The process of opening a gold IRA is straightforward. You complete and sign a few forms, fund the account, and you’re ready to buy gold. (GC=F). But within those steps, there are some important decision points. Learning how to navigate them contributes to a healthier, more successful gold investing program.
Use the five steps and the must-know facts below to set up a gold IRA that fully supports your retirement goals.
Your first step, choosing reputable gold IRA partners, may be the most challenging.
Gold IRAs are operated by specialized financial companies, so it’s likely you won’t have the option to work with your regular broker. And while gold IRA companies may position themselves as one-stop shops, there are three separate vendors involved. As Scott Maurer, vice president of sales at Advanta IRA, explained, your gold IRA providers will include:
A custodian to manage the account, reporting, and IRS compliance
A dealer that sells the gold
A depository that stores the gold
“The IRA owner chooses each of these service providers as part of setting up their gold IRA,” said Maurer. The gold IRA company, often the dealer, may require you to use its partners, or you may have the option to select your own.
Verify the history and reputation of all prospective providers before you commit. Maurer recommends asking about their principals and business track record in addition to reading online reviews. “When you choose an IRA company, you are, usually, choosing a long-term relationship,” Maurer explained. “You want to make sure the company you choose is in it for the long haul.”
Learn more: Best gold IRA companies
IRAs are regulated, so the account applications collect a lot of personal information. To streamline your form-filling, be prepared to share:
Identity details, such as your legal name, birth date, Social Security number, and a copy of your driver’s license or passport
Contact information, including mailing address, phone number, and email
Employment and financial information, which may include your employer’s name and address, your annual income, and your net worth
Names and birth dates of your beneficiaries
Funding information — that is, details for the account that will supply rollover or contributed funds to your gold IRA
Read more: Is a gold IRA a good investment? Pros, cons, and who it’s best for.
Your account type options are:
Traditional gold IRA. A traditional account supports tax-deductible contributions, tax-deferred growth, and taxable withdrawals in retirement. Deductibility of contributions may be limited by income and access to a workplace 401(k).
Roth gold IRA. A Roth account allows for after-tax contributions, tax-deferred growth, and tax-free withdrawals in retirement. The IRS does limit allowable contributions by income level.
SEP gold IRA. SEP IRAs are designed for entrepreneurs. They support employer contributions only and have potentially high contribution limits. These accounts follow the traditional IRA tax structure with deductible contributions and taxable withdrawals.
SIMPLE gold IRA. Small businesses use SIMPLE IRAs. These accounts support employer and employee contributions and follow the traditional IRA structure.
Learn more: How to invest in gold in 7 steps
When you’re ready to move ahead with opening the account, you can access or request an account application packet from the custodian or your gold IRA company.
The packet typically includes an application to collect your personal details, a custodial agreement, and a disclosure statement. The custodial agreement outlines your responsibilities and the custodian’s, and the disclosure statement explains the account’s tax structure.
You can fund your gold IRA with a rollover from another retirement account or with a new contribution. To avoid new tax liabilities, rollover funding must be in cash, from an account with the same tax treatment as your gold IRA. That means you’d fund a traditional gold IRA with cash from a traditional 401(k) or traditional IRA. And you’d use a Roth IRA rollover to fund a new gold Roth IRA.
Annual IRA contribution limits apply to new contributions, but not rollovers.
Once you have cash in the gold IRA, you can start investing.
Read more: How to roll over a 401(k) into a gold IRA
Reviewing these essential gold IRA facts can clear up misconceptions and head off unpleasant surprises:
You must fund your gold IRA with cash. You cannot deposit physical gold you already own.
You cannot store your gold IRA holdings at home. You must use an approved depository.
Reputable custodians will enforce IRS requirements for metal standards and storage.
Gold IRA fees are higher than standard IRA fees. Storage and insurance requirements are key factors.
Your dealer will charge a 5% to 10% markup on the gold you buy for your IRA. You can and should compare dealer markups before you open the account. Ask for quotes in writing and compare them to the current gold spot price.
Learn more: Gold IRA vs. physical gold: Which is the better investment?
You’re opening a gold IRA to support your long-term investment results. Take the time to find the right partners and set up your account for success. You’ll appreciate your diligence years from now, when it’s time to sell that gold and enjoy the profits.
Learn more: Can you retire on gold alone?
