Gold IRA Rollover: A Simple Step-by-Step Guide

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One of the major benefits of a gold IRA rollover is the security gold provides during economic fluctuations. Gold has been considered by many investing experts as a safe haven when a financial crisis is among us, as it tends to hold its value - sometimes increase in value. In this article, I'm going to explain what a gold IRA rollover is, why it's important and how you can benefit from it.

What is a Gold IRA Rollover?

A Gold IRA rollover is taking funds from your current retirement account to deposit into a self-directed IRA account that allows you to purchase gold and other precious metals as part of your IRA.

It differs from a traditional IRA in that you are actually purchasing and own physical gold, which offers the benefit of being able to sell it for cash when you retire. Or, you can hold onto it for its intrinsic value and then use it to trade during an economic crisis or keep it in your family as an heirloom.

You also have control over which gold investments you want in your account as opposed to being limited to the investments the IRA account manager selects for you.

However, IRS restrictions do apply.

Gold IRA Rollover vs. Gold IRA Transfer

A Gold IRA transfer is when some or all of the savings in your current IRA plan are moved directly into an IRA account at a Gold IRA company. This process is also known as a direct rollover.

However, you can also opt for an indirect rollover, which is when the funds from your current IRA account are withdrawn and then distributed directly to you via a check to deposit the funds into a Gold IRA.

The difference between the two is the tax implications they carry. Therefore, which method of rollover you choose will depend on your Gold IRA strategy.

401(k) to Gold IRA Rollover

To perform a 401(k) to Gold IRA rollover is the same as the process for an IRA to Gold IRA rollover. However, this is provided you are retired or no longer employed by the company that established your plan.

If you still work for the company that provided your 401(k) and want to transfer some or all of your funds from the account into a Gold IRA, you must request an in-service withdrawal.

This way, an exception to withdraw funds from your 401{k} account before you retire or due to a hardship will be made, allowing you to use the plan's savings to purchase gold in a Gold IRA while you are still employed by the company.

However, not all companies offer this exception, so be prepared.

Deciding on a Gold IRA Rollover Strategy

Diversifying your IRA portfolio with physical precious metals helps hedge it against economic uncertainties, such as unexpected inflation and market downturns, that can negatively impact all your investments at once and thus wreck its overall value.

This is because, throughout history, the price of precious metals has been shown to increase when traditional markets take a hit, suggesting they have an uncorrelated association. Its inherent value also makes it a form of legal tender that can be used almost anywhere throughout the world should our banking systems fail.

Hence, many investors are incorporating physical precious metals into their retirement portfolio to help secure a more certain financial future against stock market declines, a global crisis, and more.

However, what percentage of your rollover you should devote to purchasing precious metals in your Gold IRA will depend on your plans for the long term, investment risk tolerance, when you will retire, how confident you are about the future of the economy, and more.

A qualified financial adviser can work with you to determine the best rollover strategy for your goals. In the meantime, some reasons investors choose to allocate a portion of their retirement plan to precious metals include:

Choosing Your Gold IRA Allocation

Diversification Orientation

Recessions and dips in the stock market are bound to happen, especially the longer you hold stocks, bonds, and other common investments. Hence, one reason people invest a portion of their retirement savings in a Gold IRA is to limit potential losses from various market factors.

As a general rule, when diversifying your IRA with precious metals to hedge against possible market risks, devote no more than 10% to a mix of mainly gold, silver, and platinum unless you have a high-risk tolerance.

Inflation and Debasement Orientation

Inflation is another common threat to your retirement portfolio because as the U.S. dollar declines in value, so does the worth of your traditional investments.

However, gold and silver help hedge against inflation and the declining U.S. dollar. In fact, the current rising price of gold during this time of inflation is well over $1,900 per troy ounce.

Therefore, incorporating up to 20% gold into your retirement investment mix can help maintain your portfolio's worth even when there is a decrease in the purchasing power of money.

Systemic Collapse Orientation

If you are concerned about what direction the economy may take in the future and want to protect your retirement savings against the worst, you may consider dedicating more of your rollover to gold and silver as a way to help sustain your cushion.

In fact, gold and silver have both been shown to provide the greatest hedge against economic crises, in some cases, their prices quickly increasing as high as 8% or more during such times.

