Gold IRA Rollover Guide (2023): Diversify Your IRA with Precious Metals22 min read

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This Gold IRA Rollover Guide reflects laws and regulations in place in the U.S. as of January 2023. Writing commenced just days after the passage of the SECURE 2.0 Act, which changed a number of standards related to retirement accounts.

President Biden signed the bill into law in the very last days of December, 2022. Accordingly, the majority of Gold IRA Guides published in 2022 are not likely to reflect these critical changes. We will share some more details below under the headline “What’s New?”

While this resource serves as a general guide for gold IRA rollovers, the reader is reminded that the guide itself should not be considered to be investment advice; please speak with your investment advisor and/or tax professional for advice on your specific financial situation.

If ready to get started with your gold IRA, request more information from a top rated gold IRA company here.

Note: Except where we refer to specific types of bullion, the general information in this guide will apply to all precious metal IRAs. 

Benefits of Gold

Since the dawn of civilization, gold has been a recognized store of value, measure of wealth, and universally recognized currency. Its physical beauty, scarcity, and now its increasing usefulness in a variety of industrial applications combine to make gold and other precious metals an increasingly valuable asset class.

Nations, empires, and epochs have come and gone. Innumerable currencies have disappeared, or have been inflated beyond their usefulness thanks to government mismanagement, overspending, over-printing, and the general debasement of the money supply.

But physical gold continues to stand tall, outlasting hundreds of empires and dynasties, and retaining its buying power through countless times of war, famine, plague, uncertainty, and upheaval. For this reason, civilizations frequently feel comfortable investing in gold.

Gold is especially important in times of stock market uncertainty and high inflation, such as we are experiencing now. In fact, during times of economic uncertainty, gold and other precious metals tend to become even more valuable in comparison to most global currencies (since its especially common in these cycles for people to invest in gold).

You should also be aware that gold is not a perfect hedge against stock market declines; there have certainly been times when gold has struggled even as inflation has heated up. However, in the long run, exposure to gold and other precious metals within an investment portfolio has historically contributed a diversification benefit, lending ballast to portfolios otherwise heavily exposed to stocks, bonds, and other paper assets.

Gold also has recognized intrinsic value: unlike countless stocks, bonds, currencies, and other paper assets, the value of a troy ounce of gold has never fallen to zero.

Related: How to Diversify Your 401(k) with Physical Gold & Silver (Tax-Free)

What Other Metals Can I Hold in a Precious Metals IRA?

In addition to investing in gold, U.S. law allows investors to own three other types of precious metals within an IRA or other tax-advantaged retirement account: silver, platinum, and palladium. 

• Gold held in IRAs must generally be of a minimum fineness of .995 (99.5 percent pure), except for some U.S.-minted coins that are made of a more durable and scuff-resistant gold alloy. The law makes an exception to otherwise applicable purity requirements for American Gold Eagles and certain other U.S.-made gold coins and bars. 
• Silver must have a minimum fineness of .999 (99.9 percent pure).
• Platinum and palladium must be minted to a minimum fineness of .9995 (99.95 percent pure. 

In addition to meeting the minimum fineness requirements, all IRA-owned bars, rounds, and coins must be bullion, produced by a national government mint, or manufactured by a refiner assayer or manufacturer accredited by NYMEX, NYSE/Liffe, LME, LPPM, COMEX, ISO 9000, or TOCOM. 

Proof coins must be in “excellent” condition, stored in the original and complete packaging from the mint.

Non-proof bullion coins must be in “brilliant uncirculated” condition, and free from scuffing or damage.

Small bullion bars must be manufactured to precise weight specifications. Exceptions are 100- and 400-ounce gold bars, 1,000-ounce silver bars, 50-ounce platinum, and 100-ounce palladium bars. 

What is a Gold IRA Rollover? 

One investment vehicle that permits people to save for their retirements is an individual retirement account (“IRA”). The difference between a standard IRA and a gold or precious metals IRA, is that the former holds paper assets, while the latter allows people to invest in gold or other physical precious metal assets (e.g., gold bullion, coins, bars) that are held by a custodian on behalf of the account owner.

