How a Gold IRA Works: A Step-by-Step Guide to Owning Physical Gold in Retirement

For those looking to diversify their retirement plan, a gold IRA provides the same tax advantages as a conventional IRA. But the big difference is that it allows you to buy and hold gold and other physical precious metals, and even request in-kind distributions, which allows you to receive withdrawals as physical gold instead of money.

Because of its tax advantages and the inherent diversification it can bring to a portfolio, gold IRAs can be valuable resources for your retirement. As a long-term inflation hedge, gold can help offset or minimize portfolio losses during periods of economic uncertainty.

According to precious metals dealer Goldco, “a well-balanced mix of assets can offer you the potential to improve returns and help protect your principal without subjecting yourself to unnecessary concentration risk.”

While conventional IRAs allow individuals to buy shares of gold mining stocks or gold-backed exchange-traded funds, some value physical, tangible assets. Gold also eliminates your reliance on financial institutions and makes it easier to take your net worth off-the-grid.

If you are interested in diversifying your retirement plan with gold, you can follow these steps to set up a gold IRA and start accumulating precious metals.

Compare gold IRA plans

The first step to setting up a gold IRA is to compare various gold IRA plans. Many gold IRA companies let you create these accounts, but varying fees, diversification options, minimum purchase requirements and buyback policies don’t make it an easy decision.

One-time setup fees, annual administration fees, storage fees and insurance, wire fees and dealer markups (i.e., spreads) are some of the most common expenses. Some gold IRAs have no setup fees but have high spreads and charge steep storage fees that end up costing more than a gold IRA with a one-time setup fee, more forgiving markups and lower storage fees.

You can request a gold IRA company’s fee schedule to see its complete list of charges. AI tools may be able to help you find a fee schedule, and it’s common for precious metal custodians to make their fee schedules easy to find. Importantly, do not work with a gold IRA custodian unless you review its complete list of fees.

It’s also recommended to read online reviews for each gold IRA provider before making your final decision. These reviews can help you gauge the quality of a company’s customer support, product offers and whether the gold IRA custodian has your best interests in mind.

Notably, you won’t be able to use a conventional broker like Fidelity or Vanguard for your gold IRA. Rather, gold IRAs are self-directed — which allows them to hold alternative assets — and not every company offers them. Make sure the options provided by a gold IRA align with your goals: Some people only want to buy gold, while others want the flexibility of buying other eligible precious metals, including silver, platinum and palladium to diversify their holdings.

Sign up and fund your account

Once you pinpoint the right gold IRA for your long-term financial goals, the next step is to sign up for an account. You will have to provide the usual personal information: your name, email address, physical address, Social Security number and a government-issued photo ID among other details. New customers will also have to provide a bank account so money transfers can take place when you want to make new investments or withdrawals.

It’s important to understand that many gold IRAs have minimum purchase requirements that you must fulfill before you can open an account. However, these minimums often exceed what the IRS lets you contribute to a plan each year. This setup means gold IRAs expect most of their customers to conduct rollovers from existing plans.

Goldco’s site notes that “rollover contributions to a precious metals IRA are not limited by the normal annual contribution limit, so you can roll over $10,000, $100,000 or $1 million or more from existing retirement accounts, and you can do it tax-free.”

If you want to roll over money from an existing 401(k) or IRA plan, you must convert the amount you want to roll over into cash. For instance, if your 401(k) plan has $200,000 in equities, and you want to roll over $10,000 into a gold IRA, you must sell enough equities until you have $10,000 in cash. Then, the rollover will take place smoothly.

Choose from eligible precious metals

Once the money clears your gold IRA, you can choose from eligible precious metals that your custodian supports. Storage for any physical precious metals you purchase in an IRA will be facilitated by your custodian with a third-party depository. That’s because the IRS doesn’t allow people to store their own physical gold if it is part of a gold IRA. (You can still buy physical gold and keep it in your home, but it won’t receive the same tax advantages as it would in a gold IRA.)

The IRS has specific requirements on the fineness of the gold you can buy in an IRA. There are also similar rules for other precious metals. When you withdraw from a gold IRA, you can either receive cash or an in-kind transfer. The latter option lets you obtain physical gold equal to the amount that you withdraw from your account.

Build your gold IRA over time

A gold IRA will start small, but it can grow over time with recurring assets and appreciation. Over the past five years, gold has outpaced the S&P 500, and if inflation and economic uncertainty continue, precious metals could continue their recent rally.

The IRS lets you contribute up to $7,500 per year in tax year 2026 for an IRA. Be aware that this limit is combined across all of your IRAs. For instance, if you put $4,000 in a conventional Roth IRA, you can only diversify up to $3,500 in a gold IRA, assuming you do not invest in any other IRA. The annual contribution limit goes up to $8,600 if you are 50 years or older due to catch-up contributions.

Another important detail to consider is whether you want a traditional gold IRA or a Roth gold IRA. Most gold IRA custodians let you choose between both plans, and there are major tax differences. Contributions toward a traditional gold IRA are not taxed, but you will have to pay taxes on withdrawals. Roth gold IRAs, on the other hand, let you make post-tax contributions, and then you don’t pay taxes on withdrawals. Capital gains are also tax-free in a Roth IRA.

You may want to speak with a professional to determine which account is right for you. However, traditional IRAs are usually better for high-earners who can avoid high tax rates right now, while Roth IRAs are optimal for younger investors since they have more time for their investments to compound in the long run.