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How Do I Start a Gold IRA? (New Pros & Cons for 2022?)

Last Updated: September 25, 2022 by Mitt Wilson

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How do I start a gold IRA?

If you’ve decided that the comfort, safety, and potential of investing in precious metals is right for you, especially with the tax advantages of an IRA, then I think you’ve made the right decision.

However, it immediately forces you to confront the fact that you’ve possibly never done it before and have no idea how to do it.

That’s the bad news. You’re new here. Fortunately, there’s plenty of good news.

The first bit of good news is that you’ve found this website. I’m an expert in gold IRAs and the companies that provide them.

I’ll certainly provide you with an overview of the process.

The second piece of good news is that the process isn’t nearly as daunting as you think. Sure, you have a lot of money involved, and the ramifications are potentially huge.

Yet, that doesn’t mean stress is warranted, because things can be really simple.

The last piece of good news is that you’re far from alone. I’ll show you the ropes, but the real help comes from choosing the right gold IRA broker.

Several of them are really good at helping people with the gold IRA process because that’s their business.

What is a Gold IRA?

an illustration of an investment growing over time

Before you start a gold IRA, you should make sure you understand what it really is. If you’re already sure about this, I invite you to skip this section and move on.

However, if it really is your first time, then it’s worth making sure you understand what a gold IRA is so you can be sure if investing in gold for your retirement is right for you.

A gold IRA is a form of individual retirement account. IRAs are tax-advantaged investment vehicles you can use to save for things like retirement. You might already know about or have a traditional IRA or a Roth IRA.

There are also SEP and Simple IRAs, too.

What you can usually do in those accounts is put pre-tax dollars into investments and let the assets accumulate or grow in value. Sometimes, you use after-tax dollars.

In either case, the investment sits and grows, untaxed, until you take a distribution.

If you can fund them with pre-tax dollars that’s great. However, you should always wait as long as you can to take withdrawals or required minimum distributions. For the most part, if you wait until retirement age, your tax burden will be a lot lower than it could be.

That’s the big benefit to these.

At the risk of overgeneralizing, they’re a lot like a 401(k) except they’re an individual account and not sponsored by your employer. However, a gold IRA is quite the opposite, as it’s self-directed.

You choose what kinds of gold and precious metals you want to put into it, and yes, you can include silver, platinum, and palladium with some brokers.

You might already be familiar with self-directed IRAs if you have them for other alternative investment classes. These can include real estate and cryptocurrency.

Opening one for precious metals in your later investing years can help hedge against inflation and economic downturns so you don’t lose everything in a market crash.

You’ll also have serious diversification to manage risk and volatility.

You don’t personally take possession of your metals, however. This is where brokers come in. They not only buy the metals on your behalf but also arrange for storage of the metals in a secure depository.

There are also limits on what kinds of metals you can get, as the IRS limits this, and what depositories you can use.

The metals stay put until you make a withdrawal or distribution. At that time, you can either liquidate the metals for cash, or you can take personal ownership of them at that time.

If you waited until certain tax rules were met, your taxes on these transactions are going to be significantly less than if you had just bought gold with your own money and kept it in your home.

4 Questions to Consider Before Opening a Gold IRA

How do I start a gold IRA at this point turns into four different questions.

  1. How Do I Invest in a Gold IRA?
  2. How much do I invest?
  3. What broker do I use?
  4. What do I buy?

I can give you useful information on all three of these questions.

How to Invest in a Gold IRA

Now that we’ve answered the question “what is a Gold IRA?” and looked at some of the pros and cons of investing in one, let’s take a look at how to actually invest in a Gold IRA.

The first step is to choose a custodian for your account. There are many custodians that specialize in gold IRA investing, and we are always happy to help find that perfect connection for our clients.

Once you’ve chosen a custodian, you will need to open an account and fund it. You can fund your account with cash, stocks, or other assets. Once your account is funded, you can begin buying gold. You can purchase gold coins, bars, or ETFs.

RELATED READING: How to Rollover Your 401k into a Gold IRA

Once you’ve purchased your gold, it will be stored in a segregated account at a custodian-approved facility. Your gold will be fully insured against theft or loss so you won’t have to worry about those expenses.

When you’re ready to retire, you can take distributions from your account. You can choose to receive your distributions in cash or when possible even in the form of gold.

If you choose to receive your distributions in gold, you will need to find a buyer for your gold. There are many buyers that specialize in buying gold from retirement accounts.

How Much Do I Invest?

a man in a suit holds a jar of coins with a tree growing out of it

This is a tough question. If you’ve got a personal financial advisor you use for planning your portfolio, then they’re the one to really ask this. However, I’m not going to totally dodge the question.

As a general rule of thumb, your minimum should be 5% of your total portfolio.

Anything less than that, and you honestly don’t have enough exposure to truly gain any benefit from the gold sector. This is a great starting point for newer investors, and that’s likely where you are at if you’re wondering how you go about starting a gold IRA.

