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What is a gold IRA and how does it work?

Gold IRAs can be a great way to hold physical gold in your retirement account, but they’re complex and can be costly to own.

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Gold individual retirement accounts (Gold IRAs) let you hold gold and other precious metals in a tax-advantaged way. But you have to manage these accounts on your own, and they tend to be costly, complex and prone to fraud. Find out how these accounts work and what to watch out for.

What is a gold IRA?

A gold IRA is a type of self-directed IRA (SDIRA) where you can purchase physical gold — and sometimes other precious metals — that’s held by a custodian on your behalf. The custodian could be a bank, trust company or broker-dealer approved by the Internal Revenue Service (IRS). An SDIRA is an IRA that lets you invest in alternative assets for retirement.

Though the IRS defines gold as a “collectible” and prohibits individuals from owning collectibles in an IRA, it makes an exception for gold, silver, platinum and palladium in certain forms. To own these metals in your IRA, though, an institution must custody the assets for you. In other words, the custodian holds your gold and you can’t take physical possession of the gold in your IRA until you reach retirement.

Gold IRAs share many similarities with regular IRAs. But they do differ in a number of ways. Specifically, gold IRAs tend to cost more to open and maintain and are generally more complicated to manage.

Gold IRAs at a glance

  • Gold IRAs let you hold gold, silver, platinum and palladium in certain forms in a retirement account.
  • Only IRS-approved custodians can offer gold IRAs, but many brokerages do not permit these types of investments.
  • Gold IRAs are more costly to open and manage than regular IRAs and often include account setup fees, transaction fees and storage/custody fees.
  • Not every precious metals dealer is approved by the IRS to custody your IRA assets. In these cases, the metals dealer may partner with a third-party custodian to offer gold IRAs.

How does a gold IRA work?

The same contribution limits, withdrawal rules and tax advantages apply to a gold IRA as they do to a regular IRA. Gold IRAs can be either a traditional, Roth or simplified employee pension (SEP) IRA.

  • Contribution limits. Gold traditional or Roth IRA contribution levels sit at $6,500 per year for 2023, or $7,500 if you’re age 50 or older. Meanwhile, an employer can contribute to an employee’s gold SEP IRA up to either $66,000 or 25% of the employee’s compensation.
  • Withdrawal rules. Gold IRA account holders can begin to withdraw money free of penalties beginning at age 59 and a half. Withdrawals prior to age 59 and a half will be assessed a 10% early-withdrawal penalty.
  • Tax advantages. Whether a gold or regular IRA, it’s the traditional or Roth designation that determines available tax benefits. Traditional IRA contributions are tax-deductible in the year the contribution is made, while Roth IRA withdrawals are tax-free in retirement.

The primary difference between a gold IRA and a regular IRA is the types of assets you can own. Self-directed IRAs can hold just about any type of asset, whereas regular IRAs are typically limited to traditional investments, such as stocks, bonds and exchange-traded funds (ETFs). As with any SDIRA, you have to manage your investments proactively, and you are solely responsible for reviewing and understanding your investment choices. Regular IRA custodians tend to stick to firm-approved assets such as stocks and bonds because of the extra burden of federal laws and regulatory rules associated with alternative investments.

That said, an SDIRA must adhere to specific IRA rules for gold coins and bullion. These include:

  • Gold bullion or coins must be kept in the physical possession of an IRS-approved custodian.
  • Coins must come from a national government mint. Such coins include American Eagle gold and silver coins as well as American Buffalo coins.
  • Gold must be 99.5% pure, except for gold American Eagle coins, which are 91.67% pure. Silver must be 99.9% pure, while both platinum and palladium must be 99.95% pure.
Warning: Please note that a representative from your gold IRA custodian may offer you “hot tips” on when to invest in certain metals or what metals to invest in. These custodians do not have a fiduciary duty to you and may offer you this advice because they are incentivized to make a commission. If you feel like you are being pressured to purchase certain assets or that you have been the victim of fraud perpetrated upon you by the custodian of your gold IRA, contact the CFTC to report the issue.

Types of gold IRAs

  • Gold traditional IRAs. A gold traditional IRA lets you gain exposure to gold and other precious metals with your pre-tax income. Your contributions are tax-deductible, but your withdrawals in retirement are taxed.
  • Gold Roth IRAs. A gold Roth IRA lets you use your post-tax cash to invest in gold and other precious metals, with tax-free withdrawals in retirement.
  • Gold SEP IRAs. A gold SEP IRA is available to self-employed individuals and small business owners and, like a traditional IRA, is funded with pre-tax dollars.

