How to start a Gold Backed IRA

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

A gold-backed IRA is a retirement account that invests in physical gold bullion. A gold-backed IRA can be an excellent option for individuals who have always wanted to own some real, tangible gold. It is never too late to start one.

The idea behind investing in a Gold-backed IRA is that the value of investments is not as volatile as with more traditional investments such as stocks and bonds but also offers something which some people may think has intrinsic value or worth based on its rarity. There are several reasons to invest in physical gold, such as its natural beauty, the historical value of gold as money, and as a store of wealth. Still, one of its most popular features is how it increases its value over time due to inflation.

Steps to Starting a Gold-backed IRA

1. Contact a Gold Inflation Dealer

Gold inflation dealers are financial institutions that act as custodians for gold bullion. This means they take custody of your bullion and ensure it is properly stored and protected. They will discuss the terms of how to start a gold-backed IRA with your IRA custodian. In most cases, the custodian will be required to transfer your gold bullion into an IRA of your choosing.

2. Open a Gold-backed IRA Account

Before you transfer your gold bullion into a Gold-backed IRA, you must open an account. There are several options for opening an account, and each option varies slightly depending on the custodian, the type of account you would like to open, and whether or not the custodian charges any fees for opening your account.

3. Consult with a Gold Inflation Dealer

Once you've opened your account, it is important to consult with the gold inflation dealer about how to best store and secure your gold. There is no special method for storing gold that has been transferred into a gold-backed IRA, but you must be aware of the steps necessary to protect it.

4. Transfer your Gold Into Your IRA Custodian's Custody

The bullion must be physically transferred from where you live to the custodian to get it into the custodian's custody. You may request the dealer to handle the transfer on your behalf or do it yourself. This can involve paying a transfer fee. You will then have to make an appointment with your IRA custodian and transfer it into their custody.

There are different options for doing this, as some custodians will ask that you do it yourself or through an agent. You must then sign a Custodian Designated Transfer Form, which records your physical bullion being changed into the custodian's custody.

5. Set Up a Gold Inflation Plan

Once the gold has been transferred into your custodian's custody, you must set up a plan with them. This will allow them to monitor the gold and ensure it is kept safe while remaining in the custodian's care.

6. Maintain Your Gold-backed IRA Account

As with any other traditional IRA, you mustn't lose your contact information for your custodian or trustee. You will also have to keep track of how much gold you have in your account.

7. Receive Your Gold Retirement Benefits

Once you reach retirement age and are ready to receive your retirement benefits, you may request that the custodian distribute them. The gold will be melted down at this time and sold for cash, which can then be deposited in a checking or savings account.

Factors to Consider When Opening a Gold Backed IRA

1. Types of Gold Inflation Plans:

The type of plan you choose for your IRA will depend on your needs. It is important to remember that methods differ in fees, available options, and maximums. A Gold Inflation Plan is a retirement account used to store and secure gold bullion. Many custodians will offer you a choice between different plans to pick the one that best suits your needs.

2. Maximum Amounts:

The maximum amount of money you can invest in a Gold-backed IRA depends on the plan and the company's rules. Some companies even have programs that allow you to contribute to your account and an IRA, which could be an excellent choice for people who want to maximize their contribution.

3. Fees: 

Fees are a factor you will want to consider when choosing your gold inflation plan. Some companies charge management fees, which occur monthly. Custodian fees may also be involved to ensure that your gold bullion is stored securely. You will also have to pay transfer fees.

4. Precious Metals Tax Considerations: 

The IRS states that some precious metals have a higher tax liability than others because they are collectibles rather than investment instruments. This is often the case for coins with specific commemorative designs, such as American Eagles or states quarter 50-dollar gold coins. The IRS does not consider Precious Metals to be collectibles, which means that funds you put into your Gold Inflation Account are kept separate from your personal IRA funds and will not be taxed when the custodian distributes them.

5. Transferring Your Own Bullion: 

Suppose you choose to transfer in your gold. In that case, it is essential to remember that there is a considerable amount of paperwork involved to ensure that your bullion's security is maintained and complies with IRA regulations. Keep in mind that some gold-specific IRA custodians may have more resources available to them and might be able to take care of the administrative details for you.

6. Transferring Gold Into the Custody of a Foreign Company: 

If you choose to transfer into the custody of a foreign company, you will have to consider whether or not they offer IRA accounts. You will also have to decide whether or not they accept U.S. dollars as a deposit option, which is important if you want to avoid paying a currency exchange fee.

7. Inflation Denominations:

Not all gold-backed retirement plans will accept gold with a 1 gram or less denomination. Large denominations are usually available, but some companies may not offer them because they do not have enough stock to protect them.

Benefits of a Gold-Backed IRA

1. Tax-Free for You: 

By adding gold to a traditional IRA, you can enjoy significant tax benefits. In addition to being able to deduct an IRA contribution, the value of the gold deposited into your account is also fully tax-exempt. You will also have access to many government benefits and programs provided for traditional IRAs.