I’d venture to say 10% to 15% for an upper ceiling. One of the biggest benefits of gold is its diversification and ability to hedge against what stocks and bonds might do.

However, if you overdo it, you’ll prevent your portfolio from harnessing the growth and dividend power that stocks and bonds provide.

Your exposure to precious metals should go up as you get closer to retirement, but you also want to keep a highly diversified portfolio.

Much of it will always be in stocks, bonds, mutual funds, and ETFs.

Your diversification should also include real estate to some degree. Whether or not you want to include cryptocurrencies is up to you and not my field of expertise, except to suggest that you put more in real estate and gold than you do digital currencies.

What Broker Do I Use?

This might just be your biggest decision. The broker you work with can make your gold IRA experience something that puts you off, or they can make your day.

Some brokers will treat you like near royalty, while others might just want to help you set your account up and then practically forget about you.

RELATED READING: See the Best Gold IRA Companies

There are several dozen gold IRA brokers on the market, but there is only a handful that you should possibly consider. I can tell you that there are two things that can possibly eliminate some of them from your consideration right away.

Minimum Investment Levels: The minimum investment levels involved with gold brokers vary with each company. You can start with one broker for just $2,000, but other common entry points might be $10,000, $25,000, and even $50,000.

Available Metals: If you’re looking to do gold only, then this won’t matter. They all deal in gold, but some only deal in gold and silver. If you’d like to also invest in platinum and palladium, they don’t all do that. That will restrict which ones you might do business with.

Just remember, you’re only choosing your first gold IRA broker. There’s nothing stopping you from coming back and doing a second gold IRA if you’re so inclined.

As you amass more wealth and have more options for doing rollovers or want to increase your exposure, adding a second or even third gold IRA to your mix might make sense.

Specific gold brokers stand out to me based on the particular reason you might want them.

  • Goldco: If you want the comfort of the best customer service in the business…
  • Augusta Precious Metals: If you want some of the best educational resources in the industry…
  • Birch Gold Group: If you want to balance great customer service, reasonable fees, and educational resources…
  • Noble Gold: If you want some of the lowest investment minimums…
  • Regal Assets: If you want the industry’s best rollover support and experience…

Gold IRA Fees

The fees you can expect to pay for opening up a Gold IRA are going to vary from broker to broker. They generally keep the fees pretty low, but it’s worth shopping around.

All of the Gold IRA custodians on our list above are pretty comparable when it comes to their fees, so I usually recommend starting at the top of the list and checking out what each company is currently charging.

Generally speaking you can expect the following fees for your Gold IRA – this is just a broad range and will be different with each company:

  • Startup Fee: Free with Most Companies
  • Storage Fees: $0-$250
  • Yearly Fees: $0-$150

What Do I Buy?

The IRS standards for precious metal IRAs can be strict. As I already mentioned, you can always buy gold products. Based on the broker, you might also be able to do silver most of the time. Palladium and platinum are also available through select brokers.

Your first option should always be gold because of its benefits. However, you should understand that many of those same benefits also apply to the other three metals.

Silver has often outpaced the growth of gold over the last decade, and the values of palladium and platinum sometimes rise quickly based on industrial needs competing with investors.

The first IRS standard you need to adhere to is purity. Gold must be 99.5% pure or better, while silver products have to be 99.9% or higher. Platinum and palladium both have to be 99.95% pure.

American Eagle coins are the lone exception to the gold purity standard. In these stipulations, you can choose from things like PAMP Suisse bars, Australian Koala bullion coins, and Canadian Maple Leaf Coins.

Things you can’t buy are collectibles and rarities. You also can’t get things like German Marks, British Sovereigns, and Swiss Francs.

The Actual Mechanics

So, knowing the big decisions that need to be made, you’ve already done most of the work. Now, it’s mainly just a matter of paperwork and communications. You pick your broker and set your account up.

That might happen mainly online, but you might also communicate with their customer service via chat, email, or phone. However, it happens, that you need your gold IRA to be opened before you can accomplish much of anything else.

Once it is established, you need to fund it. Deciding on how much to put into it is one thing. Choosing where those funds come from is another.

You can absolutely use after-tax dollars to fund your gold IRA. This will let you buy gold and other precious metals to be stored in a tax-advantaged account for later benefit. I never stop anyone from doing that if it means that they’re finally investing in gold.

Then again, it’s a wasted opportunity. Since gold IRAs serve you better later in your investment years, you might be able to fund one by doing a rollover from other retirement accounts. Anytime you leave a job, you should have a chance to do that from a 401(k).

You get even more rollover chances with IRAs based on paper assets, such as stocks and bonds.

Funding your gold IRA with a rollover from a previous tax-advantaged retirement account lets you enjoy tax benefits at the start of the account and the end when you withdraw. Just contact your previous plan administrator, and tell them two things.

First, let them know where to send the funds to (your gold IRA broker), and second, how much.

They might talk to you about a direct transfer versus an indirect transfer. In a direct transfer, the funds go straight from them to the gold IRA broker.

