How to Buy Gold with an IRA
Last Updated on 2nd June 2022 by Jeffrey Camerda
To buy Gold with an IRA, you first need to set up a ‘Self-Directed IRA’ account that allows you to invest in precious metals. You can then ‘Rollover’ funds from your existing 401k or Traditional IRA and start buying gold right away. Your account custodian will assist you with the steps involved – account creation, fund rollover, and purchasing gold.
Buying physical gold with an IRA is becoming an increasingly popular investment option. The process is very straight forward. The first thing you need to do is get a Self Directed IRA account set up with a custodian that allows for investment in gold and other precious metals.
A good custodian will walk you through the process and the account can be up and running in as little as 24 hours. Once the account has been created you will need to transfer funds over from your 401K, Traditional/ Roth IRA, 403b, 457b, or TSP accounts.
Gold, Silver, Platinum & Palladium
This fund transfer between retirement accounts is called a ‘Rollover’. You can roll over some of your existing funds or the whole lot if you prefer. Once the funds have been successfully deposited in your new ‘Gold IRA’ you are free to start investing in gold and other precious metals as you wish. Silver, platinum, and palladium are also popular options for retirement accounts.
How Physical Gold is Purchased
The best way to buy gold is to instruct your account custodian to purchase on your behalf. This is their specialty and the best gold IRA companies have been doing it for years. All you need to do is complete a ‘Direction of Investment’ form giving details of exactly what, and how much you wish to buy.
The custodian will then act on your behalf and arrange a deal with an approved gold and precious metals broker. The agreed amount of funds will leave your account and actual physical gold will be shipped to a secure location to be stored in your name.
Striking a Deal with a Gold Broker
Some custodians may not provide the service of striking a deal with a gold broker. If this is the case with your Gold IRA custodian, you will need to make contact with a reputable gold broker and agree on a deal. Once a deal has been reached your custodian will then step in and purchase on your behalf.
As in the previous example, funds will leave your account and gold will be shipped to a secure storage facility. You cannot hold the gold personally. There are no exceptions to this rule. It must be stored in an IRS-approved secure storage facility as per section 408 of the Internal Revenue Code.
Gold Physical Requirements – What Gold is IRA Eligible?
Gold bought using a self directed IRA must meet the physical requirements as outlined by the Internal Revenue Service in section 408(m) of the Internal Revenue Code. This section of the IRC code details the physical requirements that the Gold, and other precious metals, must meet to be eligible for investment in a Gold IRA.
Consult with Your Custodian
For more information on the physical requirements of precious metals for self directed IRA accounts, you should consult with your Gold IRA custodian. You can also read our guide: IRA Gold Physical Requirements – What Physical Gold is Eligible?
IRA Gold Storage
Gold purchased using an IRA must be stored at an IRS approved storage facility. Under no circumstances can you take possession of the gold yourself. There are no exceptions to this rule. Your gold IRA custodian company will arrange for your gold to be stored at a secure facility in your name.
Two of the most commonly used storage facilities for IRA precious metals are the Delaware Depository and Brink’s Global Services. You can request that your gold be stored separately from anyone else’s. This is a storage technique called ‘segregated storage’.
Your Gold – Is Always Your Gold
This method ensures your gold is not mixed in amongst everyone else’s and guarantees that when you finally decide to sell your gold, you will be selling the very same physical gold you purchased when you made your investment. For more information on IRA gold storage, you can read our full guide here.
The world financial system has never been in a more fragile state. Viral pandemic, spiraling national debts, and a creaking financial system have many people worried about the trajectory of the global economy.
We live in challenging times. Will our savings and retirement funds be there when we need them? Traditional assets such as stocks, bonds, and mutual funds are tied into the global banking system. Industry experts warn that the global financial system is doomed to collapse again just like in 2007-08.
Diversify Before the Next Crisis
Many believe the next crash is imminent. Those who wish to protect their wealth need to diversify their portfolio. Gold is the go-to alternative asset for diversification and wealth protection. Below are the characteristics that make gold such an appealing alternative asset.
- Wealth Protection: Gold and silver have been used for centuries to protect wealth. Historically, the value of the precious metal has increased as the value of traditional assets goes into free fall. Gold investment is a common strategy of the elite for wealth protection. It is a long-trusted asset for portfolio diversification.
- Asset Diversification: Asset diversification is critical at any time, but in 2020 it has never been more important. The global economy has been paralyzed by the coronavirus pandemic and an already teetering global financial system has been pushed closer to the edge. It is not the time to be holding all your wealth in traditional assets. Diversification is key, and precious metals such as gold and silver are an excellent option.
- Protects Against Inflation: Gold is an excellent asset to hold in times of high inflation. Gold is traded globally in US dollars, and as the value of the US dollar falls, the value of gold increases. It bears an inverse relationship to the value of the US dollar.