The process is exactly the same whether your IRA contains physical gold, silver, platinum, or palladium. The taxation of a gold or precious metal IRA rollover is similar to the process you would use for any other self-directed IRA.

Note: Taking personal possession of your physical gold in your retirement account is actually prohibited by law. When you hold physical precious metal in a retirement account, you cannot hold it physically in your own personal possession. Instead, your IRA custodian will work with a secure vault service for that purpose.

Why Do a Gold IRA Rollover?

Like it or not, the dollar is a steadily-depreciating asset. Over the last century, the dollar has lost more than 90% of its purchasing power.

In contrast, gold has been a relatively reliable store of value decade after decade, century after century. While the gold market has ups and downs, it is historically resistant to inflation. Over long periods of time, gold has historically been an effective safeguard against the risk of inflation, hyperinflation, and even economic collapse. 

A gold IRA rollover allows you to transfer money from a standard IRA or other retirement investment vehicle(s) into ownership of physical gold benefit from the investment properties of gold and other precious metals on a tax-favored basis.

By doing a gold IRA rollover, you don’t have to pay income taxes or early withdrawal penalties on the transaction. This allows you to keep more money compounding tax-deferred – or, in the case of a Roth IRA account, tax-free. 

Absent a gold IRA rollover process, you would have to use after-tax dollars to purchase gold. Which means you wouldn’t be able to buy as much of it. And you’d have less gold compounding for you and working for you as an inflation hedge, a hedge against stock market volatility, and against economic uncertainty.

What Is an IRA Custodian? 

An IRA custodian is a financial institution that has been cleared by state regulators and the Internal Revenue Service to handle retirement assets on behalf of taxpayers. They are highly-regulated entities that must conform to strict standards and must adhere to stringent internal controls and procedures to protect clients’ assets.

Your custodian will handle your IRA transactions on your behalf, keep records of your transactions, provide you with regular statements, and follow legal/IRS reporting requirements.

Custodians are necessary because U.S. law forbids IRA owners from taking direct possession of IRA assets. All IRAs and other retirement plan savings accounts are required to have a custodian.

Not all custodians will handle gold IRAs, however. Instead, most IRA custodians are set up to handle paper assets only, such as cash, stocks, bonds, mutual funds, and ETFs, and so they aren’t administratively geared to handle tangible assets such as gold and other precious metals, real estate, closely-held C-corporations, partnerships, and LLCs (all common assets held in gold IRAs and other precious metals within this category of retirement accounts).

If you’re considering opening a gold IRA, a precious metals IRA, or a self-directed IRA of any kind, you should make sure that the custodian you are considering is capable of handling that type of asset before opening an account with them.

At the same time, it might make sense at this point to also ask the custodian for a schedule of their annual fees (the annual fees tend to vary, so it makes sense to figure this out at the outset). To the extent you would like to review a shortlist of companies I recommend, please see my Reviews page [insert link here], all of which provide a listing of each respective company’s annual fees.

Related: Augusta Precious Metals Review – Reputable Gold Dealer for 2023?

Eligible Account Types

You can conduct a rollover and fund gold IRAs from any of these eligible account types:

• Employer-sponsored 401(k)
• Self-directed 401(k)
• Traditional IRAs 
• Roth IRAs (but only to another Roth)
• Thrift Savings Plan
• 403(b)s
• 457(b)s
• SEP IRAs
• SIMPLE IRAs

Traditional IRAs vs. Roth Accounts

IRA accounts come in two basic forms: Traditional IRAs and Roth IRAs.

The difference lies primarily in how they’re taxed. Traditional IRAs are tax-deferred investment vehicles. Roth IRA contributions are taxed up front, but growth is generally tax free, as long as you leave the assets in the account for at least five years.

Traditional IRA accounts contributions may be fully or partially tax deductible, if you meet certain income thresholds. If you make over a certain amount of adjusted gross income, you can still make contributions on a non-deductible basis.

