What are Gold IRA tax rules if you have a traditional, Roth or Sep IRA?
If you are looking at investing in gold and wondering how you can use your individual retirement account funds to do it, this article covers how. You’ll learn how Gold IRAs work, what types of accounts you have, and what the actual Gold IRA tax rules are.
What is a Gold IRA
A Gold IRA is a retirement account where you hold physical gold or other precious metals. Sometimes, you might hear this account called a Self-Directed IRA (SDIRA) because instead of investing in traditional paper assets like stocks and bonds, you can invest in alternative assets. Besides gold, other alternative investments can include real estate, Forex, crypto, and private equity.
Despite the fact that you hold alternative investments in the account, you still must follow the same IRS tax rules you’d find with paper assets.
Types of Gold IRA accounts
There’s three main types of Gold IRAs:
Traditional Gold IRA
You fund traditional IRAs with pre-tax dollars, and your investments grow tax-deferred. You pay taxes when you withdraw funds at retirement age of 59 1/2. At that time, the IRS taxes your withdrawals at your normal income tax rate. The retirement benefit of this account is that you might be in a lower tax bracket since you aren’t working.
Roth Gold IRA
Roth IRAs get funded with after-tax dollars. Since you’ve already paid taxes, your investments grow tax-free if you hold the account for at least five years before withdrawing at retirement age.
SEP Gold IRA
If you are self-employed or own a small business, you can use a SEP IRA to invest in physical gold. This retirement account functions the same as a traditional IRA, with the only difference being that you have higher contribution limits.
Table for Tax Rules
| IRA Type | Structure | Tax Implications | Contribution Limits (2024) |
| Traditional Gold IRA | Contributions with pre-tax dollars, reducing taxable income in the year made. | Withdrawals taxed as ordinary income during retirement. | Total contributions to all IRA’s cannot exceed $7,000 ($8,000 if 50 or older). |
| Roth Gold IRA | Contributions with after-tax dollars. Eligibility to contribute based on MAGI limits. | Qualified withdrawals are tax-free if the account is open for 5 years and you’re over 59 1/2. No RMDs during the owner’s lifetime. | Total contributions to all IRAs cannot exceed $7,000 ($8,000 if 50 or older). |
| SEP Gold IRA | For self-employed and small business owners. Pre-tax contributions similar to traditional IRAs. | Contributions are tax-deductible. Withdrawals taxed as ordinary income. Higher contribution limits. | Can contribute up to 25% of net earnings or compensation, up to $69,000. Maximum eligible compensation is $345,000. |
Gold IRA tax rules
There are some commonalities and differences in tax rules for these accounts, including:
Contribution limits
The IRS allows you to add to your gold investments within these accounts each year, depending on the account type and other criteria.
Traditional Gold IRA: You can contribute up to $7,000 in 2024 or up to $8,000 if you are aged 50 and older.
Roth Gold IRA: Your income level determines if you can contribute the full $7,000 or $8,000 mentioned above to your Roth IRA. You can contribute this full amount if you are a single tax filer and your Modified Adjusted Gross Income is $146,000 or less. Or, if you are married and your joint income is $230,000 or less.
SEP Gold IRA: In SEP Gold IRAs, you can contribute 25% of the employee’s compensation up to $69,000.
Required minimum distributions
Some people may reach retirement age and not withdraw from their accounts. At some point, the IRS wants you to pay taxes on traditional Gold IRAs and SEP Gold IRAs, so they require minimum distributions starting at age 72.
To calculate what your required minimum distributions (RMDs) are, the IRS rules include:
Find your account balance as of December 31 for the previous year.
Look up your age on the IRS Uniform Lifetime Table.
Take your account balance and divide by the life expectancy factor to get your RMD.
For example, say your account balance is $20,000 and you are 80. The current IRS life expectancy factor is 20.2. So, the RMD calculation for the year is $20,000/20.2 = $990
How to set up a Gold IRA
If you’ve decided you want to invest in physical precious metals, here are the steps to set up a Gold IRA account:
Step 1: Connect with a precious metals dealer: Choose a company that has an established track record, several positive reviews, and a commitment to helping you through the IRA rollover process.
