How to Convert Your IRA into a Gold IRA

by Grant HEnson

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Precious metal investments have hit a boom in this new age and for good reason. Not only do they help investors diversify their portfolio, but they’re also a hedge against inflation. Something that’s all too necessary considering the world’s currently unstable financial climate. 

But how can you ensure that your investment in precious metals today yields the highest rewards in the long run? You convert your current IRA (Individual Retirement Account) into a gold IRA. This type of retirement savings account offers alternative investment opportunities beyond the traditional options like stocks, bonds and Exchange Traded Funds. Among these options are precious metals like gold, silver, platinum and palladium. 

Plus, the age restrictions imposed on the withdrawal of these assets ensure that you receive long term gain. With that said, here’s how you can start the process of converting your IRA into a gold IRA.  

Understanding Gold IRAs

Gold IRAs and self-directed IRAs, while related, are distinct types of retirement accounts. A Gold IRA specifically focuses on holding precious metals like gold within your retirement portfolio. On the other hand, a self-directed IRA is a broader category that allows you to diversify your investments into various alternative assets, including gold. To include gold in your retirement savings, you must convert your existing IRA into a self-directed IRA.

All self-directed IRAs are overseen by a custodian who manages the account until it's time to hand it over to you after retirement. Thus, similarly, picking the right custodian for your gold IRA is quite an essential decision. One which requires careful consideration of the knowledge and expertise of the available options in handling gold investments. Moreover, they need to be trustworthy and have an excellent track record of handling their customers' gold investments. 

Other than that, having gold as part of your portfolio is — in most cases — a wise decision. Gold is a relatively stable investment that acts as a hedge against market volatility. Thus, allowing you to spread the risk of your investment portfolio, while offering long term profits. For this same reason, investing in gold is also a great way to preserve your wealth, as it’s able to retain its value during economic downturns or currency devaluations. 

All in all, gold IRAs can be profitable in the long run, provided you choose the right custodians and don’t incur any tax penalties during the transfer.

Assessing Your Current IRA

The most essential step in converting your existing IRA into a gold IRA is understanding what type of IRA you currently own. More importantly, it's about understanding if your current retirement account can even be converted into a gold IRA. Currently there are 4 major types of IRAs that the IRS allows you to transfer funds from:

  • A traditional IRA
  • A Roth IRA
  • A SEP (Simplified Employee Pension) IRA
  • A SIMPLE (Savings Incentive Match Plan for Employees) IRA

Additionally, individuals who own a company-directed 401(k) are also eligible to rollover their assets to a gold IRA, provided they’re no longer employed by the sponsoring employer. 

Having said that, it's still important that you assess the situation of your current investments to evaluate if it's even suitable to set up a gold IRA. Yes, gold can be a safe-haven investment, but its value can also fluctuate. 

Thus, it's essential that you compare the risks with the benefits before making important decisions. Plus, you also need to evaluate if diversifying your investment portfolio even further is even worth it by assessing the different asset classes you’ve invested in. 

Choosing a Gold IRA Custodian

Searching for the right custodian for your gold IRA is a crucial step in the conversion process, and patience is key. The gold IRA custodian plays a pivotal role in ensuring your account complies with IRS regulations and effectively manages your precious metal assets.

This includes a plethora of key functions and responsibilities. To begin with, they’re in charge of handling all of the paperwork and documentation necessary for establishing and maintaining your gold IRA. 

Once your account is set up, a custodian assists you in transferring your funds from your existing IRA to your gold IRA. Lastly, the custodian helps you decide which IRS-approved precious metals you should invest in and work with secured IRS-approved depositories to store your precious metals. 

Facilitating storage in the most secure depositories is actually what separates the great gold IRA custodians from the ordinary. Ordinary custodians (whom you shouldn’t trust!) will actually advise you to store your metals at home. This can be quite a risky endeavor since the chances of theft are much higher when your gold is stored at home. Plus, this can also open you up to some IRS penalties. 

The absolute cream of gold IRA custodians also excel at record keeping. Thus, ensuring that you’re able to file your taxes with as much ease as possible. See our article about the best gold IRA custodians. Our number 1 choice is Goldco as it is extremely reliable, has excellent customer service, and low fees. Read our comprehensive Goldco review to learn more.

The Conversion Process

Now, if you are prepared to invest in precious metals and convert your existing IRA to a gold IRA, we’ve broken down the process into a series of steps that you need to follow. 

1. Set up your Self-Directed IRA

In order to transfer funds from an existing IRA, you’ll first need to set up your gold IRA, also known as a self-directed IRA. The right way to do it is by invoking the services of a reputable gold IRA company to guide you through the process of setting up the account. 

Take your time with this decision, as the company will not only be responsible for helping you transfer your assets from your IRA, it’ll also be responsible for ensuring IRS compliance. Once you’ve chosen your company and contacted them, they’ll set up your gold IRA for you.

2. Transferring Funds

With your gold IRA now set up, the only thing left to do is rollover your assets from your existing traditional, Roth or SEP IRA. You can initiate the process by contacting your existing IRA’s administrator, expressing your desire to move funds and connecting him with your self-directed IRA’s custodian. 