I always advise this since there is a much lower chance of losing money by triggering tax penalties. An indirect transfer routes the money through you, which takes longer and is usually an unnecessary complication.

Once your broker has the funds, they’ll buy the metals you chose. Then, they’ll ask you about a depository.

The IRS has a list of specifically approved depositories, and gold IRA brokers usually have good relationships with a select handful of them. You’ll recognize some of the names, such as Brinks. The location might not be as important as segregated vs non-segregated storage.

Segregated storage costs a bit more in annual fees, but you’ll have the peace of mind in knowing that your stash of precious metals isn’t sitting in the same room or container as other investors. Non-segregated will be.

Gold IRA Pros and Cons

a gold scale

While many smart investors are frequently bullish on gold, it’s worth acknowledging that every single form of investment is going to have its pros and cons.

Now that we’ve answered the question “What is a Gold IRA?” let’s take a look at the full list of pros and cons of investing in one.

Gold IRA Pros

There are many benefits to investing in a Gold IRA. Here are some of the most significant ones:

1. Hedge Against Inflation and Economic Uncertainty

One of the main reasons to invest in gold is to hedge against inflation and economic uncertainty. Over the long term, gold has outperformed other traditional asset classes like bonds and money markets. There have even been multiple times in the past where for years or decades gold even outpaced stocks.

Since gold is seen as a precious metal that will always have value, and thus always have some degree of demand, if a currency loses value or even hyper inflates, the gold will just be worth that much more currency. This is a great protection from a currency losing value because the gold will remain valuable accordingly.

2. Diversify Your Portfolio

Another reason to invest in a Gold IRA is to diversify your portfolio. By including gold in your portfolio, you can protect yourself from the volatility of the stock market and other asset classes.

Diversification in stocks, bonds, money markets, or even businesses or collectibles can only do so much. Having some of your retirement portfolio tied to a steady value precious metal like gold is a great way to further diversify and have some of your portfolio in something that will always retain at least a little value – if not straight up increase while the rest of the economy struggles.

3. Liquidity

Another benefit of investing in a Gold IRA is liquidity. Gold is a highly liquid asset, meaning it can be easily bought and sold without affecting its market price.

This is because of the constant demand for gold no matter what the markets are doing. There’s always someone willing to buy gold so it’s always possible to move gold for cash if you find yourself in need of more cash on hand.

4. Tax Benefits

Investing in a Gold IRA also comes with some tax benefits.

For example, the Internal Revenue Service (IRS) allows you to defer taxes on the gains from your gold investments. This deferment can be a major boon for investors, especially those early on in their investment journey.

There can be other tax benefits, as well, but talking to an accountant would be the proper way to learn more.

5. Portability

Another benefit of investing in a Gold IRA is portability. Unlike other retirement accounts, such as a 401(k), you can easily transfer your Gold IRA to another provider if you choose to do.

There’s no need to liquidate it and then re-invest (after taxes and penalties) into a new account.

Cons

While we’re bullish on the many benefits that investing in a Gold IRA can profit you, we’d be remiss if we didn’t look at some of the potential drawbacks to investing in a Gold IRA. While these pale in comparison to the benefits for most investors, they are still important to understand before investing.

1. Setup and Maintenance Costs

One potential drawback of investing in a Gold IRA is the cost of setting up and maintaining the account. You will need to open an account with a custodian that specializes in gold IRA investing. There may also be annual fees associated with maintaining the account.

While this can be intimidating, we know how to find the best gold IRA providers, because that can make a huge difference in long-term results.

2. Taxes

Another potential drawback of investing in a Gold IRA is the taxes you will owe on your gains. The IRS taxes gold at the capital gains tax rate, which is currently 20% as of 2022. For some people this may seem like a lot, but for many others it will be lower, especially if major income is made via employment or self-employment.

While taxes can be deferred, they do have to be paid eventually. No getting around the tax man.

3. Early Withdrawal Penalties

If you withdraw funds from your Gold IRA before you reach retirement age, you may be subject to early withdrawal penalties. The IRS imposes a 10% penalty on withdrawals made before age 59 1/2.

So while these investments can be liquified quickly in emergencies because of the high demand, they can’t be done without penalty.

Final Thoughts

You’ll spend more time doing research and thinking about things than actually making the formal moves involved with starting a gold IRA.

Just remember that you can contact many gold IRA brokers before deciding so you can ask them lots of questions.

If you’re looking for a solid place to start, we recommend Goldco as our top choice:

Goldco
goldco
9.7/10Our Score
  • New customers might get 10% free metals in silver coins
  • First-year fees might be waived
  • Goldco reps don't get pushy with heavy sales tactics
  • Staff are quite friendly and knowledgeable to new investors
  • This broker wants investors to make good investment choices
  • Minimum investment level stands at $20,000
  • Website not totally transparent about fees

Mitt Wilson

About the author

Mitt Wilson has a background in journalism and has been writing about investing for more than two decades. In his free time he enjoys spending time with his wife, touring the United States, and golfing.

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