What is Gold IRA? How Does It Work?

What is Gold IRA? How Does It Work?
What is Gold IRA? How Does It Work?

It is crucial to save for retirement so you can feel secure in your later years. There are several kinds of retirement accounts you can choose from to put your money. A popular one is a gold IRA, which lets you invest in gold through a regular retirement account.

In this blog post, we will learn about what a gold IRA is and how it can help you reach your retirement plans. We will also find out how opening a gold IRA could help make your savings for retirement grow over the years, helping you decide if it is a good choice for you. 

What is Gold IRA?

A Gold IRA (Individual Retirement Account) is a special type of retirement account where you can hold physical gold or other precious metals like silver, platinum or palladium instead of more traditional investments like stocks and bonds. 

There are some different gold IRA types to select from. The main ones are:

  • Traditional Gold IRA: This is funded with pre-tax money and your contributions and earnings grow tax-deferred. Withdrawals are taxed as regular income when you take them out in retirement.
  • Roth Gold IRA: This is funded with after-tax money, so contributions are not tax-deductible. Qualified withdrawals in retirement are tax-free.
  • Simplified Employee Pension (SEP) Gold IRA: This type is for small business owners or self-employed individuals. It works like a Traditional IRA but has a higher annual contribution limit.
A Gold IRA is a special type of retirement account where you can hold physical gold
A Gold IRA is a special type of retirement account where you can hold physical gold

With a Gold IRA, your precious metals are stored securely with a custodian instead of at home. They provide diversification for your retirement savings and can help protect your money during times of inflation or economic instability when other investments may fall in value.

How Gold IRA Works

A gold IRA works very similarly to a regular IRA account. The key difference is that investors can hold physical gold as well as other metals in their retirement savings account. With a gold IRA, you are buying actual physical gold coins or bars rather than investing in gold companies or funds like you could do in a regular IRA. 

You need to open the gold IRA with an approved brokerage firm or custodian to store and insure your precious metals. They will hold your physical gold, silver, etc. in an IRS-approved vault until you take distributions in retirement. This is why you need to pay some additional fees.

In addition, you also have to work with approved gold dealers to purchase physical gold bullion or coins that meet certain purity standards set by the IRS.

Pros and Cons of Investing in Gold IRA

Investing in gold IRA, like any type of investment, also comes with its own set of benefits and drawbacks. Let us check it out!

Pros and cons of investing in gold IRA
Pros and cons of investing in gold IRA


  • Inflation protection: Gold often maintains its value or rises when prices in general are going up. This can protect your savings from losing purchasing power over time.
  • Diversification: Since gold prices don’t always move with stocks and bonds, including it adds diversity to your retirement portfolio.
  • Tangible asset: Gold is a real thing you own, not just an investment on paper, giving some investors a sense of security.
  • Tax advantages: Just like other IRAs, you can contribute money before taxes or withdraw without taxes in retirement depending on the type of account.


  • Fees: Storage, insurance and management of physical gold costs fees which can reduce returns over time.
  • Lower returns: Gold does not pay interest or dividends so it may make less money than stocks, bonds or mutual funds.
  • Limited access: You cannot easily take money out of a Gold IRA whenever you want without penalty before retirement age.
  • Home storage prohibited: The IRS requires gold in an IRA be kept by approved professionals, not in your own possession.
  • Risk of losses: Like any investment, gold prices can fall, so there is a chance you may lose value rather than gain over the long run.

So in summary, Gold IRAs provide diversification and inflation protection but come with additional costs and restrictions compared to traditional retirement accounts.

Steps to Open a Gold IRA

If you decide to invest in gold IRA, just take the following steps:

Opt for a gold IRA company

When starting a gold IRA, you will need a company to manage the account for you. This is important because the company, called the custodian, will be responsible for storing your gold and silver coins and bars safely. They will also handle all the paperwork and taxes according to IRS rules and regulations. 

Select a gold IRA company
Select a gold IRA company

When looking for a custodian, it is crucial to consider these factors:

  • Reputation and experience: Pick a well-established company which is well-known for handling gold IRAs. You want someone stable who will still exist when you take withdrawals later on.
  • Specializes in precious metals: Choose a custodian that deals with gold IRAs and knows how to properly manage metal investments for retirement accounts.
  • Reasonable costs: Storage fees can vary, so compare prices between companies. Avoid those with very high hidden fees.
  • Good reviews: Look at what other customers have said on sites. Choose one that responds quickly to any issues.
  • Keeps metals separate: Make sure your gold will be stored on its own and not mixed together with other clients’ metals.
  • Insured protection: Pick a company that can protect your metals with insurance in case something bad happens like theft or loss.
  • Transparent: Go with a custodian that is open about costs, how your metals will be stored securely, and their own financial health.

Open an account

After choosing the company to manage your account, you need to open a special retirement savings specifically for gold. To do this, you fill out paperwork the company gives you. On the forms, you provide details about yourself. Completing these forms sets up your account with the company so you can start buying gold coins and bars for your retirement savings.

Fund your account

Fund your gold IRA account
Fund your gold IRA account

Now is the time to fund your gold IRA account. You will have three main options for funding your gold iRA:

  • Rollover: Move money from an existing IRA into your gold IRA. You can do this directly or receive the funds and deposit them within 60 days to avoid penalties.
  • Transfer: If you already have an IRA with a different company, you can move those funds directly to your new gold IRA without handling the assets yourself.
  • Contributions: Make regular yearly contributions to your gold IRA, following IRS rules about limits and eligibility.

Choose approved gold products

Once the money has been deposited into your account, you can start buying gold, silver or other precious metals for your IRA. The IRS only allows certain types and purities of metals.

How you make purchases will depend on the company you chose. Some let you directly buy approved coins and bars from them. Others have you buy metals from a separate dealer first, then tell your custodian which ones to purchase with your IRA money.

Manage your gold IRA

It is critical to regularly monitor and mangage your investment. Some companies have online tools for checking up on how your investments are doing but others do not. If keeping track of your returns is a priority for you, ask them specifics about what they offer. A good custodian can help you watch your precious metals IRA over time. Make sure to inquire about options for following your performance.

Final Words

In summary, a gold IRA let investors to invest in physical gold for their retirement instead of just stocks and bonds. It works like a traditional IRA but lets you hold precious metals instead of other assets. By opening a Gold IRA, savers can help protect their savings from inflation or a falling stock market. The custodian handles storage of the gold and silver in an insured vault until retirement age. 

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