- Demand & Supply: Gold is a highly prized asset. It is in high demand across the world. It is also in limited supply. The emerging markets of India and China are seeing ever-increasing demands for gold and gold jewelry. This relationship between high demand and limited supply is the cornerstone of gold’s true value. It is an asset that can be trusted for the long-term store of wealth.
How to Rollover Funds to Gold IRA
Your account custodian will assist you with rolling over funds from your existing retirement account. You can move some or all your funds over from a 401K, 403b, 457b, TSP, Traditional IRA, or Roth IRA.
The transfer should be done in such a way that it does not compromise the tax-deferred status of the funds. It is important not to trigger any tax penalties or early withdrawal fines during this process. There are two ways to move the money over; Direct Rollover and Indirect Rollover.
A direct rollover is the safest option as it does not have the potential to trigger any penalties. A direct IRA rollover involves funds moving from your old retirement account, (eg 401 k or Roth IRA), to your new Gold IRA without you laying a hand on them. It is a direct transfer from one account to another and is the safer of the two methods.
An indirect rollover involves the administrator of your existing account sending a check in the post to the value of the funds you wish to transfer.
This check is sent to you and you then have 60-days to lodge it into your new Gold IRA account. If for whatever reason, you do not manage to lodge the check within the 60 day time period, you will be hit with tax penalties and an early withdrawal fine.
Avoid Tax Penalties
This is a situation you want to avoid, and therefore we recommend going the route of a direct IRA rollover. Once the funds are successfully transferred over you are in a position to begin purchasing gold with your new IRA account.
Choosing a Gold IRA Custodian
By law, you will have to hire a custodian company to manage your new gold IRA account. There is no way around this. They will ensure all legal requirements and IRS taxation commitments are met. All you need to do is make sure you pick the best gold and precious metal custodian for you and your portfolio.
Assess the Candidates
There are a lot of potential candidates on the market so it is worth spending some time assessing your options. Below are some key points to consider when weighing up your options. For more information, see our guide: Best Gold IRA Companies 2020
- Industry Experience: when choosing a custodian to manage your gold IRA account you want to go with one that has a wealth of experience in the precious metals industry. While there are many gold IRA companies out there some are more established than others.
The gold trading market is a tight-knit community and specialist knowledge comes with operating in the industry over many years. Look for a company that has the specialist knowledge you need and a proven track record over the years.
- Ratings & Reviews: take a look at the industry ratings and customer reviews for each company. This information is readily available online. This will give you an idea of how the company is performing and how they are regarded by their peers and their own customers. Some great websites you can check are the Business Consumer Alliance and Better Business Bureau for industry ratings, and TrustLink for customer reviews. The more established companies will have a wealth of information available.
- Security/ Storage: when investing in gold and other precious metals you need to be able to rest assured that your assets will be stored securely. Ask some questions about how and where the gold you purchase will be stored.
The best gold IRA custodians will always use an IRS approved depository. Two of the most popular and trusted storage locations are Delaware Depository and Brink’s Global Services. Segregated storage is also an option and gives reassurance that your gold will not be pooled in along with everyone else’s.
- Services Supported: the best custodians on the market will provide assistance and support through the entire process of account creation, rollover of funds, purchasing of gold, other precious metals, asset storage, selling gold, and on-going account management. Consider the levels of support you will require and check that a potential custodian will provide support when and where you need it.
- Fee Structure: fee structures vary from one company to the next. It can be difficult to get a clear picture from the freely available published information online. Some companies employ fixed fees while others charge fees based on a percentage of the value of the investment. The best way to get a clear understanding of fees is to contact the companies directly and discuss them.
Visit our homepage for an in-depth review of the Regal Assets Self Directed Gold IRA by clicking here.
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Dr. Jeffery Camerda, PhD, is a financial planner who specializes in wealth management and retirement planning.
With a PhD in Economics and Financial Planning, Jeffery represents the highest level of financial planning expertise and achievement in the USA
In addition to preparing you for a career in financial planning, a PhD in economics and finance also prepares you for academic pursuits, such as becoming a university professor in teaching or doing research.
Here at the Wealth Builder, our financial advisory company was founded in 2007 and services all across the USA with over 16 years of expertise.
In order to provide the finest advice and services, we pay close attention to the specific financial circumstances and requirements of each client.
In order to guarantee that our clients don't get a sales pitch for insurance or investments, as well as a lack of conflict of interest from a prospective commission-bearing corporations, Jeffery focuses on fee-based services. Financial planning for wealth managers, financial well-being workshops, and personal financial planning packages are all part of the company's offering.
Jeffrey Camarda, PhD, CFA, EA is also the founder of the Family Wealth Education Institute, is a member of the Financial Planning Association and serves as the Chairman of Camarda Wealth Advisory Group