Retirement accounts and physical precious metals are popular choices among investors looking to optimize their wealth accumulation. Gold has a proven track record of keeping pace with inflation while individual retirement accounts (IRAs) offer unique tax perks. If you’re looking for the best of both investing worlds, you might wonder how to buy gold in your IRA. Contrary to popular belief, the IRS permits the investment of pre-tax dollars into physical precious metals through a gold IRA.
A gold IRA, also called a precious metals IRA, is a type of self-directed retirement account that allows for investments in various non-traditional assets including real estate, collectibles, commodities, and precious metals. Through a gold IRA, investors can diversify with physical gold assets such as gold bullion and rare coins. Conversely, traditional IRAs limit investors to stocks, bonds, ETFs, and other conventional assets.
Setting Up a Gold IRA
Before learning how to buy gold in your IRA, you’ll need to work with a custodian to establish a self-directed account. As with any retirement plan, the IRS approves specific banks or brokerages to host gold IRAs on behalf of investors. These professionals are responsible for maintaining essential records, handling transactions, and maintaining IRS compliance. These steps are crucial for maintaining the tax perks of your gold IRA and avoiding costly penalties.
It’s common for providers to require that investors meet a minimum threshold to start a gold IRA. However, most people shouldn’t have trouble meeting these generally reasonable requirements. If you’re not sure what to look for when choosing a gold IRA company, many precious metals dealers have preferred custodians. This makes it easier for customers to get matched with reputable companies.
👉 Related read: How a Gold IRA Works
How to Fund an IRA
Once your gold IRA is set up, you can start funding it. The best way to add dry powder to the account will depend on your circumstances and preferences.
Rollover
A gold IRA rollover allows you to shift funds (in whole or in part) from a current retirement plan into a newly established self-directed account. The IRS approves rollovers from some common plans including:
- Traditional IRAs
- Roth IRAs
- 401(k)s
- 403(b)s
- 457(b)s
- TSPs (Thrift Savings Plans)
What to keep in mind.
- Indirect Process: Notably, funds are sent directly to the account holder to handle the deposit during a rollover.
- Timeline & Penalties: The IRS places a strict 60-day timeline on the rollover process. If you don’t make it within that period, you could get slapped with a hefty early withdrawal penalty of 10%.
- IRA-to-IRA Rollover Limits: The IRS permits only one rollover from a standard IRA to a gold IRA per year. This restriction doesn’t apply when conducting a rollover from a non-IRA plan.
Transfer
A gold IRA transfer involves the direct movement of funds from a Roth or traditional IRA to a self-directed plan. This popular method for funding a gold IRA isn’t subject to the same time constraints or potential penalties but is only available from an IRA.
What to keep in mind.
- Direct Process: Funds are moved directly from your current IRA into your gold IRA during a transfer. You never handle the funds.
- No Penalties: You don’t run the risk of incurring early withdrawal penalties or other IRA fees because the funds are handled by account custodians.
- No Limits: The once-per-year restriction on IRA-to-IRA rollovers doesn’t apply. You can make as many transfers as you want.
Contributions
Every year, the IRS allows investors to contribute to their gold IRAs. This involves the direct deposit of funds into your self-direct account. You can make the transfer via cash, check, or wire transfer, depending on custodial requirements and investor preferences.
What to keep in mind.
- Contribution Limits: The IRS places annual limits on gold IRA contributions. These restrictions vary based on your age. For example, the contribution maximums for 2024 are $7,000 if you’re under 50 and $8,000 if you’re 50 or older.
- Tax Deductions: Depending on your tax situation, you might be able to write off your annual gold IRA contributions. You’ll have more physical precious metals in your nest egg and a lower taxable income for the year.
How to Buy Gold Through an IRA
The setup and funding process is fairly straightforward, but you’re still wondering how to buy gold in your IRA. Working with a precious metals dealer is the most straightforward, efficient, and secure method.
These experts know how to navigate the complexities of the IRS restrictions on IRA-eligible metals to ensure your account doesn’t fall afoul of the law. Plus, they can recommend the most effective physical precious metals based on your budget limitations, investment horizon, personal preference, and overall goals.
Here’s the process for buying gold in your IRA when working with SBC Gold:
1. Pick the precious metals.
The first step is to select the specific precious metals assets you want to add to your nest egg. With the guidance of your dedicated precious metals advisor, you can determine the ideal assets based on your investment situation.
2. Submit the paperwork and payment.
After finalizing what assets you want to buy through your gold IRA, it’s time to complete the legal paperwork and submit the payments. SBC Gold has a trusted IRA liaison who ensures everything is in line with IRS requirements.
3. Receive the assets.
Once the payment and paperwork are submitted, the assets are sent directly to your chosen depository. Your committed precious metals advisor will ensure the transfer process is smooth, secure, and timely.
Can you buy gold in a standard Roth or traditional IRA?
When thinking about how to buy gold in your IRA, you might wonder if it’s necessary to set up a specialized gold IRA in the first place. Unfortunately, standard Roth and traditional IRAs limit investors to paper gold assets such as gold ETFs, mutual funds, and mining stocks. These non-tangible investments don’t offer the same protection as physical gold because of their lack of inherent value and the added counterparty risk. A self-directed IRA is the only way to make precious metals part of your nest egg with tax-advantaged dollars.
If you’re interested in learning more about reaping the benefits of a gold IRA, the precious metals experts at SBC Gold would be happy to help! We can help guide you through every step including how to buy gold in your IRA. You can get in touch by calling toll-free at 1-888-812-9892 or using our live chat function.