A gold IRA often has higher fees than a traditional IRA or Roth IRA, which invests exclusively in stocks, bonds, and mutual funds. In retirement, you need an investment that either generates current income or is reasonably expected to appreciate in value so that you can sell and use it for consumption in the future. You’re essentially wasting tax-deferred space on something that doesn’t generate income. So you’re not saving before taxes. As with any other traditional IRA account, the value of the account is subject to tax when paid out.
Unlike owning stocks, mutual funds, ETFs, etc., gold IRAs can be a good idea or a bad idea, depending on your financial goals and how you incorporate a gold IRA into your overall financial plan. A gold IRA rollover involves withdrawing money from another defined contribution account, such as an IRA, 401 (k), 403 (b), or a savings plan. Technically speaking, you would still own the gold as it would remain securely in the hands of the custodian, but your investment could drastically lose value if the price of gold falls.
Investing in a gold IRA could hedge against this risk, but you don’t have the gold in your physical possession. Others say they don’t, but be aware that the price they pay you when they buy back gold is likely lower than the price they set for gold they’re selling. Costs of buying and storing gold Once you’ve chosen a specialized, independent gold IRA custodian, you need to remember that there are fees for all aspects of buying, storing, and selling gold. Including gold or other precious metals as a significant part of your IRA is usually a long-term mistake due to the high costs, relative volatility, and mixed investment balance.
Instead of investing in a gold IRA, you could buy gold bars or coins outside of an IRA and store them in your home or in a local safe. They also perform the necessary administrative functions to ensure that your Gold IRA complies with all IRS regulations. Unless you have multiple retirement accounts, it would be very risky to convert your entire balance into a gold IRA. Your chosen Gold IRA company will help you get started by reaching out to your plan administrator with a request to transfer funds to your new Gold IRA.
Even if you find reliable companies to set up a gold IRA, gold is an investment that can fluctuate in price. Many people who want to avoid this risk instead have their Gold IRA company carry it out as a transfer from institution to institution instead of taking it on themselves. If you need advice, you should contact a trusted advisor instead of relying on representatives from the Gold IRA company. As with other retirement accounts, if you withdraw gold from your IRA before you turn 59½, you must pay income tax on the value of the gold, plus a 10% upfront withdrawal penalty.
So if you want to keep gold in your IRA, you’ll need to set up a self-directed IRA first and then you’ll need to find a custodian that specializes in self-directed gold IRAs.