How Does Gold in an IRA Work?

For retirement investing, there are countless investment options. Most commonly stocks and mutual funds.

Some individuals use their retirement accounts to buy physical gold – known as a gold IRA – within their retirement accounts. It operates similarly to pretax and Roth IRAs.


Gold IRAs can provide an effective means of diversifying your retirement assets. As well as being a secure source of income in an uncertain economy, these accounts may even help lower taxes – it is however essential that before investing you understand how your particular IRA will be taxed.

Physical gold, as defined by the IRS, is classified as a collectible asset and subject to a 28% collectibles tax rate. Conversely, ETFs held in your IRA are considered capital assets that should be subject to capital gains tax rates.

As with any investment, costs associated with storage and insurance for precious metals should also be carefully considered before selecting a provider. It’s wise to research different options thoroughly prior to making your selection.


Precious metals offer a steady investment during turbulent times, yet owning physical gold is costly. Once sales commissions, storage fees, and closing costs are added on, your return could take a serious hit.

Dealer markups — usually around 5 percent but dependent upon whether or not you’re purchasing bullion, coins and proofs — are one-time fees that add additional expenses when purchasing precious metals such as gold. A markup on one ounce would amount to around $990.

Custodians for gold IRA accounts generally charge annual account maintenance fees as well as storage costs to store physical precious metals in an approved depository. While these charges tend to mirror traditional IRA fees, gold IRA fees may differ due to additional expenses involved with holding physical precious metals in an IRA account.

Examine your custodian’s fee schedule carefully to ensure you’re paying reasonable rates over time, especially if their IRA custodian offers various gold storage options; higher storage fees could apply depending on which metals are stored by that IRA custodian.


Though gold may have its place in an investment portfolio, retirement investors need to be wary. Gold does not yield dividends or profits for an investor – the only way it makes money is through appreciation of the metal itself. Furthermore, when sold back through an IRA company’s buyback program, often times less is received than retail price.

Selling precious metals early or at a later date may alter a retirement account’s tax situation depending on how old you are when withdrawing them from storage and insurance costs can make physical gold sales costly, further compounding tax issues.

Some investors appreciate investing in tangible assets they can touch and hold; these investors find gold IRA ownership more appealing. When making this decision, make sure it fits your investment timeline and goals and research any dealers you are considering working with to ensure they are reliable and offer competitive pricing.


Add precious metals to an IRA as an effective diversification strategy, but be wary of their associated costs before making your decision. Consult a financial advisor prior to investing in gold IRAs or physical precious metals.

There are more cost-effective methods of diversifying your retirement portfolio with precious metals. Gold-focused ETFs offer access to precious metals at a fraction of the cost associated with physical gold IRAs and allow for greater broker options.

Physical gold IRAs often incur additional fees that can put a dent in your returns, including storage and custodian costs, markups on sales, and markup fees for investments purchased with it. When searching for the right gold IRA, make sure you shop around to find the lowest fees possible – any reputable dealer should be upfront about all charges without using high-pressure sales tactics; they should also have buyback programs available that help sell off gold upon retirement age.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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