in a Physical Gold IRA?
A physical gold IRA contains gold coins, bars, rounds, and bullion rather than paper assets:
Gold coins allowed in an IRA include American Gold Eagles, Canadian Maple Leafs, Australian Kangaroos, and Austrian Philharmonics. Coins provide more divisibility for gradual investing.
IRA-approved gold bars come in sizes like 1 gram, 1 oz, 10 oz, 1 kilo, 100 grams, and more. Gold bars offer the most direct exposure to spot gold prices.
Gold rounds are coin-like circles of gold produced by private mints, often at lower premiums than official coins. Both 1 oz and fractional sizes are allowed.
You can further diversify with silver, platinum, and palladium coins and bars in most IRAs as well. Diversified bullion provides balanced exposure.
Sticking with well-known gold and silver coins and bars ensures you meet the IRS fineness requirements. Work closely with your gold IRA company to select physical metals approved for IRAs.
Can I Buy Physical Gold Without An IRA?
Yes, you absolutely can buy physical gold coins, bars, and bullion outside of any IRA account. Many investors do so to hold gold personally as a store of value or to pass on to heirs.
Some ways to buy physical gold without an IRA include:
- Online Dealers – Many major gold dealers like APMEX, JM Bullion, and Money Metals Exchange sell gold online directly to retail buyers.
- Local Coin Shops – Look for smaller coin and bullion shops in your area to buy gold locally.
- Pawn Shops – Sometimes you can find gold bullion and coins at pawn shops as well, often at discounted prices.
- eBay – Buyers can purchase both new and pre-owned gold products through eBay.
- Gold ATMs – In some cities, Gold ATMs dispense24k gold bars and coins.
- Refine Gold Jewelry – Turn unused jewelry into tradable gold bars through refiners like Kitco.
Just note that gold bought outside an IRA doesn’t carry the same tax advantages. Make sure to store any substantial physical gold securely in a safe, vault, or safe deposit box for protection against theft.
Physical Gold IRA vs Holding Gold Personally
Should you buy physical gold within an IRA or hold it personally in your own name? Here’s a brief comparison:
- Tax-deferred growth potential
- No capital gains taxes until distributions
- Income tax only upon withdrawals
- Required minimum distributions at 72
- Annual contribution limits
- Early withdrawal penalties before 59.5
- Secured in a depository vault
- No contribution limits
- Taxed as collectibles at 28% rate
- Subject to any state/local gold taxes
- Can be stored personally
- Can give as a gift directly
- No required distributions
- No early withdrawal penalties
- Counts against estate value
Ultimately, it depends on your goals. Do you want to fund retirement and enjoy tax perks? Go for the gold IRA. Want maximum control and flexibility? Opt for personal physical gold ownership.
Often the best approach is holding some gold both inside and outside your IRA for the combined benefits. Work with a gold IRA company and also buy some coins and bullion directly for yourself.
Can I Cash Out Gold IRA?
Yes, you can take distributions from a gold IRA at any time. However, distributions taken before age 59 1⁄2 will face a 10% early withdrawal penalty in most cases.
After age 59 1⁄2, you can cash out your gold IRA via:
- Normal distributions – Take lump-sum or periodic distributions from your IRA after this age penalty-free.
- Required minimum distributions (RMDs) – Must start taking annual RMDs at age 72 to avoid tax penalties.
- IRS levy – If you owe back taxes, the IRS can seize IRA assets.
- Rollover to another IRA – Avoid taxes by rolling over lump sums directly to a new IRA.
Cashing out gold holdings triggers income taxes on the distributions at your normal rate. For IRAs with both precious metals and other assets, the IRS uses a pro-rata rule to determine applicable taxes at conversion.
Always consult a financial advisor to minimize taxes before taking sizable gold IRA distributions. Avoid penalties by waiting until age 59 1⁄2 if possible.