Once the money is in the account, all taxes are generally deferred (exception: UBIT/UDIT taxes, described in our Guide to the Taxation of Gold IRAs. However, these only apply if you borrow money to buy assets within your IRA).

The benefit of tax deferral is so powerful that it is often worthwhile to maximize contributions even if you don’t qualify for a tax deduction on your contribution up front!

Traditional IRAs also subject to potential required minimum distributions, usually beginning at age 72 under current law.

Roth IRA contributions, in contrast, never qualify for pre-tax treatment. Instead, Roth contributions are always after tax. But once the assets are in the Roth account, future growth on those assets (UDIT and UBIT aside), are always tax free, if you leave the assets in the account for at least five years.

That means there’s no tax on growth, interest, or dividends. It also means that unlike with traditional IRAs,  there is no tax on income as you take money out of a Roth account in retirement.

Roth IRAs provide tax free growth.

Additionally, Roth accounts are not subject to required minimum distributions at age 72 and up like traditional IRAs are. Roth IRAs can grow tax free indefinitely, until the death of the owner. 

IRA Rollover Rules

The 60-Day Transfer Rule

When you withdraw assets out of a retirement savings account, you only have 60 days from the date of the withdrawal to complete the process of depositing them to your new retirement account.

Otherwise, the Internal Revenue Service will deem the amount you failed to transfer into a new IRA to be a distribution, which would be subject to federal income taxes, state income taxes, and potentially a 10% excise tax on early withdrawals, depending on your age, employment status, and the type of account.

In some cases, your accountant or enrolled agent can petition the IRS to waive the 10% penalty by writing a letter explaining you were in the hospital or had some other compelling reason why you couldn’t complete the transfer. However, if you’re under age 59 ½ for IRAs, or under age 55 (for 401(k) withdrawal), you’ll still have to pay an income tax on the transaction.

The 60-day transfer rule is only applicable if you take possession or constructive receipt of your withdrawn retirement account assets personally.

So who would want to take possession of their own retirement account assets in person and risk violating the 60-day rule?

Answer: Someone who wants to put the cash to work for up to 60 days. For example, you might want to leverage the cash to make a strong offer on an investment property; being able to make an offer that isn’t “contingent on financing” will be a much more attractive offer to the seller as that means that the transaction will close quickly.

This can be an important advantage in a competitive bidding situation, and can help the buyer purchase a property at a much more favorable price. 

So, if you have a lead on a great investment property from a motivated seller who needs to close quickly, you can sign the purchase contract, initiate an IRA rollover, and pay the seller with that money.

From the date of your withdrawal, you have 60 days to find another source of funding to deposit into your new IRA (or back into your old one!) or find other financing. 

People have also used IRA rollover proceeds to fund very short-term liquidity needs like purchasing inventory for their business, make payroll, or use as short-term bridge funding for other purposes.

Note: The government generally frowns on using IRA rollover funds as a frequent source for personal short-term loans. This is why the law limits taxpayers to just one IRA rollover per year – even if they have multiple accounts. 

Related: Gold IRA Tax Rules – Buy Physical Gold & Silver (Tax-Free)

The ‘One Rollover Per Year’ Rule

Per Section 408(d)(3)(B) of the Internal Revenue Code, every taxpayer is limited to one penalty-free 60-day rollover per rolling 12-month period. (Note: It’s not one rollover per calendar year period. Once you execute a 60-day rollover, you must wait the full twelve months before you execute another rollover.

The rule only applies to you if you take possession of the assets in your old IRA. That is, if your old IRA sends you a check or wires the funds directly to your account.

Please note that the “one rollover per year” rule does not apply in these situations: 

• Roth conversions (transfers from traditional IRAs to Roth IRAs);
• Trustee-to-trustee transfers from one IRA to another;
• IRA transfers to a workplace retirement plan, such as a 401(k);
• Rollovers from 401(k)s or other small business retirement plans (e.g., SEP and SIMPLE plans) to an IRA; and
• Rollovers between two 401(k)s or small business retirement plans.

