Gold IRA Rules and Regulations

When inflation occurs, the cash, stocks, and bonds in your retirement portfolio might not hold their value as you had hoped. Diversifying with a gold IRA can hedge against inflation and add stability to your investments.

However, a gold IRA comes with specific rules and regulations, including requirements on what metals to buy and how to handle taxes. Here’s what you need to know to navigate the complexities of investing in a gold IRA.

IRS precious metals IRA rules

Anyone can purchase precious metals as an investment, but to benefit from tax breaks, you’ll need an individual retirement account (IRA). Traditional IRAs offer tax deductions for contributions and tax-deferred growth, while Roth IRAs provide tax-free withdrawals in retirement.

Due to the valuable tax benefits, the IRS has strict rules for maintaining gold IRAs. Noncompliance can result in losing these benefits or incurring penalties.

Below is an overview of the IRS’s gold IRA tax rules.

Rule	Details
Self-directed IRAs only	Regular IRAs can’t hold alternative investments such as precious metals. A special self-directed IRA is required.
Metal purity standards	Gold must be 99.5% pure.
Custodian management	An approved custodian (bank, credit union, trust company) must manage the IRA.
Approved depository storage	Gold must be stored in an IRS-approved depository, not at home or in a safe-deposit box.
Contribution limits	Annual contributions for 2024 are $7,000 if under 50 and $8,000 if 50 or older.
Withdrawal age	Withdrawals are not permitted before age 59½.

Self-directed gold IRAs

To include gold and other precious metals in your IRA, you must open a self-directed IRA. Contributions to a traditional self-directed IRA are tax-deductible, with taxes paid upon withdrawal. Unlike regular IRAs, self-directed IRAs allow investment in various assets, including real estate and precious metals, offering more flexibility. Regular IRAs do not permit the purchase of precious metals, so compliance with this rule is straightforward.

In a self-directed IRA, you can invest in gold, silver, platinum, and palladium. However, specific purity and type standards apply to these investments, ensuring they meet IRS regulations.

Penalty for noncompliance

There is no specific penalty for not using a self-directed IRA because regular IRAs can’t purchase physical gold.

Our expert recommends: How does a gold IRA fit in your retirement portfolio?

Jim McCarthy

CFP®

It can depend on your risk tolerance, your need to generate income from your retirement portfolio, and your outlook for inflation and the economy going forward. Also, the rules for a standalone gold IRA are quite strict, and failure to adhere to them can lead to unwanted tax consequences. If you wish to allocate a large percentage, say 15% or more, of your retirement portfolio to gold, a gold IRA is worth considering. If you plan to allocate a smaller percentage, you may be better off using a publicly traded gold security—such as an exchange-traded fund (ETF), which you can hold in a regular IRA.

Metal purity standards

The IRS has certain requirements for holding gold coins and bullion in a gold IRA. Your gold IRA provider should be able to offer guidance on coins, bars, and bullion.

Generally speaking, IRA-eligible gold must meet the following criteria:

• Have a fineness or purity of 99.5%
• Be produced by a national government mint or accredited manufacturer
• Silver coins and bars must be 99.9% pure, and platinum and palladium coins and bars must be 99.95% pure

Penalty for noncompliance

Noncompliance results in the IRA losing its status, subjecting all funds to tax and penalties.

Custodian management

You can’t add gold or precious metals to your gold IRA yourself, even if you already own IRA-eligible metals or plan to purchase them for investment purposes. The IRS won’t recognize a self-directed IRA set up without a custodian—a financial institution responsible for protecting the assets in your gold IRA.

A custodian can set up a self-directed IRA, manage the funds transfer to the precious metals dealer, and facilitate transporting and storing your physical precious metals. Most gold IRA companies have relationships with top custodians, so they offer these services as part of their package.

Penalty for noncompliance

The IRS will not recognize an IRA without a custodian.

Approved depository storage

When you hold precious metals in a gold IRA, you’ll also need to consider where to store them. The IRS rules for precious metals won’t allow you to keep your coins and bars in your home or a safe-deposit box.

Your gold IRA custodian will facilitate a handoff of your physical metals to a secure storage facility called a depository. You may be able to choose a depository or go with the one your custodian recommends. Either way, the facility must be approved by the IRS.

Penalty for noncompliance

Home storage is treated as a distribution, subject to tax and penalties.

Contribution limits

IRA rules and regulations limit the amount you can contribute to your account each year.

For 2024, the IRS limits IRA contributions to $7,000 for workers younger than 50 and $8,000 for workers 50 and older. The IRS sets these limits annually.

Penalty for noncompliance

Excess contributions are taxed at 6% per year while they remain in the account.

Withdrawal age

Ideally, you’ll hold your gold and other precious metals in your gold IRA until you retire. That’s what these accounts are designed for. Precious metal IRA rules include tax benefits, but that also means limits exist on when you can access your gold IRA assets.

According to the IRS, you can’t take a distribution from your gold IRA until you turn 59½. At that time, you must pay any income taxes due on withdrawals, and you can liquidate the metals in your account for cash or take physical possession of them without penalty.

Penalty for noncompliance

Early withdrawals incur a 10% penalty plus income tax. Specific situations, such as disability or first-time home purchases, may avoid the penalty.

What happens if you don’t follow gold IRA rules and regulations? 

In most cases, failure to follow gold IRA rules and regulations means you will forfeit some or all tax benefits of the account and could face tax penalties. 

Here’s another look at common scenarios that could trigger a penalty on a gold IRA:

• Early withdrawals: The withdrawal is taxable plus a 10% penalty in most cases.
• Home storage: Gold stored at home is considered a distribution and becomes taxable. If you are younger than age 59½, a 10% penalty applies too.
• Excess contributions: 6% penalty on the excess contribution amount.
• Failure to take a required minimum distribution (RMD): 25% of the missed distribution, or 10% if corrected within two years.
• Collectible or ineligible gold in an IRA: The IRA’s entire balance may become taxable. If you are younger than age 59½, a 10% penalty applies as well.

Gold IRAs are more complex than regular IRAs, but don’t let that scare you off from opening an account. Experienced gold IRA companies are well-versed in the IRS rules and can help investors navigate them. 

What’s more, custodians won’t provide investment advice, but they can ensure your self-directed IRA is created correctly and managed appropriately. 

Now that you understand the basics of gold IRA rules and regulations follow the links below to learn more about how gold IRAs work and which companies are among the top choices for today’s investors:

• How does a gold IRA work?
• Best gold IRA companies