2. Safe Investment: 

When choosing a gold-backed IRA, one of the most important factors is the IRS audits it. They will provide you with an annual report and annual disclosure statement at no cost to help ensure that you are satisfied with your investment.

3. Flexibility: 

One of the most significant benefits of a gold-backed IRA is choosing the plan that will work best for your investment needs. You may want to invest a small amount first and then add more as your income permits. You will also have the ability to access your funds to invest in other IRA plans and other types of retirement accounts.

4. Greater Control: 

Another benefit of a gold-backed IRA is that you will have access to your gold even when not making a withdrawal. This means that you will be able to check the security of your bullion and, if necessary, transfer it out of the custodian's care.

5. Invest from Multiple Plans: 

Although most people invest in only one retirement plan, some individuals choose to take advantage of other benefits available for IRA accounts. If this is something that would benefit you financially, it may be wise to open multiple types of IRA plans so that you can consider all the available options. For example, you could open an IRA and then buy shares of stock in the company that offers the plan. You would not need to transfer funds or deal with additional paperwork.

Are There Any Downsides to Investing in a Gold-backed IRA?

Many people have turned to gold-backed retirement plans to diversify their retirement portfolios. However, some drawbacks are related to Gold IRAs. You will want to consider whether or not it is right for you based on your risk tolerance and financial goals.

1. Additional Paperwork:

One downside of a Gold-backed IRA is the extra paperwork involved in opening the account. Many traditional IRAs have strict requirements regarding paperwork, but those who opt for this type of plan may need to find additional proof of income, such as tax returns from previous years. In addition, some companies require more information about your employment history and sources of income than others. Talk with your financial advisor about your specific situation to know all the paperwork requirements before opening an account.

2. No Financial Advice:

There is additional oversight involved when dealing with a Gold-backed IRA, which means there may not be as much financial advice. Many advisors who work with IRAs will only be able to offer general advice, such as market trends, but they are not allowed to recommend specific types of investments. This could make it difficult for you if you want more comprehensive guidance.

3. IRA Custodian Limits:

Another drawback to Gold-backed IRAs is the amount of paperwork to open the account. Because the retirement account may require a third-party custodian, you will have to complete additional forms and go through the process of proving your identity. The custodian limits the amount you can put into a Gold IRA, which means you may need to make additional investments to take full advantage of your investment opportunities.

How to Invest in a Gold-Backed IRA

Once you have decided that a gold-backed IRA is a good investment for you, you can consider how to invest in a gold-backed IRA. Several different options are available to you, including direct ownership of gold bullion, various coins or bars, and certificates. Depending on the investment and your personal preferences, one option may better suit your needs than another.

1. Direct Ownership: 

Direct ownership is typically available for more significant investments that require at least 5 ounces of gold. The benefit of this type of account is that it will allow you to take possession of the bullion and use it as collateral if needed. However, this option is typically unavailable for IRA accounts and will require a much larger investment than other options.

2. Coins or Bars: 

Coins and bars are the most basic types of gold investments that you can make in a Gold-backed IRA. The options range from 1 gram to 100 ounces. They are available as coins or bars that government agencies and private companies have minted. Either coin or bar will have a higher value than bullion, but they come at a smaller denomination than other coins and bars. Therefore, you may need to purchase several coins to make up the amount you need.

3. Certificates: 

Certificates are the most common type of investment for Gold-backed IRAs. Certificate of deposits can be purchased in denominations ranging from 100 ounces to 1 gram, with an average investment being approximately 1/10th of an ounce. The price will vary depending on the purity and demand on the market at any given time, but you can expect it to cost more than gold bullion. The advantage is that this investment is lower risk than other options and does not require a significant investment.

4. Bullion: 

Gold-backed IRAs provide investors with a unique option not available with any other retirement plan. Because they are backed by gold, investors can diversify their portfolio and buy gold bullion from a third-party store instead of purchasing it from an individual store or jeweler. The benefit of this type of investment is that you will have the ability to take possession of your gold without giving up the security of an IRAs custodian.

Our Recommendation(Goldco)

Goldco is the trusted company to go to. They can help you open a gold-backed IRA and make sure that it will work for what you need. It has been in business for over a decade, and they have a lot of experience with making these IRAs work for all sorts of different people.

Goldco has a team of people who are highly experienced and understand what you're going through, which is helpful when you're in that very first stage. It's a fantastic company to work with because they have years of experience and have helped people with many different scenarios. Therefore, you can feel very confident that they will work with you to address your needs and achieve your desired outcome.

Go for It

Gold-backed IRAs provide investors with a unique way to protect their assets and balance their portfolios. By diversifying their portfolios, investors can avoid losses in the stock market and potentially enjoy more substantial returns in the long term. This can include buying coins, bars, or certificates backed by gold and taking direct ownership of bullion.


This article was written in cooperation with OMD