If you’re researching alternative ways to build your retirement investments, learning how to hold physical gold in an IRA can be helpful.
This method of investing is often seen as a fantastic vehicle to avoid stock market volatility and hedge against inflation.
Unlike stocks, actual gold investments allow you to purchase precious metals to grow your wealth over time.
That said, as beneficial as a gold IRA can be, there are requirements and regulations to be followed.
In this guide, we’ll explore the steps you need to take to be able to hold physical gold in self-directed IRAs.
What Are the Rules for Physical Possession of IRA-Approved Gold?
Before you begin investing, it’s always important to look into the regulations and guidelines for the investment account you want to open.
As you would expect, the IRS has stringent rules that gold sellers and buyers must follow when using precious metals IRAs.
Let’s review some of the most notable regulations you’ll need to follow.
Gold Possession
There’s a common myth that you can store your purchased gold in your home once you open self-directed gold IRAs.
However, although you own a physical asset, you cannot hold the gold in your house or keep it in your possession.
The IRS is strict against storing your IRA-approved gold bullion in safety deposit boxes at your bank.
Instead, every gold IRA owner must work with an IRS-approved depository per distribution rules.
They will facilitate storage when you purchase your physical metal through a gold IRA company.
There are many different approved facilities nationwide where your precious metal coins will be kept, such as the Delaware Depository.
This is because these facilities have the security and insurance to protect your precious bullion coins.
Also, since the IRS has previously approved the storage companies, they can keep track of your investments.
If your gold IRA company doesn’t facilitate storage, your custodian will.
Precious Metal Quality
When you begin making actual gold purchases for your IRA, the quality of the metals must meet a specific standard.
Reputable gold IRA companies will only deal in IRS-approved funds in gold, which is important to note.
If your precious metals do not meet these standards, they cannot be held in an IRA.
The requirements differ depending on the type of precious metal you’re investing in, for example:
- Silver coins and bars must be 99.9% pure
- Platinum and palladium bars and coins must be 99.95% pure
- Gold options must be 99.5% pure
- American Eagle coins are an exception and allowed at 91.67% purity
Precious Metal Distinctions
Aside from the purity/quality of the metals you’re using to invest in gold, there are other distinctions the bars, coins, and bullion must meet.
These regulations for your golden retirement egg include:
- Purchases must have a certificate of authenticity
- Investments must be in their original, complete packaging
- Coins must be free of damage and uncirculated
- Bars must meet specific weight requirements
Manufacturer Accreditation
The last important thing to note when buying precious metals is the manufacturer you’re buying from.
The IRS only accepts nationally accredited manufacturers or government mint products for gold IRAs.
Fortunately, like metal purity, your gold IRA company will likely only work with approved manufacturers and facilities.
Can I Hold Physical Gold Outside of an IRA?
As discussed, there isn’t any possibility to physically maintain control over your purchased gold when you have a gold IRA.
All your investments will be kept in an IRS-approved facility of your choice or your custodian’s choosing.
Many people are less interested in storing their investments elsewhere and would prefer to keep them in a personal, specified location.
In these instances, you will want to consider avoiding an IRA altogether for your asset basket and purchase the precious metals for cash.
Most gold IRA companies allow their customers to buy precious metals directly instead of opening an IRA.
With this process, you will need to pay for the gold directly, which will then be shipped to your house, like shopping online.
After purchasing your precious gold from metal dealers, you will be responsible for managing the safe storage of your investment.
Although it gives you a more hands-on approach to managing your retirement savings, it’s often not the best.
Finding safe and secure places to keep your assets in possession can be challenging, even at a bank.
The other concern with holding physical gold outside of an IRA is that it requires cash.
You won’t be able to use your existing retirement account to fund your new purchases of gold.
However, buying precious metals directly can be beneficial if you’re liquid enough to afford the process and have secure storage options.
How to Hold Physical Gold in an IRA: The Steps
If you’ve decided that you want to hold physical gold in an IRA, it’s time to consider opening an account.
You’ll first want to find a gold IRA company you can trust to help streamline the process.
They should offer custodian options, storage solutions, and multiple investment account types for you to consider.
It’s also essential to choose a gold IRA company with knowledgeable associates to give you advice and clarify any questions you may have.
Step 1: Know Your Options for Opening a Gold IRA
Once you’ve found the right gold IRA company and custodian, you can move on to choose one of these three options for holding gold in an IRA.
Cash
One of the ways to begin holding gold in your IRA is to fund it with cash.
If you have the liquidity to do so, simply send a cheque to your gold IRA company or your custodian.
They may also accept wire payments, although there could be fees associated with wire transactions.
Rollover
A popular way to start a gold IRA is to roll over your existing retirement accounts.
During this process, you’ll withdraw the funds from your old retirement account and then roll them into your new gold IRA.
That said, this process must be complete within 60 days, or you could be subjected to a couple of fees.
Rollovers that aren’t completed within 60 days can be considered income, causing you to pay taxes based on your tax bracket.
Additionally, if you’re under 59.5 years of age, you will be responsible for paying an early withdrawal penalty of 10%.
These fees are two main reasons people may consider an IRA transfer instead of a rollover.
Transfer
The third solution for opening a gold IRA is to do an IRA transfer.
This process is more hands-free for the account owner, allowing your custodians to manage the legwork.
With a transfer, your funds from your existing IRA are directly transferred into your new gold IRA. Using this process, you won’t have to worry about any penalties, taxes, or fees.
This is because your retirement savings won’t be sent to your account for transfer but instead directly transferred from one IRA to the next.
Also, it doesn’t need to be completed within a certain time frame, which helps alleviate some stress.
Step 2: Regularly Fund Your Account
After you’ve completed your initial account rollover or transfer, you’ll want to ensure you’re regularly funding your retirement savings.
You should set up a payment schedule to keep packing money into your gold IRA. Remember, the IRS establishes annual contribution limits for self-directed account owners annually.
For 2022, account owners can add up to $6,000 into their accounts, the same as 2021. If you’re over 50 years of age, you can contribute up to $7,000 annually.
Step 3: Choose a Storage Facility
Another important step before buying gold is deciding where you want your gold to go.
There are dozens of outstanding storage facilities nationwide, with the Delaware Depository being one of the most popular.
Typically, your gold IRA company or custodian will recommend storage facilities, but it’s your choice.
You will want storage that offers ample security and insurance. Otherwise, you won’t have the necessary coverage to protect your investments over time.
Step 4: Begin Buying Precious Metals
With an account, you can now begin buying precious metals to fund your retirement savings.
Most gold IRA companies offer an assortment of metal types, including gold bars and gold coins, silver, palladium bullion, and platinum coins.
They can come in multiple formats, from bullion to mint coins.
Holding Physical Gold in an IRA
Learning how to hold physical gold in an IRA is a great option for people looking to diversify their retirement savings.
Whether you want a self-directed IRA or to physically buy and store bars of gold in your home, most gold IRA companies offer flexible solutions.
It’s time you began to hedge your future against inflation by considering opening a gold IRA today.