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Self-directed IRAs (SDIRAs) were created to give investors more control and flexibility over their retirement funds. Instead of limiting investment choices to stocks, bonds, mutual funds, and ETFs, self-directed IRAs allow you to invest in a wider range of assets like real estate, private businesses, cryptocurrencies, metals, and collectibles.
Gold IRAs are a popular type of self-directed IRA that provide exposure to physical gold, silver, platinum, and other precious metals. By investing in gold through an IRA, you get tax-advantaged growth potential and the ability to diversify your portfolio.
In this article, we tell you everything you need to know about one type of SDIRA — the Traditional Gold IRA.
What Is a Traditional Gold IRA?
A self-directed IRA, or SDIRA, is a type of retirement account that gives you more control over the financial assets you are allowed to include in the investment portfolio. There are three main types of SDIRAs: Traditional IRA, Roth IRA, and SEP IRA.
A traditional gold IRA is an account that can hold precious metals and bullion coins, and that enjoys the same tax benefits as a regular IRA. The key advantages of this type of account are that they add an extra layer of diversification to the investor’s retirement portfolio while they can be a great alternative to preserve the purchasing power of the money as precious metals tend to keep up with inflation.
The value of a gold IRA is tied to the value of the physical metals held on behalf of the investor. The investor pays the gold IRA company a storage and administration fee, but the metals themselves are 100% his.
How Does a Traditional Gold IRA Work?
Opening a traditional gold IRA is a simple process. The first step is to contact a gold IRA company and then fill out the necessary paperwork to transfer or rollover your existing retirement account or deposit the minimum amount required to complete the process.
Once the funds are received, they can be used to purchase and store the physical precious metals of your choice until you’re ready to take delivery or liquidate your gold IRA. The assets held in the account have to be administered by an appointed trustee and stored with an IRS-approved depository.
|Traditional IRA||Roth IRA||SEP IRA|
|Tax break||On pre-tax income||When withdrawn||On pre-tax income|
|Contribution limits||$6,000 (49 and under) $7,000 (50 and up)||$6,000 (49 and under) $7,000 (50 and up)||$58,000 or 25% of your annual compensation (whichever is smaller)|
|Taxation||Withdrawals taxed as ordinary income||Taxed as ordinary income before contributed||Withdrawals taxed as ordinary income|
|Used By||Individuals with taxable compensation||Individuals with taxable compensation||Self-employed people, small business owners|
|Advantages||Contributions are fully taxed deductible if you are not covered by another retirement plan||You can take out your contributions and gains tax free||Allows you to save more than a Traditional or Roth IRA|
Traditional Gold IRA Rules & Guidelines
Traditional gold IRAs can hold a range of precious metals, including gold, silver, platinum, and palladium. There are specific requirements in regard to the purity levels of the products that can be purchased for a gold IRA.
- Gold: it must be 99.9% pure or .999 fine. This is 24-karat gold that is considered highly pure. Lower purity levels, like 99.5%, are not allowed. Gold is a stable store of value and is typically considered a “safe haven” asset.
- Silver: it must be .999 fine, 99.9% pure silver. Silver is seen as an affordable metal to gold for those on a budget. Silver is also considered a scarce commodity with industrial uses.
- Platinum: it must be 99.95% pure. Platinum is rare, durable, and used as a catalyst in catalytic converters and fuel cells. It holds value well over time but is more volatile than gold or silver.
- Palladium: it must be 99.95% pure. Like platinum, palladium is rare and used for catalytic converters and fuel cells. It is also an alternative precious metal investment.
Bullion coins must come from government mints like the U.S. Mint, Royal Canadian Mint, South African Mint, etc. Coins must be in good condition and uncirculated or proof versions to avoid wear and tear.
In addition, the Internal Revenue Service (IRS) has established rules around traditional gold IRAs to ensure they meet the criteria to be considered tax-advantaged retirement accounts. These are the most relevant rules and guidelines that apply to these accounts:
- Contributions: Contributions to a traditional gold IRA are made on a pre-tax basis. Hence, they are deducted from the investor’s taxable income in the year they are made. This results in sizable tax savings depending on your income and participation in employer-sponsored plans.