Trustee-to-Trustee Transfers

To avoid the risk of accidentally forgetting to complete your transfer within 60 days, you should execute a direct trustee-to-trustee transfer.

In a trustee-to-trustee transfer, your assets do not pass through your personal possession or control at all. They are typically wired from one account or custodian to another. So, in this type of account, there’s generally no risk of accidentally breaking the 60-day rule and exposing yourself to the penalty. 

Unless you have a specific reason you need to take possession of your IRA assets for up to 60 days, it’s almost always better to do a trustee-to-trustee transfer rather than a 60-day rollover. 

IRA Rollovers vs. Transfers

While people commonly use these terms interchangeably, it’s important to note that there is a technical difference between the two terms:

A transfer refers to moving money between two accounts of the same type. For example, an IRA to an IRA.

A rollover refers to moving money between two different account types. For example, a 401(k) or 403(b) account to an IRA.  

IRA-Eligible Gold and Precious Metals 

Once you’ve moved your money into your new IRA or Roth IRA account, it’s time to purchase some gold or other precious metals.

But you can’t just purchase any old form of gold. You have to follow some pretty strict rules:

First, you can’t buy the gold from your local coin collector shop or over the Internet and have it delivered to your house, thinking you’re going to mail the gold coins or bars to your IRA custodian and have them keep it for you.

Your custodian or third-party administrator must purchase the metal on your behalf, and ensure it’s stored in a secure vault.

Second, you can’t just buy any form of gold, silver, platinum, or palladium. You can only buy bullion, and only from certain mints and manufacturers. 

What is Bullion? 

Bullion is a precious metal product manufactured in a standard, consistent purity and unit of measure, designed primarily for investment and transactional purposes.

Bullion products can be bars, coins, or rounds.

They aren’t designed or meant to be collectibles, or to have any significant value beyond their weight in metal at current market spot prices.

Investing in Bullion vs. Numismatics and Collectibles.

All IRA precious metal investments must be in bullion. Jewelry and collectibles are specifically disallowed for IRA investments by law under Internal Revenue Code (“IRC”) Section 401(a), as are many forms of bars, rounds, and coins that are manufactured for their numismatic or collector value, as opposed to their intrinsic metal content.

Some bullion products are quite beautiful – particularly “proofs,” which are the first-struck coins of any minting series. Proofs are made from specially polished and burnished blanks, and struck multiple times for extraordinary detail and relief.

Related: Gold IRA Investor Kit – Read this Before Buying Gold with Your IRA

Do Not Buy Numismatics or Collectibles for Your IRA. 

IRA investors are strictly disallowed from investing IRA assets in collectibles of any kind [see IRC Sections 401(a) and 408(m)]. Bullion is the only form of precious metal authorized for inclusion within IRAs and other self-directed retirement investments.

Some salespeople (fortunately, just a few), could attempt to convince you into investing in special collectors’ items, or numismatics, as investments based on their value in the collector’s market. These items could sell well above the spot price for the amount of precious metal they contain.

While experienced collectors may deem these items as a good “investment,” make no mistake that they are never appropriate for an IRA or other retirement account. Instead, IRA investors should generally stick to bullion, sold close to the spot price.

You could, however, use your IRA to invest in coins described under 31 USC Section 5112, coins of sufficient purity and fineness minted by the government of any sovereign state, and coins or bullion kept in the possession of a bank or non-bank trustee. 

Proof Coins in Your IRA – Legal, But Not a Great Idea

Proofs in good condition are gorgeous products. But for the purposes of IRA investing, it’s best to stick to ordinary forms of bullion, and leave the proofs to experienced investors. 

Because of their physical beauty and scarcity, proofs in good condition sell at a significant premium to their weight in precious metal. That means you pay a higher price for every troy ounce of metal you buy. That premium cuts into your investment returns. 

