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What You Should Know About Gold IRA Tax Rules

What You Should Know About Gold IRA Tax Rules

Gold is one of the most important alternative investment classes in the world, with a market cap of nearly $11.4 trillion. A safe haven for millennia, investors are now realizing that individual retirement accounts (IRA) can be used to invest in it. IRAs are a  tax-deferred or tax-exempt powerful investment vehicle that gives you the freedom to invest with a kind of loan from the government (the taxes you don’t have to pay), to compound wealth in the long run. One of the most attractive IRA types is the self-directed IRA. A self-directed IRA allows investors to invest in alternative investments such as gold. Here are the gold IRA tax rules that you should know.

The Tax Status of Gold IRAs

When you approach a gold IRA company to help you establish a gold IRA account, you will be provided with various options. There are five main classes of IRA: a traditional IRA, a Roth IRA, a SEP IRA, a SIMPLE IRA, and a Conduit IRA. Since 1986, Americans have had the option of using their IRA to invest in gold, by converting it into a self-directed IRA. The most common self-directed gold IRAs are a traditional IRA, SEP IRA, or Roth IRA. (Although we refer to a “gold IRA”, this is a synonym for a “precious metals IRA”: according to the Taxpayer Relief Act of 1997, investors can invest in gold, silver, platinum, or palladium. The most common investment is in gold, so precious metals IRAs are often just referred to as gold IRAs).

Traditional Gold IRA

Contributions made into a traditional IRA are largely tax-deductible, and all transactions and gains made within it have no tax impact. Any withdrawals made at retirement are taxed as income. Traditional IRAs are either deductible IRAs or non-deductible IRAs, depending on the nature of the contribution.

Investors are limited to contributions of $5,500 a year, for those under 50, and $6,500 for those over 50.


A Simplified Employee Pension (SEP) IRA allows employers(usually a small business or a self-employed person) to contribute into a traditional IRA set up in their employee’s name, rather than a pension fund in that employer’s name.

SEP Gold IRAs allow investors to contribute as much as 25% of their ordinary income., or as much as $53,000 per year. 

Roth IRA

The Roth IRA, named after Senator William V. Roth Jr., does not carry any immediate tax benefits. Contributions into a Roth IRA are non-deductible and earnings and transactions within it have no tax impact. You are free to withdraw your contributions at any time without having to pay any penalty. Withdrawals at retirement are tax-free.

Other Considerations

Collectible coins are not permissible except for specially approved coins and bullion. You are not permitted to keep physical possession of the gold that you invest in, rather, it must be stored by a third-party storage facility.

Typically, traditional gold IRAs have the highest returns, compared to Roth IRAs. SEP IRAs have the lowest returns of the three.

If you cash out from an IRA, you become liable for capital gains tax, including an early-withdrawal penalty of 10%, where applicable. You will also no longer be under the 28% collectible tax rate but will be charged at your marginal tax rate (which depends, of course, on your income bracket).

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