- Tax-advantaged status: earnings on investments in a traditional gold IRA grow tax-deferred. This means that they are not taxed until they are withdrawn from the account at the retirement age. Your money can compound more rapidly without yearly taxes reducing the balance.
- Withdrawals: Withdrawals from a traditional gold IRA are taxed as ordinary income in the year they are made. This includes any precious metal sales, distributions of cash, or Required Minimum Distributions (RMDs) after age 72. RMDs must begin at 72 to avoid penalties and ensure you can withdraw the funds during your lifetime.
- Penalties: Early withdrawals before age 59 1/2 may be subject to a 10% penalty in addition to being taxed as ordinary income. This penalty aims to discourage withdrawing money from retirement accounts before retirement age.
- Special considerations: The contributions made to a traditional gold IRA may be tax deductible, depending on income and participation in an employer-sponsored retirement plan like a 401(k). Higher-income individuals may face limits on deductions or not be able to deduct at all. In some specific circumstances, the account holder may be able to avoid the 10% early-withdrawal penalty if the money is being taken out to make the down payment on his/her first home or for health reasons.
Best Traditional Gold IRA Companies
There are dozens of gold IRA companies in the market that offer similar services. However, when it comes to managing your money and assets, not every provider offers the same level of quality, catalog of products, and educational resources.
In this section, we share the best gold IRA companies that stand out for us in case you need some help short-listing your possible picks.
1. Augusta Precious Metals
Founded more than 10 years ago, Augusta Precious Metals has a pristine track record when it comes to helping investors in setting up gold IRAs and buy precious metals for their accounts. Read our full Augusta Precious Metals review to learn more.
- August Precious Metals offers lifetime support for all its customers, no matter what the balance of their accounts may be. They are arguably the only provider in the industry that offers this kind of assistance.
- The company provides access to an ample portfolio of gold products, including gold coins and 1oz, 10oz, and 100oz gold bars.
- Augusta’s library of educational materials is one of the best out there. Their goal is to help investors learn more about the basics of investing and the dynamics that affect the value of their gold investments.
- August has secured partnerships with top-notch providers such as Equity Trust and the Delaware Depository to offer their customers a seamless onboarding experience and secure storage alternatives.
- Well-reputed gold IRA provider with years of experience in the business and a pristine track record reflected by thousands of positive online reviews.
- They provide access to a widely varied catalog of products.
- Augusta offers free shipping on eligible gold purchases.
- They offer access to an incredible library of educational content for beginners.
- Augusta requires a high minimum deposit to open an account that is above the industry’s average.
Who Is August Precious Metals Best for?
Augusta Precious Metals is a great alternative for relatively wealthy investors who have amassed a decent balance on their existing retirement accounts but would like to diversify their holdings by investing in precious metals.
In A Nutshell
- Key Highlight: Exclusive lifetime customer support for its clients
- Minimum Investment: $50,000
- Metals Available: Gold and silver bullion and coins
- Ratings: 5.0/5.0 over 200 reviews (TrustLink); 4.9/5.0 over 100 reviews (BBB) and A+ rating with BBB
Goldco is a top-rated gold IRA provider in the United States with over 17 years of experience in the business. The firm offers access to top-quality gold products, including Australian, American, and British coins, along with gold bars of different sizes. Read our full Goldco review to learn more.
- Goldco requires a minimum investment of $25,000 to open an account.
- The company has a positive track record of customer satisfaction, as reflected by its good standing with the Better Business Bureau (BBB) and thousands of online reviews.
- Goldco supports rollovers and transfers from both traditional IRAs and employer-sponsored programs like 401(k)s.
- Apart from offering access to a gold IRA, investors can buy precious metals directly with this provider to be stored privately.
- Decent track record of customer satisfaction reflected by thousands of positive online reviews and an A+ rating with the BBB.
