How to Convert IRA to Gold? Complete Guide for 2023

Want to convert IRA to Gold? First to remember is that you can't directly hold physical gold or other precious metals in a standard IRA due to IRS rules. That means you'll have to open a self-directed IRA (SDIRA) and then convert it to a Gold IRA account or a Roth Gold IRA.

convert ira to gold

However, self-directed IRAs are fairly straightforward to set up and manage, while allowing a broader range of investments like Gold and other precious metals. The key is to find a qualified self-directed Gold IRA custodian, like Goldco or any other highly recommended one, to guide you throughout the process.

The Process of Converting IRA into a GOLD IRA

Let's go through the process of step by step to help you understand and visualize it.

  1. Choose the Type of Self-Directed IRA – the first step is to choose the type. Either traditional or Roth IRA.
    • Traditional Gold IRA – you can invest with pre-tax dollars or roll over funds from existing IRA account.
    • Roth Gold IRA – transfer or rollover from  Roth IRA or do a conversation from IRA to Roth Gold IRA
  2. Decide on your Funding Source – and important step to check with your tax advisor to confirm eligibility. Gold IRA can be funded with:
    • Cash
    • Rollovers from 401k, 403b, 457b or TSP plan.
    • Transferred from Traditional IRA, Roth IRA, SEP IRA, and Simple IRA
  3. Choose a Qualified Self-Directed Gold IRA Custodian – per IRS regulations GOLD IRA assets need to be stored with a custodian. My #1 recommendation right now is Goldco.
  4. Fund your Self-Directed Gold IRA and Buy Gold – this step is the most important as the process must be performed according to the IRA regulations. If done incorrectly there maybe be tax liabilities. That's why make sure to work with a specialist.

As you see it's not that complicated, but the key is to work with custodians that have knowledge and experience.

Choosing The Right Gold Company for Your IRA Conversion

Here are some crucial reasons on highlight how important it is to choose the right custodian for a Gold IRA.

  1. Compliance with IRS Rules: All IRA's, including gold, have to be in the possession of a trustee or custodian. If that's not the case it could be considered as a distribution and you may face taxes and penalties.
  2. Safety and Security: Custodians must maintain all records of transactions, which include purchases, sales, and distributions comply with tax and IRS requirements. On top of that, you also can that information and get account statements detailing the holdings of value of your Gold IRA.
  3. Expertise: The correct custodian for you should have knowledge and experience managing the type IRA you want. As they will often guide you through the process and help you follow the rules and regulations
  4. Facilitating Transactions: When you want to buy or sell gold, or other assets, within your IRA, your custodian will facilitate these on your behalf.
  5. Administrative support:  The chosen custodian will handle the administrative tasks with your Gold IRA. This means tax documents, limits, and requirements, as well as keeping you in the loop
  6. Insurance: Respectable fold custodians have insurance policies that will protect the value of your assets stored in their facilities.

So, you see how important it is to choose the right custodian.

Why My #1 Recommendation is Goldco for IRA Gold Conversation?

There are several great gold IRA companies, but based on the experience of many people I've helped Goldco is overall the best.

Click Here to get a free Gold IRA kit from them

Why? There are two key factors that make it the best

  1. Goldco makes it simple to convert, rollover or transfer to a GOLD IRA – hassles free
  2. Their customer service is one of the best, if not the best in the business. You'll be alone if you need help or have questions

As you see, I didn't talk about trust or authority as key factors, because I wouldn't even mention a company that can't be trusted.  This serious step and the last thing you need to worry about is if your money is safe.

However, Goldco does have an A+ rating on BBB and a 4.8/5 rating on Trustpilot. The two most recognized and trusted 3rd-party review sites.

Convert IRA to Gold IRA – Transfer or Rollover?

Converting an IRA into Gold IRA can invoice either a transfer or a rollover. Now, it's important to not confuse an IRA rollover with retirement plan rollovers like 401k, 403b, 457b, or TSP plan.

Gold IRA Rollover

When you decided to do an IRA rollover the funds are paid to you, and then you can deposit them into another IRA within 60 days. When done correctly will be no taxes or penalties.

However, if the money is not redeposited, it will be considered a withdrawal and subjected to taxes and penalties. IRS allows to do one rollover per year.

Gold IRA Transfer

An IRA transfer to Gold IRA is a process in which the fund moves directly from one custodian to another. So, with this process, you don't receive the funds, like with a rollover and you can do as many transfers as you like.

The transfer of gold into an IRA is technically simpler than a rollover but both will work.

What Type of Gold to Convert To?

While the types of Gold should be discussed with your custodian let's take a quick overview of what is available for you. As when you convert to gold you can't just pick any gold coin or bar from anyone you want.

Yes, that means no local dealers as the IRS has strict regulations regarding the purity and type of gold you can have in your IRA. It's to protect you.

The most popular types are bullion coins, bullion bars, and proof coins. Here is information on each to help you understand them better before you talk with your custodian.