Investing in proofs for your gold IRAs isn’t explicitly prohibited by the law. However, the proofs have to be in mint or excellent condition, and stored in their original packing material from the mint. 

Proof coins and bars are such beautiful products, but many see investing in them to be a waste since they would need to be stored in a vault somewhere as per applicable laws. The bottom line is most investors should leave proof editions for experienced collectors, who will (hopefully) store and display them properly so their beauty can be properly appreciated. 

Prohibited Transaction Rules

The law prohibits “self-dealing” within retirement accounts, including gold and silver IRAs. In other words, you can’t use your tax-advantaged retirement savings as a personal piggy-bank to benefit your family members and business partners.

To that end, Congress has enacted several “prohibited transaction” rules that apply to all types of retirement accounts:

For example, you cannot use retirement accounts to buy, sell, lend to, or borrow from any of the following:

• Yourself
• Your spouse
• Your direct descendants and ascendants
• Your spouse’s descendants and ascendants
• Anyone who advises you on your retirement portfolio in a fiduciary capacity
• Any entity controlled by any of the above parties 
• You cannot make personal use of or take personal possession of the physical assets within your IRA – nor can any of the above parties 

Additionally, you cannot pledge anything in your retirement account as collateral for a loan – except within your retirement account itself. For example, you cannot use the gold bars in your IRA as collateral for a personal loan, business loan, or mortgage for any property outside your IRA.

However, you could potentially use the assets in your gold IRAs as collateral for a loan for the IRAs, themselves – for example, to leverage up to buy real estate to be held within your gold IRAs, or to buy more precious metals for your IRA portfolio.

The key is to keep the collateral and the loan proceeds and everything they buy within the IRA.

If you are caught making prohibited transactions, the Internal Revenue Service may disallow your entire IRA, and force you to take an immediate taxable distribution of the entire account.

You may also face substantial additional fines, penalties, and you might end up paying a significant amount of legal fees and costs. 

Related: Goldco Review – Best for Your Gold IRA Rollover?

IRA-to-IRA Rollovers

The IRA-to-IRA rollover is the simplest and most straightforward type of gold IRA rollover. This is the kind of rollover you would do if both your old and your new IRAs are traditional IRAs, as opposed to Roth IRAs. It’s also what you need to do if you already have assets in a traditional IRA and you want to establish a gold and silver IRA, or a self-directed IRA of any kind.

If you are rolling assets over from a Roth account, or if you’re rolling them over from a workplace plan such as a 401(k), you will most likely be very interested in reading the sections below.

To that end, here is a step-by step guide to doing a direct trustee-to-trustee transfer into a gold IRA.

1. Identify a self-directed IRA custodian or third-party administrator. 

The first step is to find a self-directed IRA vendor to act as the IRA administrator or custodian. This company will record all your IRA transactions, provide services and documentation to you and to the Internal Revenue Service, and facilitate gold and precious metals purchases and sales on your behalf. 

Not every investment company is set up to allow you to hold physical gold and other precious metals within their IRA accounts. Many Wall Street firms won’t allow it since they’d prefer that you instead purchase stocks, bonds, mutual funds, and money markets (i.e., securities). However, securities by themselves arguably don’t provide enough diversification against market crashes, interest rate fluctuations, and inflation. 

Make sure you are dealing with a vendor specifically set up to allow self-directed IRAs. 

The term self-directed indicates that you are taking personal control of the assets within your IRA, and not relying on the services of a mutual fund manager or broker-dealer to manage the money within your IRA on your behalf. 

2.) Open your new gold IRA account.

Once you’ve identified a gold IRA company you like to utilize to buy gold on your behalf, the next step is to open an account. They will send you the forms, and you can normally execute these forms online. 

Often, you will need to pay a one-time account set-up fee of $50 to $300. This is normal. Over time, the ongoing fee structure is usually a much more important factor than the setup fee. 

3.) Execute the rollover or transfer.

It’s possible to roll IRA funds into your new gold IRA by simply withdrawing your money in cash, and then depositing it into your new IRA yourself. You can do this up to once per year. The law gives you up to 60 days from your withdrawal to execute this transfer. 