For the greatest protection, incorporate between 20% and 30% gold into your investment mix to help offset the damage of a financial system collapse.

Gold IRA Rollover: Choose IRS-Approved Bullion Bars

Bullion bars vary by grade. However, when purchasing bullion bars for a Gold IRA, you are required to buy only IRS-approved bullion bars.

IRS-approved bullion bars contain the highest metal purity, and they are also produced by a national government mint or an IRS-approved refiner or manufacturer, so they have a higher resale value.

Hence, it increases the likelihood they will maintain their high value when it is time to sell them for your retirement.

irs approved bullion gold bars

The IRS requirements for Gold IRA bullion bars are as follows:

  • Gold bullion bars must have at least .995 percent gold content.
  • Silver bullion bars must have at least .999 percent silver content.
  • Platinum bullion bars must have at least .9995 platinum content.
  • Palladium bullion bars must have at least .9995 palladium content.

Gold IRA companies typically have access to IRS-approved precious metals and will help you choose the right products for your account. Otherwise, the storage facility will not accept them.

Gold IRA Rules and Contribution Limits

For a Gold IRA to qualify for IRA tax-deferred benefits, the precious metals purchases made for the account must be facilitated by a custodian.

A custodian is a third-party company that manages your self-directed IRA account on your behalf, during which time they also handle all tax paperwork to ensure IRS compliance.

The precious metals held for your IRA must also be IRS-approved, which the custodian or Gold IRA company will help you with. They must also be stored in an IRS-approved storage facility until you reach retirement age, which the custodian will also handle on your behalf. However, you get to choose the depository where they are stored.

Your precious metals must also remain in storage until you reach age 59 1/2, or you will be charged taxes on the IRA withdrawal as well as a 10% early withdrawal fee.

Provided your Gold IRA meets all IRS rules for a self-directed individual retirement account, you then also have the same contribution limits as a traditional IRA.

The IRA contribution limit for 2023 is $6,500 for those aged 50 and under and $7,500 for those over age 50. However, these limits are expected to increase in 2024.

Physical Gold IRA Rollover vs. “Paper Gold” Rollover

When you perform a physical Gold IRA rollover, it means the funds moved from your current IRA into the Gold IRA are used to purchase physical precious metals for your retirement portfolio, so when you retire, you can take hold of your physical precious metals.

However, a paper gold IRA rollover means you are transferring funds from your current IRA into a retirement account that allows you to purchase shares in a gold mining company, gold futures contracts, or an instrument that invests in gold prices, such as a gold mutual fund or gold EFT.

Hence, when you retire, you only have access to the increase in equity accrued from the market growth of your paper gold investments. Therefore, your portfolio's overall value will be determined by the number of shares you own in such investments.

However, the process to complete a physical Gold IRA rollover and a paper gold rollover is about the same.

Many retirement investors opt for a physical Gold IRA rollover over a paper gold rollover because of the stability that physical gold has historically been shown to provide when the stock market declines, which offers greater portfolio diversification.

Finding the Best Gold IRA Custodian

There are several ways to find the best Gold IRA custodian, including visiting the company's site and researching their fees and other information for transparency. This helps ensure there are no surprises later should you choose to work with them.

You also want to ensure the company is IRS-approved, which means it has demonstrated it has the experience and competence to handle retirement funds, the capacity to manage large numbers of accounts, and the financial responsibility to be a custodian.

It also means they are highly knowledgeable in IRS-approved precious metals and authorized to work with IRS-approved depositories.

1. Reputation and Prestige

Gold IRA custodians come highly recommended by reputable Gold IRA companies and customers alike. Therefore, in addition to researching the custodians recommended by Gold IRA company on their sites, you should also look up their customer reviews on consumer protection sites like Trustpilot, Consumer Affairs, Google Reviews, and the Better Business Bureau (BBB), etc., to read what actual users have to say about the company and their services.

A good Gold IRA custodian will also have a high BBB rating, with an AAA being the highest, which means it has passed the organization's independent screening for ethics, trustworthiness, and more.

You should also be sure there are no official complaints or lawsuits filed against them by the Federal Trade Commission, Attorney General, or another government agency on consumers' behalf, which can be done by conducting an internet search using the agency's name and your state.

