How to Hold Physical Gold in an IRA

An IRA can be an excellent option if you’re interested in investing in gold. These are tax-advantaged accounts designed to help people save for retirement.

However, you can’t hold physical gold in a regular IRA. Instead, you’ll need a special gold IRA account subject to specific IRS regulations. Also, you won’t be able to store IRA gold in your own home; it must be stored in a secure depository.

Keep reading to learn more about physical gold IRAs, how to open one, and whether this investment option is right for you.

Gold IRA vs. physical gold

If you’d like to invest in physical gold, you can do that in two ways: Hold precious metals in a gold IRA, or invest in precious metals outside a retirement account.

Here’s a look at how the two options compare:

Gold IRA	Physical gold outside of an IRA
Comes with tax benefits	No tax benefits
Gold must meet IRS standards	Any gold can be purchased for an investment
Typically must wait until age 59½ to make penalty-free withdrawals	Gold can be liquidated at any time
Gold must be stored in an approved depository	Home storage is an option
Best for long-term investments	Suitable for short- and mid-term investments

Purchasing gold outside a retirement account offers more flexibility, but the tax benefits of a gold IRA provide more value to many investors. IRS requirements ensure you purchase high-purity gold and store it securely.

Before you open a gold IRA, be sure you understand what it is and how to set one up properly.

What is a gold IRA?

A gold IRA is a type of self-directed individual retirement account that allows investors to hold physical gold and other precious metals, including silver, platinum, and palladium, as part of their retirement portfolio. 

Unlike traditional IRAs, which typically invest in stocks, bonds, and mutual funds, a gold IRA allows you to invest in tangible assets, offering a hedge against inflation and economic uncertainty. 

The account is managed by a custodian who specializes in precious metals. The custodian ensures that the gold meets IRS purity standards and is stored in an approved depository. This provides a secure way to diversify your retirement savings with physical gold while maintaining the tax advantages of a traditional IRA.

Can you hold physical gold in an IRA?

Yes, you can hold physical metal in a gold IRA.

If you have a regular IRA, you’re limited to stocks, bonds, mutual funds, and similar investments. So you could purchase a gold ETF or stock in a gold mining company, but you can’t buy gold itself.

However, a self-directed IRA, such as a gold IRA, allows you to hold alternative investments. These include cryptocurrency, real estate, and precious metals—namely, gold, silver, platinum, and palladium.

When you open a gold IRA, you can own physical gold and access all the benefits that come with it. Plus, because it’s an IRS-approved retirement account, you get tax breaks too.  

How do you hold physical gold in an IRA?

To hold physical gold in an IRA, you must set up an account, fund it, and purchase precious metals to be stored in a depository. Here’s a closer look at each step in the process:

1. Open a self-directed IRA: To hold physical gold, you’ll need a special IRA account, known as a self-directed IRA. Opening an account isn’t difficult, but you will need to go through a custodian, a specialized entity that manages self-directed accounts such as gold IRAs.
2. Fund your account: Once your gold IRA is open, you must deposit money into it. You can contribute or transfer money from your 401(k) or IRA.
3. Purchase your gold: You can’t place gold you already own into an IRA. Instead, you must buy the gold using funds from your self-directed IRA. Be sure the gold you purchase meets IRS standards, which we’ll cover below.
4. Store your gold: You can’t store the gold you purchase with your IRA at home. The IRS would consider it a distribution, subjecting the gold to taxes and a possible penalty. Instead, you must have your gold shipped from a dealer to a depository for secure storage.

If these steps sound difficult, don’t worry. The best gold IRA companies have experienced staff who can help with every step, from setting up the account and purchasing IRS-approved gold to having it shipped and stored at an insured depository.

Our expert’s recommendation

Rand Millwood

CFP®

Gold should be viewed the same as any other investment made within your portfolio. What are your long-term growth desires for the portfolio? What is the purpose of this specific investment as part of that process, and what is your time frame for this investment (e.g., short- or long-term, specific period based on a concern or opportunity?) Gold is an investment that can suffer through periods of significant volatility (up or down) or periods of significant decline for many reasons. Based on all of this, you need to view gold in the context of its impact on the long-term growth of your portfolio when compared to other potential areas of investment to decide whether you feel it’s likely to be a better- or worse-performing holding. Nothing is ever exact, but once you have a better idea of its place versus other options, you can determine whether it’s better to be a smaller or larger portion of your overall portfolio.

Types of gold IRAs

You will need a self-directed rather than a traditional IRA to hold physical gold. And self-directed IRAs—sometimes called SDIRAs—generally fall into one of three categories.

Traditional account

A traditional SDIRA offers immediate tax benefits. Contributions to the account are tax-deductible, and the value of your gold grows tax-deferred. When you reach age 59½, you can start making penalty-free withdrawals, but the value of those withdrawals is taxed as regular income.

At age 73 or 75, depending on your birth year, you must take the required minimum distributions (RMDs). The amount of these distributions is based on the account’s value and your age. Failure to take them could result in a tax penalty of up to 25%.

Roth account

With a Roth gold IRA, no tax deduction applies to contributions. Instead, you fund the account with after-tax dollars. The value of your gold grows tax-free, and withdrawals made after age 59½ are tax-free. No RMDs apply to Roth accounts.

Roth and traditional gold IRAs have the same contribution limits. In 2024, you can contribute up to $7,000 if you’re younger than age 50 or $8,000 if you are 50 or older. However, you can also roll over funds from a 401(k) or IRA to boost the balance in your gold IRA.