However, if you get sidetracked or you forget to complete the transfer, the IRS will deem the transaction to have been a distribution. You’ll have to pay income tax on the transaction, as well as an additional 10% excise tax if you are younger than age 59½ (age 55 if the withdrawal is from a 401(k) and you have retired or otherwise left service with the company). 

Also, if you’re taking cash out from a 401(k), note that the 401(k) administrator will automatically withhold 20% of the transaction and forward it to the IRS. However, you are still responsible for depositing the full amount of the withdrawal in your new IRA by the end of the 60-day deadline. So that 20% will have to come from other savings. 

Unless you have a specific reason why you want to have the money in hand for up to 60 days, the safer option is to do a direct trustee-to-trustee transfer between your old account and your new gold IRA. This eliminates the 20% withholding requirement from 401(k)s, and removes the risk that you’ll miss the 60-day deadline and pay taxes and penalties on the distribution. 

To do this, notify your existing investment company that you want to do a direct rollover or trustee to trustee transfer to your new account. You can normally do so online. However, you’ll need your new gold IRA account number to complete the transaction, which is why you have to set up your new account first before trying to do a trustee-to-trustee transfer. 

4.) Purchase your gold. 

Once the trustee-to-trustee transfer is complete, you should have cash in your new gold IRA account. Next steps:

a.)  Find a reputable gold broker. With a quick google search, you can find a long list of companies that specialize in gold and silver IRAs. Reach out to two or three established and reputable gold brokers and dealers with long track records of delivering on their promises and taking care of their customers. Make sure to check consumer watchdog sites like the Better Business Bureau and Trustlink for real customer reviews. 

b.) Decide what specific gold or precious metal bullion products you want to own, and get a current purchase price. You can do your own research, and work with your own advisors. On the other hand, your gold IRA vendor’s sales staff can help you decide which types of gold or other precious metals you should consider for your IRA. 

c.) Contact your gold IRA administrator or vendor and direct them in writing where to purchase your gold, and at what price. 

Your gold IRA administrator will do the rest. 

WARNING: At no point should the gold pass through your hands or your direct control, personally. The gold broker or vendor you select should deposit the metals directly into your account at the depository or third-party vault company. 

• Do not consider anything but gold bullion coins, bars, or rounds for your IRA. 

• Do not let your gold broker convince you to buy “numismatics” or collector’s items. 

• Do not buy proofs for your IRA unless you are an experienced gold investor. 

Related: Diversify Your Retirement with Physical Precious Metals (Free Guide)

Roth Conversion Rollovers

This is the type of transaction you’ll initiate if you have assets in a traditional IRA and you want to convert the assets (all, or some) to a Roth gold IRA.

a.) Open a new Roth IRA account with a custodian that supports self-direct retirement accounts.

b.) Fund the account. You can make new contributions (subject to the current funding limits and any limitations on new contributions based on your income. You can also have your new IRA custodian contact your old IRA administrator and initiate a trustee-to-trustee transfer, and transfer an unlimited amount to your new Roth IRA account.

Note that you will need to pay income taxes on any amounts you take out of your old tax-deferred accounts to transfer to your new Roth IRA.

c.)  Find a reputable gold broker. You can click on any of the advertising links on this page – they will all be to established and reputable gold brokers and dealers with long track records of delivering on their promises and taking care of their customers and years of strong positive reviews on neutral review sites. 

d.) Decide what specific gold or precious metal bullion products you want to own, and get a current purchase price. You can do your own research, and work with your own advisors. Or your gold IRA vendor’s sales staff can help you decide which types of gold or other precious metals you should consider for your IRA. 

e.) Contact your gold IRA administrator or vendor and direct them in writing where to purchase your gold, and at what price. Follow up to make sure the purchase was done correctly. 

f.) Pay income taxes on the transaction. When you convert assets in a tax-deferred account, such as a traditional IRA, SEP IRA, SIMPLE IRA, or 403(b) to a Roth IRA, you must pay income taxes on the amount you convert.