How to set up a gold IRA

  1. Choose a specialty custodian. Choose a bank, trust company or broker-dealer licensed and registered with the IRS to custody the precious metals in your gold IRA. You can compare providers below.
  2. Choose a precious metals dealer. If your IRA custodian isn’t a precious metals dealer, you must select a dealer from which to purchase your gold or precious metals. Some metals dealers use preferred IRA custodians, while others require you to bring your own IRA custodian. To see if a dealer is legitimate, check that they are registered with an industry trade group like the American Numismatic Association (ANA) or the Numismatic Guaranty Corporation (NGC).
  3. Fund your account. Deposit money with your gold IRA custodian, and then purchase IRA-eligible bullion products from your choice of precious metals dealers.
  4. Select the metals you’d like to purchase. Decide whether you want gold, silver, platinum or palladium.

Compare Gold IRA providers

1 - 5 of 5
Name Product Account types Available metals Standard storage fees Markup fees
Lear Capital IRA
Lear Capital IRA
Roth, Traditional
Gold, Silver, Platinum
$280 for first year, $200 annually thereafter
Preserve IRA
Roth, Traditional, SEP, SIMPLE
Gold, Silver, Platinum, Palladium
No fees
Goldco IRA
Roth, Traditional
Gold, Silver, Platinum, Palladium
$250 in first year for account set up, storage and insurance
Varies
iTrustCapital (Crypto and gold IRA)
iTrustCapital (Crypto and gold IRA)
Roth, Traditional, SEP, Rollover
Gold, Silver
None
$50 over spot, per ounce for gold
Silver Gold Bull IRA
Silver Gold Bull IRA
Roth, Traditional
Gold, Silver, Platinum, Copper
First 3 months free
Varies
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Gold IRA costs and fees

Gold IRAs have a number of associated costs and fees that don’t apply to regular IRAs. And the monthly fees to maintain your gold IRA increase depending on the value of the precious metals held in your gold IRA.

Below are rough costs and fees you may encounter with a gold IRA:

Account setup fee$50
Custodian annual maintenance feeFrom $75 to a few hundred dollars
Transaction fee$40
Storage fee0.5% of the value of the precious metals you have stored
Wire transfer fee$25
Termination fee$150

Risks of Gold IRAs

Gold IRA custodians are not fiduciaries, which means they do not have to put their clients’ interests ahead of their own. And these custodians often charge inflated fees to make a commission when you buy and sell precious metals with them. So, be careful not to get pressured into buying (or selling) more gold or other precious metals than you feel comfortable with. And if you do feel pressured or feel like you’ve been the victim of fraudulent activity, contact the Commodity Futures Trading Commission (CFTC) to voice your complaint.

Investing in a gold IRA can also be costly. Opening and maintaining a gold IRA involves a number of fees, and the money spent doing so is money you could otherwise use to invest. And if you fail to follow the rules set forth by the IRS, you may have to pay unintended taxes and financial penalties, and you may even lose your account’s tax-advantaged status.

Pros and cons of Gold IRAs

Pros

  • Gain direct exposure to gold. Invest directly in gold with your retirement account instead of buying shares of a gold exchange-traded fund (ETF), a gold mutual fund or a gold mining company.
  • Own a physical asset in a tax-advantaged account. Most IRA accounts don’t allow you to hold physical assets in them. With gold IRAs, though, you can hold gold, silver, platinum or palladium in your account.
  • More control. All gold IRAs are self-directed, which means you get to manage what, how much and when you buy and sell your precious metals.

Cons

  • High fees. A number of different fees are typically associated with gold IRAs, including account application fees (around $50), transaction fees (about $40) and annual account fees (from about $75 to $300).
  • No tax-advantaged yield. Gold and precious metals don’t produce interest or dividends. For this reason, you can’t take full advantage of tax-free growth in your IRA.
  • Price mark-ups. Gold IRAs often charge over the current spot price of gold.
  • Complex tax rules. Purchasing gold or another metal that the IRS doesn’t approve can result in extra taxes or the loss of your account’s tax-advantaged status.

Other ways to invest in gold

You don’t have to open a gold IRA to gain exposure to gold. You can also purchase the following financial gold-related products via most major brokerages:

  • Gold funds (ETFs and mutual funds). Examples include SPDR Gold Shares (GLD) or iShares Gold Trust (IAU).
  • Gold stocks (gold mining companies and gold royalty companies). Examples include Barrick Gold (GOLD) and Franco-Nevada (FNV).
  • Physical gold. Purchase physical gold from a registered bullion dealer and store it at home or with a gold storage company.

A third of Americans have an IRA

Do you have an IRA?

Response% of Americans
I do not have this, but plan on getting it in the next 6 months13%
I do not have this nor plan on getting it56%
I currently have this31%
Source: Finder survey by Qualtrics of 2,033 Americans, October 2023

Thinking about opening an IRA? Well, you’ll be joining the roughly third (31%) of American adults who are currently funding an IRA.

Frequently asked questions about gold IRAs

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