Can I hold physical gold in my IRA? If yes, how can I go about it? Today’s post will help you understand what it takes to become a gold investor, and whether using an IRA structure to achieve this objective is permitted by the law? If this is something you’ve been wanting to find out, then read on to find out more about this topic.
If you are interested in owning physical gold, then opening a self-directed IRA known as a Gold IRA is a good way to go about it. The first thing you ought to know is that you cannot hold physical gold in the regular IRAs e.g. Traditional IRAs, Roth IRAs, and SEP IRAs. It is also not possible to do so using a 401(k) account, which is one of the most common defined contribution plans you can come across today.
With most of these retirement plans, you are only allowed to hold paper assets such as stocks, ETFs, Bonds, Mutual Funds, as well as derivatives. Those who are interested in holding alternative assets as part of their retirement investment portfolios must as such open special individual retirement accounts known as self-directed IRAs.
With a self-directed IRA, you can hold assets such as physical precious metals, cryptocurrencies, real estate, ranches, mining rights, startups, etc.
What are the limitations on how I can hold the physical gold?
Now that you know that you can only hold physical gold through a special IRA known as a Gold IRA, let us proceed to find out which IRS guidelines you need to follow. For starters, you are only allowed to hold IRA-approved gold, which has to meet the following requirements:
- The gold must be 99.5% pure.
- It must be sourced from a nationally accredited or an internationally recognized mint/
- Should be presented in its complete original casing or packaging.
- Has to come with a certificate of authenticity.
- If you purchase coins, they must be uncirculated and free from any damage.
- For gold bars, they should be presented with the exact weight they were manufactured with.
The other rule that pertains to the ownership of gold through a gold IRA is that the gold bars and coins cannot be held in your possession. Despite being the rightful owner, you must ensure that the physical gold is stored in a secure off-site IRS-approved depository. You can, during the account-opening process, liaise with your gold IRA custodian for them to suggest a reliable depository where you can hold the gold.
Will I get the opportunity to hold the gold in my possession at any time?
Yes. you can withdraw the gold from your gold IRA without penalties if you have reached the retirement age (59 ½ years). Upon reaching this age, you have the option to either withdraw and hold the gold, or to liquidate your assets in which case you will receive the value in cash instead.
Those who attempt to withdraw the gold before they are 59.5 years end up attracting a 10% early withdrawal penalty. Such a penalty can disrupt the positive growth of your retirement investment portfolio, and I’d generally advise against anyone attempting to make an early withdrawal.
Are there any benefits of owning physical gold through a gold IRA?
Yes. Buying gold has been established to be one of the smart ways to not only safeguard your wealth but also grow it. Below are some of the top benefits of buying gold coins and bars:
Investors who put all their assets in one basket end up exposing themselves to significant market risks. It is advisable to hold some of your wealth in gold assets so that you can diversify your portfolio and in turn minimize the overall exposure to risks.
2. Inflation hedge
The decline in the value of the dollar is usually accompanied by a decrease in the purchasing power of the consumers. You can bank on gold to protect against such losses since it is perceived as a store of value.
3. Safe haven from the economic downturns
Allocating some of your retirement investment funds to gold assets can help minimize the impact of the losses that arise from an economic downturn such as a stock market crash.
4. The growth of wealth
Investors who believe that gold will grow in value often hold it to increase their long-term wealth. If you look at the prices of gold over the past decade, you will notice that they have climbed quite a bit.
Why hasn’t my financial advisor recommended gold to me?
There are very few financial institutions that have the capacity to oversee precious-metal-based retirement plans. Most financial advisors are only licensed to recommend publicly-traded securities and have not received sufficient training to advise on physical precious metals. You may come across some financial advisors who recommend gold ETFs or gold mining stocks. These options offer a limited way to gain exposure to the price movements in the gold market.
The main downside to investing in precious metal ETFs and mining stocks is that it is not similar to investing in precious metals. Precious metals are tangible in nature, hence are not susceptible to the factors that lead to the decline in the value of stocks, including:
- Company earnings and performance
- Corporate fraud
Investing in gold-based paper assets will, as such, only lead to you losing the protection offered by physical gold.
Where can I open a gold IRA today?
There are many gold IRA companies that are available to help you open an account that you use to hold physical gold investments. Most of these companies vary in experience, service, and fees, hence you should take the time to compare what they have to offer before settling on any single company. You can get started by looking at our guide to the most reliable Gold IRA Companies to see if you will find one which has the characteristics and features that will benefit you.
Frequently Asked Questions on “Can I hold physical Gold in My IRA?”
1. Can I add pre-owned gold coins to my gold IRA?
No! If you have a collection of gold coins that you either purchased or inherited, you cannot simply add them to your Gold IRA. You can only add uncirculated bullion coins to your gold IRA. Alternatively, you can sell your preowned coins, and use that money to fund your account, upon consulting with a gold IRA expert.
2. Must I withdraw the gold upon retiring?
No. You can hold the gold in your IRA after retirement. If you open a traditional gold IRA, you have until your 72nd birthday to hold on to the investments, after which the IRS requires that you start taking required minimum distributions. With a Roth Gold IRA, however, you do not have to withdraw your gold. You can, in fact, leave it as an estate for your children or grandchildren.
3. I already have a 401(k) retirement plan, can I still open a gold IRA?
Yes. In addition to your employer-sponsored 401(k), you can open and contribute to other IRAs, including a gold IRA. Doing this allows you to diversify your investment portfolio, as you minimize exposure to risks in the market.
4. Is it too late to open a Gold IRA?
No. It is never too late to open a self-directed precious metal IRA. You only need to contact the customer representatives in a Gold IRA company, and they will set up your account for you to start investing in Gold.
Remember that you can also roll over or transfer some of the retirement funds in your current retirement plan into a gold IRA, so you do not have to worry about the source of funds for your newly-created account.
Thank you for making it to the end of this post in which we have addressed the question “Can I hold physical Gold in my IRA?”. I hope you now have a definite answer that will help you make a sound investment decision. Drop all the questions you may have in the comments section below, and I will get back to you ASAP!
I wish you well,
Eric, Investor and Team Member at Gold Retired!