- Ample catalog of gold products to choose from that meet the IRS’s rules for gold IRA investments.
- Goldco offers to waive its management fees for account balances exceeding a certain threshold.
- They also offer a silver IRA for investors who would like to further diversify their retirement portfolios by adding another precious metal.
- Goldco does not offer palladium or platinum products, and their gold and silver IRAs must be set up separately. This could be inconvenient for some customers.
Who Is Goldco Best for?
Goldco is a long-standing player in the gold dealing and investment business. Their portfolio of products is quite ample and caters to both investors looking to add more assets to their retirement accounts and casual gold buyers that prefer to store their metals at home.
In A Nutshell
- Key Highlight: Exclusive gold buyback program
- Minimum Investment: $25,000
- Metals Available: Gold and silver bullion and coins, palladium and platinum
- Ratings: 4.8/5.0 over 200 reviews (TrustLink); 4.8/5.0 over 450 reviews (BBB) and A+ rating with BBB
3. American Hartford Gold
American Hartford Gold has established itself as a reputable gold IRA company by delivering over $1 billion of precious metals to satisfied clients since opening its doors.
Boasting endorsements from well-known figures like Rudy Giuliani, Rick Harrison of Pawn Stars fame, and Bill O’Reilly, the company’s impeccable track record and superb reviews speak for themselves. Read our full American Hartford Gold review to learn more.
- AHG offers gold, silver, and other precious metals for IRAs and general investing.
- A $10,000 minimum deposit is required to open an account.
- They offer live support 24/7 and easy account setup and management.
- Aggregated live metal prices and news.
- Customers have the ability to buy and sell, often free of fees.
- They work with trusted storage partners.
- AHG offers a 3-step liquidation process without liquidation fees.
- Over $1 billion in precious metals have been delivered to customers since its founding.
- High reviews and ratings from sources like Trustpilot and Better Business Bureau.
- Endorsements from influential figures like Rudy Giuliani, Rick Harrison, and Bill O’Reilly.
- Waives fees for up to 3 years for customers who exceed $100,000 in precious metal purchases.
- In-person registration is required. Customers cannot complete their registration fully online.
Who Is American Hartford Gold Best for?
American Hartford Gold has a long-standing reputation, and that gives the firm significant credibility, especially for high-net-worth investors. In addition, they waive their fees for the first three years for those who purchase over $100,000 in precious metals. This makes this provider a great choice for wealthy investors.
In A Nutshell
- Key Highlight: Exclusive buyback program for existing clients
- Minimum Investment: $10,000
- Metals Available: Gold and silver bullion and coins
- Ratings: 5.0/5.0 over 1000 reviews (Trustpilot); 4.9/5.0 over 267 reviews (BBB) and A+ rating with BBB
4. Birch Gold Group
The Birch Gold Group provides access to gold IRAs and precious metal products. They have been offering these services since 2003 and now have clients in over 50 states.
The company works with top-notch partners to provide custodian and storage services, such as the STRATA Trust Company and the Delaware Depository, and offers an ample selection of gold products to offer. Read our full Birch Gold Group review to learn more.
- A large selection of gold coins, bars, and other products is available with this provider.
- Customers can also purchase silver, platinum, and palladium products with Birch.
- Birch offers storage services at four IRS-approved depositories.
- The company offers to arrange depository visits (not all companies offer this).
- A minimum deposit of $10,000 is required to open a gold IRA.
- Endorsed by political and financial figures like Ron Paul and Ben Shapiro.
- The company has a significant number of positive reviews and a good online reputation.
- Over 19 years of experience in the business.
- Birch offers a $1 billion insurance coverage on all the metals held within their gold IRAs.
- Newsletter and website content on gold and finances.
- Basic educational materials with no videos.
Who Is Birch Gold Group Best for?
Birch Gold Group is ideal for beginners interested in gold IRAs and precious metals investing. Their large selection, insured products, and educational resources make them an access provider, though their materials could provide more depth.