2. Rollover Limitations

You are allowed just one IRA rollover per year without penalties. Therefore, it is important to choose your Gold IRA custodian wisely. Otherwise, switching custodians before the end of your 365-day rollover limit will result in taxes and an early withdrawal fee on your transaction.

List of Top Gold IRA Companies

To help make your search for a reputable Gold IRA company much easier, we've included this list of the most popular Gold IRA companies in the U.S., which were chosen based on their high BBB rating and customer reviews.

Click to see companies:

  • Noble Gold Investments
  • Rosland Capital
  • GoldCo
  • Birch Gold Group
  • American Hartford Gold
  • American Bullion Inc.
  • Gold Alliance
  • Augusta Precious Metals
  • Silver Gold Bull
  • JM Bullion

Eligible Account Types for a Gold IRA Rollover

Most retirement accounts are eligible for a Gold IRA rollover, including traditional IRAs, Roth IRAs, SEP IRAs, Simple IRAs, and Self-directed IRAs. 401(k), 403(b), 457(b), and TSPs retirement accounts also qualify.

However, they usually require you to do an in-service withdrawal to do so because they are employer-sponsored plans.

If you have a 401(k) retirement plan, you can convert it to a Gold IRA only if you are no longer employed with the company that offered it. However, if you still work for the company and are age 59 1/2 or older it will require you to request an in-service withdrawal.

The rules for converting a 403(b) plan into a Gold IRA are pretty much the same. You must no longer be employed by the company that issued your plan to move funds from it or at least age 59 1/2 or older and still employed by the company to request an in-service withdrawal.

457(b) plans also require you to still be employed by the company that issued your plan and at least 59 1/2 before you can request an in-service withdrawal to convert your employee-sponsored retirement account into a Gold IRA. However, if you are no longer employed by the company, it is possible to transfer funds from your 457(b) into a Gold IRA without the need for an in-service withdrawal.

Thrift Savings Plans can also qualify for conversion into a Gold IRA, provided you are at least age 59 1/2 and still employed by the company that provided it.

You may also be limited on the amount of funds you can transfer from your employer-sponsored plan to a Gold IRA account as part of your in-service withdrawal.

When in doubt about whether your retirement plan qualifies for a Gold IRA rollover, consult your current plan's administrator or your account representative at the Gold to find out. If your plan qualifies, they will then assist you with the process of converting your current retirement account into a Gold IRA.

Gold IRA Rollover FAQs

How does a Gold IRA Rollover Work?

To begin a Gold IRA rollover, you must first open a self-directed IRA account with a Gold IRA company. You also need to choose a custodian to initiate the rollover process with your current IRA trustee. Or you can have your IRA trustee distribute the funds from your account directly to you to deposit the funds into a Gold IRA.

Once the funds from your previous retirement plan are deposited into your Gold IRA account, the custodian will then work with you to purchase your physical precious metals and then have them safely transferred to the depository of your choice.

The custodian will oversee your account from then on out and handle all tax paperwork required by the IRS. They will also ensure you have copies of all the paperwork and provide you with an online account to check the status of your precious metals holdings any time you want.

When you reach retirement age, you can either take hold of your precious metals or have your custodian sell them for cash and then provide you with the money.

What are the IRS Rules for a Gold IRA?

For a Gold IRA to qualify for IRS retirement account tax exemptions, it must be managed by a custodian at a self-directed IRA company.

The custodian must also purchase the precious metals for your account, and the precious metals purchased must meet the IRS's requirements for metal fineness and production.

Your precious metals must then be transported to a secure storage facility by the custodian where they are required to remain stored until you reach age 59 1/2. Any withdrawals made before then are subject to a 10% early withdrawal fee and tax penalties.

What are the IRS Rules for a Gold IRA Rollover?

The IRS requires a Gold IRA rollover to be completed within 60 days of withdrawing funds from your current retirement account, or the distribution will be seen as an early withdrawal, which is subject to taxes and fees.

For this reason, many plan holders typically opt for a direct Gold IRA rollover because it ensures the instant transfer of funds from their current retirement account to their Gold IRA account, which helps avoid penalties.

