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We all want a comfortable retirement free of financial stress and worry. But achieving that? Well, that takes planning.
For some, it might mean opening a traditional IRA. If you’re looking to diversify and protect against inflation, a traditional gold IRA might be an even better option. These accounts allow you to invest pre-tax dollars in things like gold, silver, and palladium, among other things.
If this strategy sounds like something you might like to incorporate into your retirement plan, this guide can help. Keep reading to learn more about traditional gold IRAs and how they can help you achieve your long-term wealth goals.
In this guide:
- How does a traditional gold IRA work?
- Traditional gold IRA guidelines
- Best traditional gold IRA companies
- Traditional gold IRA vs. other account types
- Is a traditional gold IRA worth it?
How does a traditional gold IRA work?
A traditional gold IRA (Individual Retirement Account) is a type of self-directed IRA that allows you to invest in various tangible assets — gold and silver included. You can also invest in other items, like collectibles, antiques, art, and in some cases, even real estate.
With a traditional gold IRA, you’ll make contributions with pre-tax money — money earnings you haven’t yet paid income taxes on. Once you withdraw the funds, later on, that’s when you’ll pay the taxes.
For this reason, traditional IRAs are typically best if you expect your income tax bracket to be lower in retirement. If you predict you’ll have a higher tax bracket once you retire, then a Roth gold IRA may be a better option.
If you do opt to open a traditional gold IRA, you’ll need to find a gold IRA custodian who can help. These companies can set up your account, purchase the IRS-approved gold and other metals on your behalf, ship the metals to a secure depository, and handle all the IRS reporting. They will also assist you with funding the account, which typically involves rolling over or transferring funds from an existing retirement account (like a 401(k) or other IRA). You can also contribute cash to your traditional gold IRA if you’d prefer.
>> Read more: How does a gold IRA work?
Traditional gold IRA guidelines
The IRS has several guidelines you’ll need to adhere to if opening a traditional gold IRA account is on your radar. For one, you can only contribute so much. Currently, the limits on traditional IRAs are $6,000 in contributions each year if you’re 49 or younger and $7,000 per year if you’re at least 50.
These contributions are tax-deductible — at least up to a point. The exact deduction you can take is based on your annual modified adjusted gross income (AGI).
|Tax Filing Status||Modified AGI||Deduction|
|Single or head of household||$66,000 or less||Full contribution (up to contribution limit for your age group)|
|Single or head of household||$66,000 to $76,000||Partial deduction|
|Single or head of household||$76,000 or higher||No deduction|
|Married filing jointly||$105,000 or less||Full contribution (up to contribution limit for your age group)|
|Married filing jointly||$105,000 to $125,000||Partial deduction|
|Married filing jointly||$125,000 or more||No deduction|
|Married filing separately||$10,000 or less||Partial deduction|
|Married filing separately||$10,000 or more||No deduction|
You can continue making contributions to your traditional gold IRA account until you reach the age of 70.5. After that, only Roth IRA contributions are allowed.
Withdrawals are also tied to age. Though you can technically withdraw funds from your account at any time, doing so before age 59.5 will mean a 10% penalty. At age 72, you’ll also need to start taking required minimum distributions.
Best traditional gold IRA companies
Many companies can help you establish and manage a traditional gold IRA account, each with its own unique fee structures, services, and terms. To make sure you’re getting the best fit for your long-term retirement needs, always shop around first and compare your options.
Here are just a few of the best traditional gold IRA companies from our partners to get your search started:
Oxford Gold Group: Best overall
Our choice for best overall
- Set up an account in as little as 24 hours after submitting a completed application
- Education-focused approach with plenty of learning materials
- Talk to a representative at (877) 544-1523
If you’re looking for a gold IRA company with excellent ratings, Oxford Gold Group is it. The company has an A+ rating with the Better Business Bureau, a 4.9-star rating on Google, and 4.9 stars on Trustpilot.
Oxford can assist with setting up and funding your gold IRA account, purchasing your metals, and funding your account. Account statements are mailed out quarterly (or more for a fee).
Goldco: Best for customer support
Another highly-rated gold IRA firm is Goldco, which has an A+ with the BBB and 4.8 stars on Trustpilot.
Goldco’s standout feature is its wide array of educational content, which can help you learn more about gold investments and make better choices regarding yours. The company also has easily accessible customer service — available via chat, phone, and email.
Patriot Gold Group: Best for limiting fees
If fees are a worry, Patriot Gold Group deserves a look. The company’s $180 fee (for accounts under $100,000) is on the lower end, and for accounts with balances over $100,000, you’ll pay nothing at all.
Patriot doesn’t scrimp on customer service either. It has 5 stars on Google and 4.6 stars on Trustpilot.
Orion Metal Exchange: Best for accounts with a small balance
Orion Metal Exchange is a well-known name in the gold IRA game, and for good reason. The company assists with both IRA set-up and sells IRS-approved precious metals. The California-based company also has high ratings, including an A+ with the BBB and 4.9 stars on Trustpilot.
The best part? If your account balance falls under $200,000, you’ll pay just $150 per year in fees.
Traditional gold IRA vs. other account types
A traditional IRA isn’t the only account that allows for investing in gold and precious metals. Both Roth IRA and SEP IRAs may be options as well.
Here’s how all three accounts differ:
|Traditional IRA||Roth IRA||SEP IRA|
|Best for||If you expect your tax bracket to be lower in retirement||If you expect your tax bracket to be higher in retirement||Self-employed people, small business owners|
|Contribution limits||$6,000, if you’re 49 or under $7,000, if you’re 50 or older||$6,000, if you’re 49 or under $7,000, if you’re 50 or older||$58,000 or 25% of your annual compensation, whichever is smaller|
|Benefits||Can lower your taxable income now||Not taxed in retirement, when earnings are lower||High contribution limits|
|Requirements||Must make less than $66,000 if you’re single or $105,000 if you’re married and filing jointly to deduct your full contributions||Must make less than $125,000 if you’re single or $198,000 if you’re married and filing jointly to make the full contribution||Must be self-employed or work for a self-employed person Employees must work for the business at least three of the last five years|
Is a traditional gold IRA worth it?
Traditional gold IRAs can come with serious perks. For one, they’re tax-deductible, which can help you reduce your taxable income now and save more for the future.
They also offer an excellent hedge against inflation, and they’re a great way to diversify your portfolio, too – especially in such a unique and challenging economic time.
Finally, they’re also just a sound investment. The price of gold has increased significantly over the years, and over the long haul, it can be a great way to build wealth.
If you’re considering making a traditional gold IRA a part of your larger retirement plan, then shopping around is your best bet.
Author: Aly Yale