Should You Get a Gold IRA?

| End-of-Life Resources

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When it comes to investing, it’s important to explore all of your options. With so much misinformation available, taking the time to research and understand the different types of investments is essential for protecting your hard-earned money.

Gold IRAs have become a hot topic in the retirement planning world. Here’s what you need to know about gold IRAs to determine if this option is right for you.


What is a Gold IRA?

As the name implies, a gold IRA is a self-directed retirement investment account that uses gold as a form of currency. Rather than investing in stocks or bonds, you’re purchasing actual gold. Gold IRAs come in both traditional and Roth formats, and while this physical investment is not without its challenges, it is fairly adaptable.


Why Should You Get a Gold IRA?

There are a lot of benefits to getting a gold IRA. Gold has been deemed valuable for thousands of years, with no end in sight. While it’s prone to market volatility (like any form of investment), it’s often considered recession-proof. Gold was valued at $411.43 per ounce in August 2000, and $2005.15 as of August 2020— a 387% increase that endured a major recession and a global pandemic.

Getting a gold IRA is also a great way to diversify your portfolio and invest in something physical. As the saying goes, you should never put all of your eggs in one basket. Adding a few golden eggs to the nest is a smart way to diversify and cover your assets.


Tips for Opening a Gold IRA

The first step to opening a gold IRA is to open a self-directed IRA— either Roth or traditional. From there, you will need to find an IRS-approved custodian to oversee your self-directed IRA. Only custodians with licensing from the IRS are able to deliver the gold to your IRA. 

Take your time and do your due diligence when vetting potential IRS-approved custodians. The best gold IRA companies will have positive reviews and recommendations, timely and trustworthy communication skills, and in-depth knowledge of gold investing. 

There are fees surrounding the administration and storage of gold investments. Your custodian should be knowledgeable about these fees and have a clear structure for you to review and understand.

The IRS also has numerous other regulations surrounding gold IRAs. One important thing to remember is that you cannot personally purchase gold to roll over into your IRA— your custodian must handle the transaction. Additionally, the physical product must be stored in an IRS-approved facility and cannot remain on your property.

There are exceptions to the main regulations on gold IRAs, but they aren’t logical or feasible for most investors. There is also talk that these exceptions are being re-evaluated by the IRS and may no longer exist in the near future. Set yourself up for success by adhering to the rules.


Receiving Distributions from a Gold IRA

People with gold IRAs are mandated to start taking required minimum distributions (RMDs) from their investment account when they turn 72. If you have a traditional IRA, this means paying tax on the value of the gold. If you opt for a Roth IRA, you do not. 

You’ll also have to determine how you want to receive your RMD: receiving the physical product or having your custodian liquidate the gold and send you money. Taking an RMD is one of the downsides of investing in gold, as you’ll be at the whims of the market when you withdraw. 

Using a gold IRA has the same risks as any other form of investment. However, the pros outweigh the cons when using this method to diversify. Take some time to explore your options and see how you can benefit from a gold IRA.


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