A gold IRA, also known as a Gold based IRA, is a self-managed individual retirement account that invests in physical gold and other precious metals. A gold IRA often has higher fees than a traditional or Roth IRA that invests only in stocks, bonds and mutual funds. If you want to keep physical gold in an IRA account, it can't be your regular account. It has to be a special, independent account, called a Gold based IRA. As with other retirement accounts, if you withdraw gold from your IRA before you turn 59 and a half years old, you'll have to pay income tax on the value of the gold, plus a 10% early withdrawal penalty.
To set up a gold IRA, you must work with a gold IRA company to open an account and purchase the precious metals of your choice to fund it. Investors with gold IRA accounts can hold physical metals such as ingots or coins in their portfolios, as well as securities related to precious metals. Once you've opened a self-directed gold IRA account, you can transfer cash to the account to finance your purchase of physical gold. In addition to the post-tax rule, Roth Gold IRAs come with a few other guidelines that you'll also need to follow.
Many people who open gold IRAs use funds from another IRA to do so, but it's not a good idea to invest all of their savings in a gold IRA. Gold and other precious metals are just one of the many things you can buy with a Roth Gold IRA. To do this, you need an individual retirement account in gold, commonly known as a gold IRA, although it comes with its own additional rules to follow and fees to pay. The Internal Revenue Service (IRS) allows holders of self-managed IRA accounts to purchase ingots and coins minted with gold or other approved precious metals, such as silver, platinum or palladium.
A gold IRA company will help you set up your account and sell you the gold (or silver) coins or bars that fund it. Others say no, but keep in mind that the price they pay you when they buy gold again is probably lower than the price they set for the gold they sell. The rules of the IRA with gold require that eligible precious metals be stored in a domestic depositary, bank, or external trustee approved by the IRS. If you are interested in creating this type of account, you'll need to look for a specialized custodian or a company that is capable of managing all the documentation and tax reports necessary to maintain a gold IRA account.
With a traditional IRA or other retirement account, you can invest in gold through the stock market by purchasing shares in mining companies or mutual funds that hold those shares. If you want to keep gold out of a retirement account (meaning you can keep it at home), here's more information on how to buy gold outside of an IRA. The term gold IRA is primarily used to describe a self-directed IRA with funds invested in hard metals.