Gold IRA Rules and Regulations

Despite experts’ best predictions, it can be difficult to know when inflation will hit. When it does, you might find the cash, stocks, and bonds you set aside for retirement aren’t as valuable as you had hoped. However, investing in gold and precious metals in a gold IRA can help diversify your portfolio.

Investing in a gold IRA can be a smart way to hedge against inflation and take advantage of helpful tax benefits. However, a gold IRA is subject to specific rules and requirements.

Here’s what you need to know about gold IRA rules, what metals to buy, and how to handle the taxes.

Precious metals IRA rules and regulations to know 

Anyone can purchase precious metals as an investment, but if you want a tax break, you’ll need an individual retirement account (IRA). 

A traditional IRA offers a tax deduction for contributions. Then, assets in the account grow tax-deferred until you make withdrawals in retirement. Another option is a Roth IRA, which is funded with after-tax dollars but comes with tax-free withdrawals in retirement.

Because these tax benefits can be valuable, the IRS has created strict rules and regulations about how to maintain gold IRAs. Failure to follow these rules could result in the loss of tax benefits or other penalties. 

Below is an overview of the IRS rules for gold IRAs

Rule	Details	Penalty for failure to comply
Gold IRAs must be self-directed IRAs	Regular IRAs can’t hold alt. investments such as precious metals, so you need a special IRA account.	None; it is not possible to purchase physical gold through a regular IRA.
Precious metals must meet certain standards	With few exceptions, gold must be 99.5% pure.	Your IRA will cease to exist, according to the IRS, and all funds in the account become subject to tax and any applicable penalties.
IRAs must be managed by a custodian	A bank, credit union, trust company, or other approved entity must manage the IRA for you.	None; IRS will not recognize SD-IRA set up without a custodian.
Gold must be stored in an IRS-approved depository	Gold can’t be kept at home or in a safe-deposit box.	Gold stored at home is a dist. from IRA & subject to tax + penalties.
Annual cont. are limited	In 2024, up to $7,000 to an IRA if under age 50 or $8,000 if 50+.	Excess cont. taxed at 6% per year for every year they remain in the account.
Withdrawals can’t be made until age 59½	Taking a distribution prior to age 59½ is considered an early withdrawal.	Early withdrawals may be subject to a 10% penalty in addition to income tax.

Gold IRAs must be self-directed

To add gold and other precious metals to an IRA, you must open a self-directed IRA unless you already have one.

Contributions to a traditional self-directed IRA are tax-deductible. You’ll only pay taxes when you take money or precious metals out of your IRA.

A self-directed IRA is different from other types of IRAs because you can invest in assets such as real estate and precious metals. You’re not limited to stocks, bonds, and other similar assets. You don’t need to worry about running afoul of this rule because regular IRAs don’t offer investors a way to purchase gold or precious metals.

However, within a self-directed IRA, you can purchase and hold four types of precious metals:

• Gold
• Silver
• Platinum
• Palladium

However, there are specific rules regarding the types of gold and precious metals you can invest in a self-directed IRA. More on that next.

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.

Precious metals must meet certain 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%
  • American Buffalo coins
  • Australian Kangaroo coins
  • Credit Suisse gold bars made at an approved facility
  • American Eagle coins are an exception—although they’re 91.67% pure, you can still hold them in a gold IRA
• 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. The IRS sets these limits to ensure investors purchase high-quality metals that will hold their value over the long term.

One more caveat: In some situations, the IRS considers IRA-eligible gold a “collectible.” This usually occurs when a certified organization, such as the Professional Coin Grading Service grade the gold. In that case, you can’t hold it in your gold IRA.

If you want to have your gold graded, it’s often better to wait until after you’ve liquidated your IRA assets and taken possession of your metals. If the IRS finds you have collectible or ineligible precious metals in your account, all the assets in your IRA could become taxable.

IRAs must be managed by a custodian

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 transfer of funds 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.

You’ll purchase gold and other precious metals with cash that’s already in your account. You can fund a gold IRA in the following ways:

• Deposit cash: Once the money is in your IRA, you can use it to buy gold and other precious metals.
• Transfer IRA assets: If you hold assets such as stocks, cash, or gold in another IRA, you can transfer them to a new gold IRA. Then, you can use those assets to buy precious metals.
• Complete a rollover: If you have a 401(k) or other retirement account, you can roll those assets over and use them to purchase precious metals in your gold IRA.

Not all gold IRA custodians are equal. Consider the following when choosing one to secure your assets:

• Is the custodian approved by the IRS?
• Does it charge fees for storage and account management? (Hint: Most do.)
• How many years has the custodian been in business?
• How experienced is the staff at managing gold IRAs?
• Does the custodian have excellent customer reviews?
• Does the company have good ratings with the Better Business Bureau or similar organizations?
• Does the custodian offer a buyback program so you can sell your gold back if you wish?

Store your gold in an IRS-approved depository

When you hold precious metals in a gold IRA, you’ll also need to think about where you’ll 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.

If you take possession of IRA-eligible gold and precious metals—even for a day—the IRS may consider it a distribution. In specific circumstances, that could mean you’ll end up paying steep penalties and taxes.

So 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.

Here are other considerations when choosing a depository:

• How secure it is
• The depository’s insurance policies
• Storage fees for your metals (usually annual)

The depository is responsible for storing your gold and precious metals until you request that your gold IRA custodian sell your gold or distribute it to you. When you take a distribution, your gold is sent to your home address by secure delivery.

Don’t contribute more than you’re able to

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 age 50 and $8,000 for workers age 50 and older. The IRS sets these limits annually.

While you can roll over or transfer a larger amount from a retirement fund, don’t make yearly contributions in excess of the annual limit. This will result in a tax penalty.  

Hold the gold in your IRA until you are 59½

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 perks, 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.

That’s one upside of a gold IRA: Having access to physical gold and precious metals allows you to hold on to and sell them later, exchange them in a time of crisis, or pass them on to your heirs.

However, should you need to access your funds before age 59½, you may need to pay:

• A 10% early withdrawal penalty
• A 28% capital gains tax on any profits if your metals increased in value while you held them in your gold IRA

You won’t pay the 10% early withdrawal penalty in several specific situations, such as if you become disabled or are buying a home for the first time. You can also avoid the penalty if you set up annuity payments based on your life expectancy.

You’ll need to start taking mandatory distributions from your gold IRA when you reach age 73. If you don’t, you could face a 25% excise tax for each year you don’t withdraw the required amount.

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