Gold IRA: What It Is And How It Works
Short answer. A gold IRA is a self-directed individual retirement account that holds IRS-approved physical gold (and often silver) instead of stocks or funds. It adds costs and risks that a standard IRA does not.
What A Gold IRA Is
A gold IRA is not a different kind of tax account. It is a traditional or Roth IRA set up as a self-directed account, so it can hold approved physical metals. The tax treatment of a traditional or Roth IRA still applies.
Three parties are usually involved: a custodian who administers the account, a dealer who sells the metals, and a depository that stores them. See custodians and depositories.
What It Can Hold
Only products that meet IRS standards qualify, not jewelry or most collectible coins. See IRS rules and approved coins and bars.
Why People Consider One
- To diversify beyond stocks and bonds. See diversifying a retirement portfolio.
- To hold a tangible asset with no issuer behind it.
- To stay inside an IRA's tax structure while holding metals.
What To Weigh Against It
- Gold pays no dividends or interest, and its price can fall.
- Fees and dealer spreads are typically higher than a plain index fund.
- Selling takes more steps than selling a fund.
Where To Go Next
Gold IRA Glossary
The industry uses a lot of jargon. These are the terms you will hear most:
- Custodian: the financial institution that holds and administers your IRA.
- Dealer: the company that sells you the metals.
- Depository: the secure facility that stores the metals on behalf of the IRA.
- Spot price: the current market price for one ounce of a metal, before any dealer markup.
- Spread or premium: the gap between what you pay and the metal's market value.
- Bullion: metal valued mainly for its weight and purity, such as standard bars and coins.
- Numismatic or collectible: coins valued for rarity or condition, which usually carry higher premiums and generally do not qualify.
- Segregated storage: your metals are stored separately and identifiable as yours.
- Commingled storage: your metals are pooled with others' of the same type.
- Rollover and transfer: two ways to move retirement money. See rollover vs transfer.
- Required minimum distribution (RMD): the amount you must withdraw each year from a traditional IRA once you reach the required age.
Common Misconceptions
- 'A gold IRA is a different kind of tax account.' It is a traditional or Roth IRA that is self-directed, so the usual IRA tax rules apply.
- 'I can keep the gold at home.' In an IRA, metals are generally held by a custodian arrangement. See home storage.
- 'Gold always protects against inflation.' Its record is mixed. See inflation and retirement savings.
- 'Any gold coin qualifies.' Many do not, especially collectibles. See IRS rules.
- 'The company I buy from holds my account.' Usually a separate custodian does.
A Sensible Order Of Questions
- Does a gold IRA belong in my plan at all, and how much of it?
- Which account would I use, and how would I move the money?
- Which companies can serve my balance, and what would each charge?
- How would I eventually sell or take distributions?
Answering them in that order keeps the sales conversation from deciding for you.
Sources And Further Reading
These are primary sources, not marketing:
In This Section
- How a Gold IRA WorksHow a gold IRA works from opening a self-directed account to funding, buying IRS-eligible metals, and storage.
- Gold IRA IRS Rules: What QualifiesThe IRS rules for gold IRAs: purity requirements, which products qualify, the collectibles restriction, and storage requirements.
- Gold IRA Pros and ConsThe real advantages and drawbacks of a gold IRA: diversification and tangibility versus fees, spreads, no income, and price swings.
- Gold IRA Costs and FeesEvery cost in a gold IRA: setup, custodian, storage, shipping, dealer spread, and selling costs, and which ones to compare first.
- Gold IRA Scams and Red FlagsCommon gold IRA scams and sales red flags: pressure tactics, rare-coin upsells, hidden fees, and promises of returns, and what to do.
- Gold IRA Custodians and DepositoriesWhat a gold IRA custodian and depository do, the difference between segregated and commingled storage, and what to ask.
- Can You Keep Gold IRA Metals at Home?Why holding IRA gold at home is risky, what the IRS requires, and how owning gold outside an IRA differs.
- Gold IRAs for Retirees and Near-RetireesWhat retirees and those near retirement should weigh about a gold IRA: no income, required distributions, liquidity, and allocation.
- Gold IRAs for the Self-EmployedHow self-employed people can hold precious metals through a SEP IRA or solo plan, and what to check first.
Ready To Compare Companies?
Use our checklist to get written quotes, then see how gold IRA companies compare. If you have $50,000 or more, our Augusta review covers the strengths and drawbacks.
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Frequently Asked Questions
Is A Gold IRA Safe?
It's a legitimate account type, but metals prices fluctuate and fees reduce returns. Safety depends on the company, the custodian, and how much you allocate.
Can I Keep Gold In My House?
Generally no. See gold IRA home storage.
What Is The Difference Between A Gold IRA And Owning Gold?
A gold IRA holds metal inside a tax-advantaged retirement account through a custodian. Owning gold directly means you hold it yourself with no IRA tax treatment.
Can I Put Gold In A Roth IRA?
Yes, if the Roth IRA is self-directed and the metals are eligible. See Roth gold IRAs.