What are Bullion Coins?

Gold Bullion Coins are high-purity gold coins minted by national governments. The value comes from gold content which is usually very high and profitable, rather than rarity or historical significance.

That's why these are non-collectible coins and some of the gold bullion coins allowed in a Gold IRA include the American Gold Eagle, Canadian Gold Maple Leaf, and Australian Gold Kangaroo.

What are Bullion Bars?

Gold bullion bars, which typically range from one ounce to 400 ounces, offer one of the most straightforward and effective ways to invest. Also known as ingots, these bars can be stored compactly no matter how significant the amount of gold is being bought.

What are Proof Coins?

Unlike bullion coins, these are minted more to be collected than a store of value. That's why they undergo a specialized minting process with a mirror-like finish and are enhanced with designs. American Gold Eagle Proof and then American Gold Buffalo Proof as some of the more common proofs coins eligible for Gold IRAs/

Which One To Choose?

All of these are accepted by IRS (check specificity with custodian) but they have some pros and cons.

  • Budget: Bullion coins are usually a good option for smaller budgets, while bars are more cost-effective and come in smaller sizes.
  • Liquidity: Bullion coins are usually easier and faster to liquidate because of their popularity and size. Small bars could be as easy, while Proof coins and bigger bars could take some time.
  • Investments goals: at the end, it depends on what is your investment goal. Do you invest purely for the gold content or want some potential collectors' value? If for gold then bullion bars and coins are preferred.

However, remember that you can diversify your Gold IRA and have a mix of coins and bards. In fact, that might be a wise strategy to spread risk and capitalize on the advantages of each.

Other things to consider before converting IRA to Gold IRA?

Having your IRA converted to Gold may seems like a daunting ordeal but with the right guide and trustworthy custodian the process is simple and straightforward.

Hopefully, thanks to this article you're more knowledge and confident when it comes these matters. However, there are a few other things to consider if you're still unsure.

Costs and Fees

Every custodian might be a little different but here are basic costs and fees you have to consider:

  • Setup fee – this is usually a small $50 fee for initial setup, but can be higher with certain custodians.
  • Annual Maintenance Fees – feed charged by custodian to manage the account is around $100 per year, but could be higher
  • Storage fees – IRS requires that the gold in your IRA has to be stored in a secure and IRS-approved depository. This will depend on the custodian and amount of gold but Goldco has flat rates of $100 for general storage or $150 per year for separate storage.
  • Insurance Fees – to secure and protect your gold it is wise to have insurance which will vary depending on the amount of gold you have.

Tax Implications

Of course as with traditional IRA there are tax implications, so make sure to understand that and talk with a specialist. Here's a few pointers to consider:

  • Tax-Deferred Growth – like with traditional IRA gold offers tax-deferred growth
  • Taxes and Distributions – when you withdraw from your Gold IRA cash you will be taxed your ordinary income tax rate, if you take out gold it will be taxed value amount of the gold at that time
  • Early Withdrawal Penalty – as of now if you take out money out  before you're 59 and half, you might face a $10% penalty
  • RMDs (Required Minimum Distributions) – starting at 72 you have top start withdrawing a certain amount each year.
  • In-kind Distributions: taking out gold as a distributions will trigger a tax for the value of the gold at the time.

Withdrawal Rules

There several withdrawing rules when it comes to IRa or Gold IRA. Most I already covered but here is the summery.

  • Age limit – where you can start withdrawing pentalty free at age 59 and ahalf.
  • RMDS – where you need to withdraw a certain mount from age 72 each year.
  • Form of Distribution – You can take out cash or physical gold, but it will be taxed at the value at the time.
  • Rollover rules – you can move IRA to another IRA, like Gold IRA once a year and in the space of 60 days without penalaties

All of the above should be discussed in detail with your gold custodian. At the end of the day it is your choice what you do with your money. Remember that, and no one is allowed to pressure you.

The most important part is to feel confident and confident with your decisions.

Is This The Right time To Convert To Gold?

The 2022 was not a good year for people with traditional IRA and other retirement accounts with the SP&P 500 losing 19.4% and majority of other investments options being down as well.

However, the S&P 500 is now up 9% since that. Does that mean it's too late to buy gold?

The whole economy is in shambles, and it will still take time to recover. Arguably we might never recover fully. Have we recovered from 2008 crash?

The point is that it's hard, nearly impossible, to predict a perfect time to buy and asset. With that said gold, unlike any other assets, seems to be the most stable way to store value.

Will it make you rich overnight? Or in a year? No, this is no cryptocurrency or even stocks. Gold plus side is not huge highs and button lows. It's the stability.

Even with the S&P 500 up 9% now, is it safe? Howe many factors are we away from it coming down 30% by the end of the year?

It seems like all of these investment are ready to pop. Gold, has been here for thousands of years and will be here until the end.  That's why I think it's wise to convert IRA to Gold IRA

Check out my number one recommended custodian now.