Otherwise, having the funds from your old IRA distributed directly to you to deposit into a Gold IRA puts you at risk of taxes and an early withdrawal fee if the transaction is not complete within 60 days of receiving the funds. You are also allowed just one rollover per year.

What are the IRS Rules for a Gold IRA Transfer?

During a Gold IRA transfer, funds from your current retirement account are transferred directly to your new Gold IRA account, also known as a trustee-to-trustee transfer. Therefore, it is deemed by the IRS as a non-taxable event. Hence, there are no taxes or penalties involved with the transaction because it meets the IRS's rules for the IRA rollover deadline.

What are the Fees Involved in a Gold IRA Rollover?

The custodian in charge of managing your self-directed IRA may charge various fees for their service, including a $50 processing fee to open your account or roll over your previous retirement plan to a Gold IRA. They also usually charge an annual fee to oversee your account, which typically ranges between $50 and $150, depending on the account size. Some custodians also charge a transaction fee each time they purchase or sell precious metals in the account, which on average is about $40 per transaction.

You will also be charged an annual fee of about $100 to $325 by the depository to store your precious metals, which is usually based on the value of your stored precious metals.

IRA custodians and depository fees vary by company, so do your research to find the best ones for you.

How does a 401k to Gold IRA Rollover Work?

If you are age 59 1/2 and have a 401k that is sponsored by a former employer and want to convert it into a Gold IRA, you need to contact your Gold IRA custodian to begin the direct rollover process and have the funds from your old retirement plan deposited into your Gold IRA account.

Or, you can opt for an indirect rollover and then deposit the funds into the Gold IRA yourself within 60 days. You can then purchase precious metals with your account and have them transported to the depository of your choice to be stored for safekeeping until you are ready to liquidate or take possession of them.

Otherwise, if you are still employed by the company providing your plan, you need to call your employer and inquire about the rules regarding withdrawing funds from your 401k to roll over into a Gold IRA.

You are also limited to just one 401k rollover into a Gold or any other IRA per year.

What Physical Gold is allowed in a Gold IRA Rollover?

The physical gold allowed in a Gold IRA includes gold, silver, platinum, palladium, and platinum bars, rounds, and coins. However, the IRS states that they must be produced by a national government mint, manufacturer, precious metals analyst, or COMEX, LME, NYMEX, ISO 9000, NYSE/Liffe, LBMA, TOCOM, OR LLPM certified refiner.

All gold products must also have a minimum fineness of 99.5%, while silver products must contain at least 99.9% pure metal. Platinum and palladium precious metals products also have a minimum fineness requirement, which is 99.5%.

Lastly, proof and nonproof bullion coins must be in excellent condition and include a certificate of authenticity.

Which Companies Can Help With a Gold IRA Rollover?

The best Gold IRA rollover ultimately depends on your needs. For instance, Gold IRA rollover companies work with different depositories in various locations throughout the U.S. Hence, if having your precious metals stored in a depository near you matters, then you may consider choosing a Gold IRA company that works with a storage facility in or near your area.

You should also consider the company's experience working with Gold IRA rollovers. The more experienced the company is, the smoother the process will go, and they will be knowledgeable enough to answer all of your questions.

More experienced Gold IRA companies also usually have a list of vetted custodians and depositories to choose from, which helps take the guesswork out of having to search around for one on your own.

However, it is strongly advised that you still research each of their custodians and storage facilities on your own to ensure their ratings, customer reviews, fees, etc., sit well with you before trusting them with your money and investments for greater confidence.

Are You Ready to Start Your Rollover?

Hopefully, this Gold IRA Rollover Guide has helped you understand the power of diversifying your retirement portfolio with alternative investments such as precious metals. However, the true power lies in incorporating the right ratio of precious metals to traditional assets, which an experienced financial professional can help you do.

It is also important to choose the right Gold IRA company and custodian to help make the rollover process easy and penalty-free. So, be sure to check out the list of the Top Gold IRA companies we have provided to help you get started finding the right ones for you.

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Carson Ash

After earning my degree in Economics from Princeton University, I started on the Wall Street grind, working for J.P. Morgan as a Financial Analyst and a Professional. Over those years, I learned a lot about investment banking and how to diversify portfolios. I later developed a strong passion in Precious Metals and Gold IRA investing companies, helping hundreds of clients reach retirement earlier than ever before.

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