Purchasing physical gold in an IRA provides numerous benefits for retirement investors looking to diversify with hard assets. By following the step-by-step process outlined here and partnering with a leading Gold IRA provider, you can seamlessly fund your IRA account with IRS-approved coins, bullion bars, and other precious metals. Keep 5-20% of your total IRA holdings in physical gold for solid diversification. And be sure to utilize an established, reputable precious metals IRA company to handle the logistics of buying, storing, and managing your gold IRA investments. With the right approach, investing in physical metals like gold within an IRA is straightforward and wise for just about any investor saving for retirement.
Holding physical gold IRA-approved gold bullion provides portfolio stability, inflation and dollar hedging, and upside potential during periods of uncertainty. If you want real tangible assets in your retirement accounts, adding physical precious metals allows you to hold gold coins and bars in your hands. With the help of a reputable gold IRA provider guiding you through the process, buying physical gold in an IRA is straightforward. Diversify for the long-term by adding gold to your investment mix.
Gold IRA Frequently Asked Questions
Below are answers to some common questions when considering investing in physical gold through an IRA:
Is a Gold IRA a good investment?
A Gold IRA can be an excellent investment for retirement savers looking to diversify and hedge their portfolio against risks. Adding gold to an IRA provides negative correlation to equities, inflation protection, dollar hedging, and stability during stock market declines. Having 5%-20% of your IRA holdings in physical gold and precious metals can potentially reduce overall volatility and risk.
How do I open a Gold IRA?
Opening a Gold IRA involves first choosing a reputable precious metals IRA provider, such as Goldco or Augusta Precious Metals. You’ll fill out an application to open a special self-directed IRA (SDIRA) that allows physical gold. The company will coordinate with an IRS-approved custodian to handle your account. After funding your account with a rollover or transfer, you select approved gold coins, bullion, and bars to add to the IRA holdings.
What metals can be stored in an IRA?
The IRS has a specific list of approved metals for IRAs. Allowed gold IRA metals include gold, silver, platinum, and palladium bullion in the form of coins, bars, and rounds. Common examples include American Gold Eagles, Canadian Maple Leafs, American Silver Eagles, 1 oz bullion bars, etc. Always check with your gold IRA custodian to ensure any precious metals meet the minimum fineness standards for IRAs before purchasing.
Does gold IRA need to be reported on taxes?
Gold IRA investments do not require any special reporting compared to traditional IRAs. Like other IRA accounts, a gold IRA is only reported when you take taxable distributions. Prior to distribution, the IRA grows tax-deferred. At distribution, metals and other assets are taxed as ordinary income. A gold IRA custodian handles proper IRS reporting behind the scenes.
Can the government confiscate gold IRAs?
The government can technically seize any retirement assets, including gold IRAs, to settle unpaid taxes based on IRS levy rules. However, outright confiscation of assets in IRAs is illegal. Gold IRAs receive the same protections against government confiscation as any other retirement account.
Can I store physical gold at home in an IRA?
No, the IRS prohibits keeping physical gold from an IRA at your home or storing it yourself. All metals in a gold IRA must be handled and secured by an approved custodian in segregated, insured vault storage. You cannot store the gold personally once it’s inside the IRA. Some gold IRA providers like Goldco do allow home delivery, but the metals must be returned to the custodian for continued IRA compliance.
What is the process to take distributions from a Gold IRA?
Taking distributions from a gold IRA involves contacting your custodian and completing required paperwork to request a distribution of assets, either as a lump-sum or periodic payments. You can request physical delivery of metals or have them liquidated to cash. A mix of both is also possible. Taxes will be due on any IRA distributions as ordinary income. If under age 59 1⁄2, you’ll face a 10% early withdrawal penalty in most cases. Always plan Gold IRA distributions carefully to optimize tax treatment.
Can I move my gold IRA to another custodian?
Yes, you can transfer or rollover your gold IRA from one custodian directly to another at any time while maintaining tax-deferred status. This is known as a custodian-to-custodian transfer. To initiate the process, open an IRA with the new custodian you wish to use, then fill out a transfer authorization form provided by them. The current custodian will send your cash and metals directly to the new custodian to complete the transfer. There are generally no tax penalties or distribution taxes incurred when properly completing a custodian-to-custodian transfer.
