How a Gold IRA Works

Gold is an effective and simple way to diversify a retirement portfolio. Gold can be a balancing asset to smooth out risk, especially over the long term, and protect against inflation, making it a smart choice for retirement investments. Establishing a self-directed IRA with gold is easy, but it's important to understand the differences between a self-direct IRA with gold and traditional IRA.

Self-Directed IRAs

Most retirement funds are held in a conventional IRA or 401(k) and typically include stocks, mutual funds, bond, and annuities. Physical gold and other precious metals may be held in a self-directed IRA. With a self-directed IRA, the investor is empowered to make his or her own investment decisions from a wider range of products, including precious metals.

Gold-Backed IRAs

Often called a Gold IRA or Gold Backed IRA, a self-directed IRA with gold provides the opportunity to buy gold coins and bullion and other precious metals. There are many gold, platinum, silver and palladium coins and bars that can be invested in a Gold IRA, but not all precious metals products are eligible. To be included in a Gold IRA, each precious metal or gold coin and bar must meet specific fineness or purity requirements as stated by the IRS. This ensures the investment will leverage the tax benefits an IRA provides.

Opening a Self-Directed IRA with Gold

Conventional IRA accounts do not allow for investment diversifications into physical gold. To open a self-directed IRA with gold an investor needs a custodian to create and administer the IRA account. Custodians are banks, trust companies, credit unions, brokerage firms or savings and loan associations that have been approved by Federal and/or state agencies to provide asset-custody services to individual investors and financial advisors. The investor wanting to add physical gold and precious metals to their retirement account simply establishes a new account with a trustee that allows self-directed retirement plans and funds the account to get started (Goldline can assist in identifying a custodian for an independent self-directed IRA custodian).

Funding a Self-Directed IRA with Gold

Like any IRA, to fund a self-directed IRA with gold you can make the allowable contributions or rollover or transfer funds from an existing retirement account. The current law allows for both transfers from IRAs as well as rollovers from qualified retirement plans, such as 401(k), 401(a), 403(b), 457, Thrift Savings Plan (TSP) and annuities. (Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.)

Gold Storage

The precious metals in your IRA must be held in the custody of an IRS approved trustee that is in charge of administering your IRA and stored in a licensed, insured depository.

Selecting a Gold Dealer for Your IRA

Selecting a gold dealer for your IRA purchases is an important decision. Here are factors to consider when choosing a gold dealer:

  • History. Select a dealer with a long history of working in the industry and has a stellar track record from objective third parties, such as the Better Business Bureau. Looking at testimonials from confirmed customers (not just customer quotes on their website) on review sites like Trustpilot can provide valuable insight into the customer experience.
  • Transparency. Look for a company that is transparent and honest in their pricing and provides all necessary information upfront and in writing to avoid any surprises, such as hidden fees.
  • Customer Focus. Choose a dealer that is focused on its customers, delivers excellent client support, with a broad inventory of precious metals.
  • Qualifications. Only work with a dealer that has all the appropriate and required licenses and registrations. Ask for verification of licenses, compliances and other important information.

Diversify your retirement portfolio with gold to help protect your hard-earned assets against market volatility and inflation.

Learn more about Goldline's Express IRA program, a unique, expedited process for acquiring precious metals for your retirement portfolio. For information on the benefits of gold and precious metals as part of your retirement savings, please read Gold for Retirement.