Your gold IRA administrator will do the rest. 

Waring: At no point should the gold pass through your hands or your direct control, personally. The gold broker or vendor you select should deposit the metals directly into your account at the depository or third-party vault company.

Tip: For the best result, you should not use your retirement account funds to pay the income taxes. Rather than pull extra money out of your tax-advantaged retirement account to pay the income tax (and generate more income tax on the amount you withdraw to pay the taxes!), it’s much better to use your own savings held in taxable accounts to pay the taxes on IRA conversions.

Rollover 401k to Gold IRA

A 401(k) rollover is similar to IRA rollovers in concept, except they involve an additional step:

First, you need to make sure your 401(k) administrator will let you access the funds in your plan. Most 401(k) accounts do not allow “in service” withdrawals. If you are still employed with the 401(k) plan sponsor, you may need to wait until you’ve left the job to move those assets into an IRA.

Warning: Beware Gold IRA “Home Storage” Schemes 

Second, you should account for the fact that your 401(k) plan administrator will deduct 20% of the amount you want to transfer (via the 401(k) rollover) against income taxes, and forward them directly to the IRS.

Occasionally, you may run into advertisements or salespeople hawking some form of Gold IRA home storage schemes.

The idea is that you can establish a new gold individual retirement account, and then form an LLC, to be held entirely within the IRA. That is, the IRA itself is the sole owner of the LLC,  and the LLC itself owns the gold (and, not you personally). The salespeople will then conclude that this “shield” somehow gives you the ability to store the gold in your own safe at home.

This is a very bad idea for multiple reasons:

First, it’s illegal. The courts have ruled repeatedly that you cannot use an LLC to get around prohibited transaction rules, such as the rule that prohibits you from taking direct personal possession of your IRA assets. 

Second, it exposes you directly to security risks. When you buy gold and store it at your home, there is a chance that the gold can either be lost or stolen. You could be a target for a robbery. And the criminals could even be close friends and/or members of your own family.

Third, it’s not cost-efficient for most people. Safes and security systems cost money. So do insurance premiums. These costs would inevitably consume a large chunk of your precious metal retirement account IRA, over time.

Bottom line: an established, reputable, third-party vault service, such as the ones engaged by all the major self-directed IRA custodians, have economies of scale, and can easily offer security and protection for your gold IRA portfolio. Please do not buy gold with the intention of burying it in the backyard or storing it under your mattress… especially if you haven’t told your heirs or executor where your hiding place is! 

Related: Gold IRA Scams to Avoid (Read this Before Buying Precious Metals)

Common Rollover Mistakes

Additionally, we also wanted you to be aware of these common IRA Rollover mistakes:

1. Taking too long to complete a 60-day rollover.
   
   Many people have the best of intentions when they have their old retirement account custodian wire them the money they intend to move to a new rollover account – only to get distracted or incapacitated, or run into liquidity issues that prevent them from completing the transfer on time.
   
2. Failing to account for the 20% withholding from 401(k) plans

When you receive money from your old 401(k) plan administrator, they will withhold 20% and send it to the IRS against the taxes that would be due if you don’t complete the rollover transaction.

But under the 60-day rule, you have 60 days to complete the deposit of 100% of the withdrawn funds to the new account.

For example: You have an old 401(k) with $500,000 in it. You tell your plan administrator you want to withdraw your entire account so you can do a rollover to an IRA.

Your plan administrator will send you $400,000, and the remaining $100,000 (20% of the value of the account) will be sent to the IRS. 

Meanwhile, the day they wire the $400,000 to your account, the 60-day clock starts ticking. You have 60 days to complete a $500,000 deposit into your rollover IRA account.

You will have to find that missing $100,000 from somewhere.

If you are younger than age 55, you’ll have to eat a $10,000 excise tax, which is the 10% early withdrawal penalty on the amount you failed to rollover. That’s the amount the IRS will deem to have been a distribution from your IRA.