Step 2: Choose a Self-Directed IRA custodian: You may already have one in mind or your dealer can recommend one for you. Open an account with the custodian so they can receive your retirement funds.
Step 3: Initiate transfer: Contact your 401(k) plan administrator or your current IRA manager and let them know you want to roll over a portion of your funds into a Self-Directed IRA. The best and easiest option is to use a direct rollover, which means your current administrator sends the funds directly to your precious metals custodian.
You can also rollover funds from an existing IRA.
Step 4: Purchase precious metals: Work with your physical gold dealer and choose which metals to buy. The IRS has specific details on which metals qualify, and your dealer can provide guidance on these details. At this point, you’ll direct your custodian to buy the metals on your behalf.
Step 5: Storage. Your custodian arranges for the metals to ship to a secure IRS-approved depository for safekeeping. When you are investing in gold through an IRA, you can’t actually take possession of the gold because the IRS considers this a distribution and a taxable income event.
Benefits of investing in gold
Many of the reasons investors choose to add gold to their individual retirement accounts are to reduce portfolio risk and hold a safe-haven asset. Consider the following benefits of Gold or Precious Metals IRAs:
No counterparty risk
Your precious metal purchases don’t depend on a bank, a company or anyone else for you to own your physical gold. Many investors like the control they have over a physical asset that doesn’t rely on anyone else to perform.
Store of wealth
People often look at gold as an “insurance policy”. It’s an asset that primarily holds your wealth and guards erosion from the effects of inflation, economic uncertainty, or geopolitical events. The reason is that when the world is in chaos, investors turn to gold for safety and security. If you hold gold in your IRA, it’s a way to reduce your risk and exposure to these unforeseen events.
No cyber risk
Investing in gold doesn’t require digital or internet access which means it’s not impacted by hackers or cyber incidents. Gold investors can feel confident that their investment can’t be wiped out with one keystroke or mistaken transaction.
Why choose Swiss America for your Gold IRA
When you are looking to get into gold investing, how do you make a decision on the best dealer to work with? Here’s why thousands of investors have worked with Swiss America for their individual retirement accounts:
Experience
We’ve been helping customers with Precious Metals IRAs for over 40 years. We understand the rules, how to rollover accounts, tax benefits, and the various options available to you. Our expert guidance can help you make the best decision for your individual retirement account.
Support
Customers give us high ratings for our support, quick delivery of metals, and availability to help with ongoing questions. All Swiss America customers receive access to our customer portal, where you can view your account status in real-time.
Education
We provide several resources to help you make choices for your investment portfolio like our regular podcast series, blog content and in-depth research reports.
Certifications
Swiss America is an A++-rated member of the Better Business Bureau and several industry organizations, including:
American Numismatic Association
Industry Council for Tangible Assets
Numismatic Guaranty Corp
Precious metals IRA rules
Using your individual retirement account to buy gold investments can help you diversify your assets and protect your wealth. Knowing the IRS rules around account types, contribution amounts, and taxes upon withdrawal can help you make sound decisions for your portfolio.
If you want to learn more about setting up a Gold IRA, contact the Swiss America team today!
Gold IRA tax rules: FAQs
Is a Gold IRA tax-free?
It depends on your account type. Traditional Gold IRAs get funded with pre-tax dollars so they grow tax-deferred but they are not tax free. Roth Gold IRAs can be tax-free because you fund them with after-tax dollars. The only time you would pay taxes on a Roth IRA is if you withdraw your gold investments before retirement age at 59 1/2.
How much can you put in a Gold IRA?
You can rollover all of your retirement account funds into a Gold IRA if you want. Most investors allocate a portion of their total assets to gold and other precious metals. Once you have your Gold IRA in place, you can also contribute to it each year, depending on your account type and your income.
Is a Gold IRA better than a traditional IRA?
The difference between the two is that a Gold IRA invests in physical gold assets while a traditional IRA invests in paper assets. One isn’t necessarily better than the other. Experts usually recommend people invest a portion of their assets in gold as a safe haven asset to preserve wealth.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