What percentage of my portfolio should be in precious metals?
Most financial experts recommend keeping 5-20% of your total investment portfolio in gold and other precious metals. Some even advise up to 30% for more conservative investors. To translate this into an IRA, aim to hold at least 5% of your IRA balance in physical metals. For larger IRAs, 10-15% is reasonable if you want ample exposure to gold for diversification.
What is the process to take physical possession of gold in an IRA?
To take physical possession of gold holdings in your IRA, you first contact your custodian to request delivery. If eligible based on your age and account status, the custodian will ship your requested metals via insured carriers to your home or other address you specify. The metals remain titled to your IRA. You can store them securely at home for up to 6 months. To remain IRS compliant, physical gold held outside the custodian’s vault must be returned or possibly face distribution taxes if kept too long. Taking temporary physical possession lets you hold IRA gold in your hands while following the rules.
Can I check on or visit my gold IRA metals in storage?
In most cases, you cannot personally visit or inspect your specific gold IRA holdings stored in vaults. However, your IRA custodian provides detailed statements showing your holdings and their status. Some even provide photos and video of your actual metals in storage for extra transparency. To physically lay hands on your gold, you can utilize the distribution process to take temporary personal possession, then return the assets to the IRA custodian afterwards per IRS rules.
Are Gold ETFs and Miner Stocks Allowed in an IRA?
While physical gold is allowed in an IRA, gold ETFs and miner stocks must go into the brokerage portion of your account. An IRA cannot hold paper assets like stocks, ETFs, and mutual funds alongside physical metals. However, several gold IRA providers offer combined accounts with a metals side and a brokerage side. This allows one account with both physical gold and gold stocks for more diversified exposure.
What are the annual fees for a self-directed IRA?
Annual fees for a self-directed IRA that contains physical precious metals are typically around $150-$300. Smaller accounts may pay toward the higher end, while larger balances can negotiate lower fees. There are also potential storage fees for physical gold holdings that vary based on account value and specific vault. Overall costs are generally around 0.8%-1.5% of assets annually.
What are the risks associated with Gold IRAs?
There are a few risks to consider with gold IRAs:
- Gold is volatile, subject to swings in value week-to-week and year-to-year.
- Required minimum distributions may force you sell gold at undesirable times.
- Early withdrawal penalties can apply if accessing funds before age 59.5.
- Scam companies may charge hidden fees or mishandle transactions.
- IRS regulations could change, affecting permitted gold products.
- Metals depend on dealer appraisals, which contain subjective premiums.
However, working with leading gold IRA providers minimizes most of these risks through transparency, education, and compliance expertise. Reputable gold IRA custodians greatly limit the risks involved.
Are there Gold IRA complaints I should look out for?
Be wary of any gold IRA companies that generate excessive complaints and negative reviews. Common issues include:
- High pressure sales tactics
- Misleading information on fees or processes
- Hidden account fees or markups on gold
- Poor customer service responsiveness
- Difficulty reaching knowledgeable reps
- Challenges receiving timely distributions
- Pushy rollover recommendations
- Overall lack of transparency
Seeking out a highly-rated gold IRA provider with a strong reputation can help avoid these pitfalls. Focus on finding an open, honest, and responsive partner you trust to execute a seamless Gold IRA investing process.
Can I own Bitcoin in an IRA account?
Unfortunately, you cannot hold cryptocurrencies like Bitcoin directly in an IRA. However, some Bitcoin IRA providers now allow IRA investors exposure through trusts or funds that invest in cryptocurrencies. For example, Bitcoin IRA by CoinIRA lets you invest in crypto via an IRA-compliant fund so you gain tax-advantaged exposure. While not direct ownership, it can provide IRA access to Bitcoin and other digital currencies within current laws.
In another related article, How to Rollover Your 401k to a Gold IRA