Both custodians will then provide you with some instructions that you need to follow. The whole process can take around 2-3 weeks. 

Selecting and Purchasing Your Gold

Once the paperwork and documentation of your new gold IRA is complete and the funds have been transferred, you’ll be free to invest in IRS-approved gold coins and bullions. 

The IRS has set some specific standards precious metals have to meet in order to be eligible for purchase through a gold IRA. These standards are purity based and differ for each precious metal. 

  • For gold, its purity must be 99.5%
  • silver must be 99.9% pure and
  • platinum must be 99.95% pure.

Plus, any gold or other precious metals purchased must also be produced by a government approved mint. 

The IRS also places special emphasis on compliance when it comes to these assets and incur heavy taxes or penalties on those who don’t fill out and submit the required paperwork. 

Thankfully, the precious metal dealers you’ve hired should take care of all of this for you. A reputable precious metal dealer will also provide you with an immense variety of gold coins and bullions that’ve been produced by IRS-approved national mints. 

You can hire a financial advisor here to guide you in choosing specific coins to invest in, while also ensuring that you diversify your investments within all precious metals, instead of just gold.  

Storage Considerations for Your Gold

One of the responsibilities of your gold IRA’s custodian is to find a secure place to store your account’s precious metals. It's highly likely that the only input you’ll have in this process is choosing your assets’ storage location from a list of IRS-approved depositories provided by your custodian. 

Having said that, it's still important that you have some semblance of IRS’ storage requirements when it comes to your gold IRA’s precious metals. These specific requirements are in place to maintain the tax-advantaged status of all gold IRAs. 

To begin with the IRS has made it mandatory to store the gold in an IRA in IRS-approved depositories. These depositories are specialized facilities, equipped to store precious metals in IRAs. There is no correlation between them and regular bank vaults. 

The IRS also requires that gold in a self-directed IRA be stored in segregated storage. Essentially meaning that your specific gold holdings should be physically separated, identified and stored apart from other customers’ metals in a depository. This’ll ensure that your assets are distinct and easy to identify, as they’re not being mixed with other individuals’ assets. 

Lastly, the IRS requires that all your precious metals in an IRA be insured against theft or loss. Insurance coverage is a pretty well known feature of reputable depositories, so you’re pretty much covered there already.

Potential Costs and Fees

The storage and safety of your gold IRA’s precious metals can come with some potential costs and fees apart from what you pay to buy the assets. These fees are usually paid to your gold IRA’s custodian who’s responsible for managing the storage and security of your gold IRA’s precious metal assets. 

Potentially, there are three types of fees associated with gold IRAs.

One-time Setup Fee

The first is one-time setup fees charged by the gold IRA company responsible for setting up your self-directed IRA and for transferring funds from your existing IRA. This fee can range anywhere from $50 to $300 based on the facilities provided by your chosen precious metals dealer. 

Annual administrative Fee

Next up is an annual administrative or custodial fee that can range from $50 to $150. 

Storage Fee

Lastly, you’ll also most likely have to pay a storage fee that can be anywhere around 0.5% to 1% of the total value of your precious metals. 

Pay close attention to these three types of fees and remember them well. There have been reports about reputable gold IRA companies cleaning out their customers’ accounts by charging some hidden fees or pushing them to make risky investments. 

So, make sure you take the time to do your due diligence before choosing the company you’re going to create your self-directed IRA with. It may cost slightly more, but we’d also recommend consulting a certified financial advisor to go through each company's terms and conditions. But most of all, do not get pressured into making an investment you don’t want.

Tax Implications of the Conversion

Contrary to popular belief, converting an IRA into a gold IRA can be taxable depending on the type of gold IRA you’re converting to. 

Yes, converting to a traditional gold IRA is tax free, provided your custodian doesn’t incur any tax penalties from the IRS during the transfer. That’s because in a traditional gold IRA, contributions are made from pre-tax dollars and the earnings in your account grow tax-deferred until you withdraw them after hitting your retirement age. Thus, if the transfer is done correctly, the event of transferring funds from your IRA to a gold IRA is not taxable. 

However, if you’re converting to a Roth gold IRA you’ll have to pay taxes on the converted amount. Using the same line of reasoning, this tax is due to Roth IRAs being funded with after tax dollars and traditional IRAs being funded with pre-tax dollars. The exact amount of the tax that’ll be charged is calculated on the converted amount at your current income tax rate. This can result in a serious tax liability in the year of the conversion. 

Apart from conversion taxes (if any), the IRS is also quite strict in imposing tax penalties on individuals who try to access the gold in their IRA before they’re of retirement age. This rule applies to all types of IRAs including both traditional and Roth. 


In summary, converting your IRA to a gold IRA is manageable with the right custodian and company. Reputable firms make it easy, requiring minimal effort from you. Your main decisions involve choosing the custodian for conversion and a secure depository for your precious metals. 

Don't hesitate to establish and fund a gold IRA, as it's a vital hedge against market volatility and inflation for your retirement portfolio. Keep an eye on tax implications and custodians during the transfer, and you'll be closer to financial security.

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