How to Invest in Gold in Your IRA

By Beverly DeVeny, IRA Technical Expert
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Have you seen or read those ads for putting gold in your IRA? They make it sound so easy. And that’s the problem.

Yes, you can invest in certain types of gold in your IRA. There are only three things that the tax code says you cannot hold in your IRA:

  • life insurance
  • collectibles
  • S-corporation stock

Some gold coins will be considered a collectible so make sure you are investing in the right type of gold. You can find more information in IRS Publication 590-A available at  

You also will need to make sure that your IRA custodian will hold the gold for you in your IRA. Many custodians only want to hold investments in stocks, bonds, mutual funds, or cash – in other words assets that are readily marketable and easy to value. You may need a self-directed IRA account in order to invest your IRA funds in gold.

Your IRA must buy the gold. You cannot take money out of your IRA, buy the gold, and put the gold in your IRA. You also cannot buy the gold with IRA funds and keep it at your house, your business, in your car or any other special place. It must be bought by your IRA, with your IRA funds. Money leaves your IRA and gold comes back into it. You don’t get to see it, touch it or smell it. Only your IRA can do that.

I once talked to an individual who had started the process for his IRA to invest in gold. He was working on the paperwork to open the self-directed IRA. He had his IRA funds distributed to him and was waiting for the new account to be opened so he could complete his rollover and get his gold. In the meantime, the price of gold was going up each day. Finally, he couldn’t stand it any longer, so he took his IRA money and bought the gold. Then he told his advisor what he had done, and they called me.

I explained to the individual that he could not put his gold into his IRA. The tax code says that whatever you take out is what you must put back. He took out cash; he has to complete the rollover with cash. In order to complete the rollover he had to sell his gold. The good news was that the price had gone up and he had made money. The bad news was that the money was taxable because it was not earned in the IRA.

A client I spoke with recently kept insisting that the company he had spoken to said that the gold could be shipped directly to him so that was what he wanted to do. He wanted to be able to see it and touch it. Of course the gold can be shipped directly to him. But then it is not an investment in his IRA for the same reasons stated above.

Note: The procedures and pitfalls noted here apply to any alternative investment such as real estate, debt instruments, etc. The IRA must make the investment. All expenses of the investment must come from the IRA.

An alternative to actually investing in gold is to invest in a fund that invests in gold. Then you don’t have any problems. Most IRA custodians will have that option available to you.

Be careful of the information you receive when considering an alternative investment. Sometimes you have to look at who stands to make money on your transaction. If the person making the money is the one who is giving you “qualified” advice, you might want to get a second opinion.


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