Seasoned investors may prefer companies with additional tools and analysis. However, Birch Gold Group remains a decent choice for those looking to diversify their retirement portfolios by adding gold and other metals through an IRA.
In A Nutshell
- Key Highlight: Robust security features
- Minimum Investment: $10,000
- Metals Available: Gold and silver bullion and coins, palladium, and platinum
- Ratings: 4.9/5.0 over 130 reviews (TrustLink); 4.7/5.0 over 70 reviews (BBB) and A+ rating with BBB
5. Noble Gold Investments
Noble Gold Investments offers access to gold IRAs, precious metals accounts, and rare coins. They have over 20 years of experience and $200 million in client assets under management. Setting up an account takes only five minutes, according to Noble Gold. They also claim to be the only company in the state of Texas to store the precious metals within their gold IRAs at a local depository. Read our full Noble Gold Investments to learn more.
- Noble’s portfolio of products includes 5 gold coins and 6 silver coins, along with bars of different sizes. All of these are IRS-approved gold products.
- Platinum, palladium, and rare coins are also available with this provider.
- Noble partners with International Depository Services (IDS) to offer its customers a Texas-based depository that they can visit periodically.
- A minimum investment of $2,000 is required to open an account.
- Noble offers to waive its $80 annual fee for the first year for eligible customers.
- Solid reputation and experience.
- Fast 5-minute account setup.
- Texas-based storage is available for customers within the state.
- A $2,000 minimum deposit is required to open an account with Noble.
- It is not possible to track the value of a Noble account via its app or website.
Who Is Noble Gold Investments Best for?
Noble Gold is a good, low-cost choice for beginners interested in gold IRAs, precious metals, and rare coins. Their experience, reputation, and straightforward process appeal to those new to these types of investments. In addition, Texas-based investors may find their partnership with a local depository appealing.
In A Nutshell
- Key Highlight: Unique Survival Packs
- Minimum Investment: $2,000
- Metals Available: Gold and silver bullion and coins, palladium, and platinum
- Ratings: 5.0/5.0 over 120 reviews (TrustLink); 4.9/5.0 over 50 reviews (BBB) and A+ rating with BBB
Costs Associated with Traditional Gold IRAs
Investing in physical precious metals through a gold IRA involves some additional fees compared to regular retirement accounts. Here’s an overview of the common expenses to budget for when funding a gold IRA:
Most gold IRA companies charge a one-time fee for setting up your account, which can range from $50 to $500. The setup fees cover the administrative work required to transfer your existing IRA assets into a gold IRA.
Custodian and Vaulting Costs
The company that acts as the custodian of your gold IRA assets will usually charge an annual fee for managing your account and making the necessary arrangements to buy and sell your precious metals. Custodian fees typically range from $100 to $300 per year.
Vaulting fees are also charged as a percentage of your account value, around 0.03-0.10% per year. This helps cover the costs of insuring your gold and maintaining a private vault facility.
The IRS-approved depository you pick to store your precious metals will charge an annual fee for keeping your assets safe. This fee may go from $100 to $150 per year depending on the type of storage you select — commingled or segregated. In addition, they may charge an extra fee for taking delivery of every new shipment of gold.
Purchasing and Selling Precious Metals
When buying or selling metals within your gold IRA, the coin dealers and refiners will mark up the prices by approximately 2 to 5%. Their markups get added to the market price of the metals. The more you trade in your account, the more these fees can impact your balance over time.
IRS-Approved Gold for Traditional Gold IRAs
The following is a summary of the most common gold products that investors choose to add to a traditional Gold IRA based on the rules and guidelines established by the IRS that we outlined previously.
- Government-issued gold coins: Certain gold coins issued by sovereign governments like the US, Canada, and South Africa are allowed into gold IRAs. This includes coins like the American Gold Eagle, Canadian Maple Leaf, and the South African Krugerrand. They must contain at least 99.9% gold by weight.
