How to Start Investing in a Gold IRA?

Opening a gold-backed individual retirement account (IRA) can be crucial in retirement planning. Through gold IRA, you will be able to invest in gold and other precious metals, providing you with an excellent way to secure and potentially grow your retirement savings. 

The thing is, though, that starting with a gold IRA can be tricky. There are many things to consider, and the entire process can be overwhelming. To make it easier, we’ve prepared the following guide on investing in a gold IRA. Read on, and begin your IRA investing journey on the right foot!

Key Highlights

• To invest in gold through an IRA, you must open a dedicated gold-backed self-directed retirement account, aka gold IRA. 
• Gold IRA allows individuals to purchase and hold gold and other precious metals, such as silver, platinum, and palladium, on tax-advantaged rules.
• To open a gold IRA, you must first find a gold IRA company; this company will help you start your account and transfer funds, as well as purchase, ship, and store your precious metals at an IRS-approved depository.
• Once you find your IRA company/custodian, you can either create a new account or roll over your 401(k) or 403(b) retirement plan to a precious metals IRA. 
• With a gold IRA, you can purchase only IRA-approved gold and precious metals of specific type and purity. 

How To Invest in a Gold IRA? A Step-By-Step Guide

Opening your gold-backed IRA can be a lengthy process. And while it’s definitely less complex than some try to paint it, it does involve a few extra steps compared to starting a traditional or Roth IRA. Let’s go through the key steps to follow when starting your gold IRA investment.

Step 1: Find the Right IRA Company

First things first, you must find an accredited IRA company to open your account. That company will help you get your account up and running, choose the right funding option, and purchase, ship, and store your assets. Some IRA companies also work as custodians, handling the necessary paperwork and ensuring your IRA is IRS-compliant. 

There are many IRA companies out there, each offering different fees, services, and customer experience. We’ve compiled a list of the best gold IRA companies, so be sure to check it out during your research. 

However, if we were to recommend one gold IRA company, it would be Augusta Precious Metals. They are one of the most renowned IRA companies out there, offering everything an investor needs from their IRA custodian – transparent fees, reliable storage, and numerous investment options. 

Step 2: Open Your Account

Once you’ve chosen your gold IRA company, it’s time to open your self-directed retirement account. Regarding that, you have two options – traditional IRA or Roth IRA. The difference between the two lies in their tax benefits:

• With traditional IRAs, all your contributions to your IRA are tax-deferred, but you must pay taxes on withdrawals;
• On the other hand, Roth IRAs offer the opposite, with contributions being taxed and withdrawals not. 

Which option is better? That depends on your individual circumstances. A good idea might be to consult this with your tax advisor. They should be able to provide you with more information to decide what best suits your needs. 

Step 3: Fund Your Gold IRA

To invest in gold through your self-directed IRA, you must first fund your account. Regarding this step, you’ll be presented with three primary options: cash contribution, direct transfer, and a rollover. Let’s go through these in more detail:

• Cash Contribution: The first option is funding your account with cash. To do that, you can use a traditional check, e-check, or wire transfer. Wire transfers are most reliable, but keep in mind your bank and chosen IRA custodian might charge you a wiring fee. 
• Direct Transfer: It’s possible to fund your gold IRA through a direct account-to-account transfer. To do this, you’ll need to fill out a form from your account administrator or IRA custodian. Such transfers are tax-free, making them a favorable option for investors. 
• IRA Rollover: If you have a retirement plan different from a gold IRA, you can use it to fund your self-directed account. To perform a gold IRA rollover, you will need to contact your IRA custodian, who will then guide you through the process. 

When funding your precious metals IRA, you should also be aware of the contribution limits. Yes, there’s a limit to how much you can invest in a gold IRA, which varies by age. 

The rules are simple: if you’re under 50, you can contribute up to $7,000 per year in your gold IRA. Once you turn 50, this amount jumps up to $8,000 annually. 

Step 4: Select and Buy Your Chosen Precious Metals

With your account funded, you can now start investing in gold, usually in the form of bullion bars and coins. Also, the gold and precious metals you purchase through your retirement account must be IRA-approved, which means they need to be of specific type and purity. 

Now, the exact process of purchasing precious metals through your IRA will vary from one IRA company to another. Some companies sell IRS-approved gold coins and bars themselves, allowing you to purchase precious metals directly from them. Others work with accredited third-party dealers, from whom you can purchase your assets through the custodian. 

Take your time and look through available options. Once you’re ready to invest, follow your company’s instructions to finalize the deal using your IRA funds. During this process, you will also be asked to select the depository to which your assets will be shipped. You can’t store your IRA gold at home! Most IRA companies work with IRS-accredited storage facilities they recommend, but you can also select your own as long as it meets the strict IRS requirements. 

How Long Does It Take to Open a Precious Metals IRA?

The account opening itself shouldn’t take more than one business day. The application takes around 10-15 minutes, and renowned IRA companies make the registration process as simple as possible, guiding you through each step to ensure everything goes smoothly. 

How fast you can start investing in a gold IRA will depend on the speed of your funding. Rollovers and direct account transfers usually take several business days, typically seven, but cash contributions can take longer than that. 

When Can You Make a Withdrawal?

In theory, you can start withdrawing from your retirement account at any time. However, if you want to avoid penalties, you must wait until you’re 59. Before that, any distribution from your gold IRA will result in a 10% penalty. 

Also, once you reach 70 and a half, or 72, depending on your birthday, you’ll be obliged to take a minimum annual distribution from your retirement account. How much? This will depend on your age and your account type, among other factors. 

Regarding withdrawal options, you can opt for depository or in-kind distributions. Depository withdrawals are when you ask your depository institution to purchase the assets from you, providing you with money from your investment. If you opt for an in-kind distribution, the depository will ship the actual gold to you. 

Wrapping Up: Is a Gold IRA Investment Worth It?

Once you start looking at all the steps involved in starting your gold IRA investment, you might begin to wonder: is all this hassle worth it? Our answer would be yes, but gold IRAs aren’t for everyone. 

For instance, while they allow investors to leverage the benefits of gold at tax-advantaged rules, precious metals IRAs also come with high annual fees that can bite into potential returns. If this is something that bothers you, investing in gold ETFs, gold mining stocks, or gold futures might be an appealing alternative, especially since you can do so through your traditional IRA. 

Essentially, it all depends on your investment goals. Physical gold is much less prone to risk than market-related instruments, with gold and precious metals displaying reliable performance in times of uncertainty or during high inflation. 

So yes, if it aligns with your goals, opening a precious metals IRA might be worth it. And, as you can see, it’s not as scary as some try to paint it. Just find the right IRA company, go through the application process, fund your account, and start investing in gold. 

Article Sources

At Gold IRA Blueprint, we dive deep into the world of gold IRAs, using trusted sources to back up our insights. Our sources range from official documents to expert interviews, ensuring our content is both accurate and reliable. We also draw on research from reputable publishers to give you the most comprehensive understanding possible. Check out our editorial policy to see how we maintain our high standards for accuracy and fairness. Also make sure to check out our Financial Review Process to have a better understanding of our process.

1. https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras 
2. https://www.irs.gov/retirement-plans/traditional-and-roth-iras
3. https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CustomerAdvisory_COVID19PreciousMetals.htm