SEP account

A SEP IRA is the final option for those who want to hold physical gold in an IRA. These accounts are for business owners and self-employed workers. They can be set up as a traditional or Roth account, so you can choose which tax benefits are best for you.

The contribution limit is the major difference between a SEP IRA and other IRAs. With a SEP account, you can contribute 25% of your annual income, up to $69,000 in 2024.

Note that if you or your spouse have a workplace retirement plan, such as a 401(k), income limits apply to new contributions to both traditional and Roth IRAs. Talk to a financial professional for more information and guidance in selecting the right type of gold IRA for your situation.  

Rules about holding physical gold in an IRA

You must follow IRS rules if you plan to hold physical gold in an IRA. We’ve already touched on many of them above, but here’s a review of what the government requires for a gold IRA:

• Gold must meet purity standards. Except for American Eagle coins, all gold held in a gold IRA must be at least 99.5% pure.
• Gold must meet manufacturer requirements. It can be in the form of rounds, coins, or bars, but a certified or accredited manufacturer or a national mint must make it. Rare and collectible coins do not qualify for a gold IRA.
• A custodian must oversee the IRA. The IRS requires a self-directed IRA to have a custodian. Your gold IRA company can help connect you with a custodian that is experienced in gold IRAs.
• Gold must be stored in a depository. You can’t store IRA gold at home. Instead, it must be sent directly from the gold dealer to an approved depository. Again, your gold IRA company can help you review available options and select the right place to keep your precious metals.
• Early withdrawals may be penalized: The government intends an IRA to be used for retirement,, so it penalizes early withdrawals. If you liquidate or take physical possession of gold before age 59½, that is considered a taxable distribution. In most cases, the IRS will also assess a 10% penalty.

Pros and cons of holding physical gold in an IRA

Before you open a gold IRA, be sure you understand the pros and cons of these accounts.

Pros

• Valuable tax benefits

• Provide an inflation hedge within a retirement account

• Almost no risk of theft or loss while stored at an insured depository

Cons

• More fees than a regular IRA

• Can’t store gold at home

• More steps are involved compared to other investment options

Is investing in physical gold in an IRA right for you?

While many good reasons exist to invest in physical gold within an IRA, this investment strategy isn’t right for everyone.

Take a look at the following table to see when it makes sense to open a gold IRA and when you may want to purchase gold outside an IRA.

Consider a gold IRA if…	A gold IRA may not be right if…
You are looking for a tax-advantaged investment.	You want to store your gold at home.
You are saving for retirement.	You want to invest in gold for a short-term or mid-term need.
You want to diversify your retirement investment portfolio.	You want gold to be easily accessible in the event of an emergency.
You don’t expect to make withdrawals before age 59½	You expect to make withdrawals before age 59½.

A gold IRA makes the most sense for someone who is interested in a long-term investment. If you think you’ll need to liquidate or take possession of your gold before retirement age, a gold IRA is likely not the best choice for you. In that case, you may be better off investing in physical gold outside an IRA.

Also, remember that you can invest in gold outside of physical gold. Some people purchase gold exchange-traded funds (ETFs)—which hold physical gold—or gold mining stocks within their regular IRA as a way to benefit from the value of gold. But these options don’t give you ownership of physical gold.

Many investors prize gold IRAs for offering a way to gain tax benefits by purchasing an asset that will diversify their portfolio and provide a hedge against inflation. However, they have higher fees and some restrictions. Be sure you weigh the pros and cons before opening an account.

FAQ 

Can I buy physical gold with IRA money?

Yes, you can buy physical gold with IRA money through a self-directed IRA, aka a gold IRA, which allows you to invest in physical precious metals, including gold, silver, platinum, and palladium. To do this, you must open a self-directed IRA with a custodian specializing in precious metals. The gold purchased must meet specific purity requirements set by the IRS and be stored in an approved depository.

Can I convert my IRA to physical gold?

Yes, you can convert your IRA to a physical gold IRA through a rollover or transfer process. This involves moving funds from your current IRA (traditional, Roth, SEP, or SIMPLE IRA) into a self-directed IRA that allows investments in physical gold. The process can be done without triggering taxes or penalties as long as it’s executed correctly. The custodian of the gold IRA will help facilitate the transfer and ensure compliance with IRS regulations.

How do I do a 401(k) to physical gold IRA rollover?

To roll over a 401(k) to a physical gold IRA, start by opening a self-directed IRA with a custodian that allows investments in physical gold. Next, contact your 401(k) plan administrator to initiate a direct rollover, transferring the funds to your new gold IRA. Once the transfer is complete, work with your custodian to purchase IRS-approved physical gold. Finally, ensure that the gold is stored in an IRS-approved depository; you can’t hold it personally.

Can I take physical possession of the gold in my IRA?

No, you can’t take physical possession of the gold in your IRA while it’s part of the IRA. The IRS requires that the physical gold in an IRA be stored in an approved depository to maintain the tax-advantaged status of the account. If you take physical possession of the gold before retirement, it’s considered a distribution, subjecting you to taxes and possibly early withdrawal penalties. However, upon reaching the eligible age for distributions, you can choose to receive the gold as a distribution, though it would be taxed as income.

What is the best way to buy physical gold?

These are our highest-rated gold companies that allow you to purchase physical gold, either delivered to your door or held within your gold IRA.