- Gold bullion rounds: Rounds are gold coins produced by private mints and not an official government-issued currency. Top mints for gold rounds include APMEX, Golden Eagle Coin, and Rosland Capital, among others. Rounds must also meet the 99.9% purity requirement.
- Gold bars: Bullion bars are rectangular ingots of gold that are widely available in weights of 1 troy ounce up to 100 troy ounces. The IRS requires bullion bars to be at least 99.9% pure to be eligible to be added to a gold IRA. Popular options include those minted by PAMP, Valcambi, and the Royal Canadian Mint.
How to Purchase Gold with A Traditional Gold IRA
Now that you understand how traditional gold IRAs work, here’s a step-by-step guide you can follow to open an account and complete your first gold purchase to start building your portfolio.
Step 1: Determine The Source of Your Funds
If the investor chooses to make a cash contribution to open an account, the amount deposited into the account must be equal to or lower than the maximum cash contribution allowed for IRAs during that given year to avoid penalties.
Since some providers require minimum deposits of $10,000 or higher, this makes it inconvenient to fund the new gold IRA with a cash deposit since the maximum yearly IRA contribution stands at $6,500 as of this year.
This is why rollovers are the most commonly used method to fund a gold IRA. A rollover involves transferring the assets from one tax-advantaged account to the other. A direct rollover is performed by the previous administrator of the account after completing the required paperwork.
Meanwhile, an indirect rollover involves the issuance of a check to the investor that must be deposited into the new Gold IRA within 60 days to avoid penalties.
Step 2: Open A Precious Metals Self-Directed IRA (SDIRA)
The next step is to open an account with a Gold IRA company. The five ones we mentioned earlier are good alternatives for both beginners and experienced investors, regardless of their net worth.
To open an account, the investor will have to provide some personal and financial information, decide how the account will be funded (cash contribution, rollover, or transfer), and also sign up with a depository and a custodian to meet the IRS’s requirements for SDIRAs.
Most gold dealers and gold IRA companies let investors complete the process of opening an account online. However, in some instances, some of the paperwork may have to be mailed physically.
Step 3: Fund Your New Precious Metals SDIRA
If the investor opted to rollover an existing retirement account, the administrator must be informed so they can begin the paperwork required to perform this operation. The process is typically slower if the existing account is a different type of tax-advantaged account, like a 401(k).
Meanwhile, if it’s an IRA-to-IRA transfer, the process should not take longer than a few days. Finally, if the investor opts to fund the account via a cash contribution, most providers may support various payment methods, including debit and credit cards, wire transfers, electronic wallets, or even cryptocurrency.
Step 4: Purchase Your IRS-Approved Precious Metal
At this point, investors must choose which products they would like to incorporate into their retirement account, whether that is coins or bars. It is worth remembering that these products have to meet the IRS’s requirements in terms of purity. For gold, gold coins and bars must have a purity level of at least 99.9%.
The decision of what kind of product the customer will purchase will depend on their available investment budget, the level of liquidity they would like to have, and the promotions or discounts available at the time.
Many Gold IRA companies offer free shipping on eligible orders — typically those that exceed a certain amount. Hence, it is usually a good idea to make purchases that are equal or higher to that amount to save costs.
Step 5: Store Metals at Approved Depository
Once investors pick the gold products they would like to add to their portfolio, it’s time to place an order. Most providers ship orders 1 to 7 business days after payment has been received. Shipping times vary depending on the carrier. These packages typically travel insured, and their contents are concealed to prevent theft.
The depository will send a notification once they have received the gold products shipped by the gold IRA company, and the assets will be credited to the customers’ account right after.
Traditional gold IRAs offer significant benefits for investors. They provide a tax-sheltered way to accumulate wealth for a later stage of their life, hedge against inflation and currency devaluation, and generate returns through price appreciation and interest.
Gold has historically been a stable store of value, and Traditional Gold IRAs give investors an easy way to include this asset class in their retirement portfolios. For those looking to diversify beyond traditional investments, gold IRAs open up more options to match investment objectives and risk tolerance.
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Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and has also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.