What’s more, you’ll have to pay income tax on the entire $100,000 you failed to deposit into your rollover account.

NOT just on the $90,000 you have left over after you pay the 10% early withdrawal penalty. 

3. Not paying off loans before rolling over.
   
   If you took a loan from your 401(k) or Thrift Savings Plan account, and you still have a balance outstanding, pay it back before doing a rollover. Otherwise, the IRS will deem the remaining loan balance to be a taxable distribution, resulting in taxes and potential early withdrawal penalties.
   
4. Rolling over highly-appreciated company stock.
   
   Speak to your tax and financial advisors before executing any rollover of a 401(k) that includes company stock. Under some circumstances, you may be able to sell your company stock at a much lower long-term capital gains rate. But if you roll it over to an IRA along with all your other 401(k) assets, you effectively give up that option. Instead, when you later take a distribution of the assets, you will have to pay ordinary income taxes. 

5. Doing the rollover before taking your required minimum distribution (RMD) for the year.
   
   The law requires owners of tax-deferred retirement accounts (e.g., IRAs, 401(k)s, SEP IRAs, SIMPLE IRAs, and 403(b)s to begin taking distributions not later than April 1st of the year in which they turn age 72. (It used to be the year in which they turned age 70½, until the passage of the SECURE Act.)

But if you do your rollover before you take a distribution for the year, you run the risk of making an excess IRA contribution. The recent passage of SECURE 2.0 in January of 2023 makes that less of a problem than it was in prior years.

FrugalNerds does not provide individual tax or financial advice. For information regarding your specific situation, including any IRA rollovers and possible RMDs, you should additionally seek the advice of a qualified tax professional and/or financial advisors.

6. Withdrawing instead of rolling it over.

If you choose to withdraw instead of choosing a rollover, you may lose money. Not only will you miss out on compounding interest, but depending on a variety of factors, you may also get hit with a significant tax penalty.

To learn more about the benefits of adding physical precious metals to your IRA, request your free investor guide from Augusta Precious Metals here.

Appendix A 

IRS-Approved Coins for IRAs

Not all coins and bars are eligible for IRA investment. Instead, you may only hold specific forms of bullion that meet minimum requirements for purity and fineness. With the exception of American Gold Eagles, all physical gold coin investments must be at least .995 pure, and be manufactured in a national mint, or one certified by NYMEX, NYSE/Liffe, LME, LPPM, COMEX, ISO 9000, or TOCOM.

We would not recommend that you try to buy coins or other bullion that are not IRS approved as having met this criteria for inclusion within your IRA.

The following gold coins are eligible for IRA investment

• American Gold Eagles
• American Gold Buffalos
• Canadian Maple Leafs
• Canadian War of 1812 
• Australian Gold Kangaroos
• Australian Gold Nuggets
• Australian Lunar Series Coins
• Austrian Gold Philharmonic
• British Gold Britannia Coins (2013 and later)
• British Gold “Queen’s Beast” Coins
• Chinese Gold Pandas
• Credit Suisse – PAMP Suisse Bars

Note: There are many gold investments (e.g., gold coins and bars) that are very popular among many investors, but many are not allowable investments in IRAs. Most commonly, these are coins made from a 22-karat gold alloy that’s only 91.67% gold, with the rest typically being copper and bronze.

Since gold is a very soft metal, the higher the purity of the gold, the more prone it is to scuffing. The 22-karat gold alloy is commonly used in coins because it’s much more resistant to scratching, scuffing, and is more durable (i.e., resistant to wear and tear) than purer 24-karat coins.

Similarly, the American Gold Eagle is also made from this alloy. Accordingly, it would normally not be allowed for an IRA account. However Congress, seeking to create a market for U.S. mined, minted, and manufactured gold, made an exception for the American Gold Eagle coin, allowing it to be held in IRA accounts.

The American Gold Buffalo coin, on the other hand, is made from 24-karat gold, manufactured to a fineness of .9999. And is, of course, authorized for IRA investment.