Tax Laws and Gold Investment Retirement Accounts

Are you thinking of opening a gold IRA? That is a great idea. It is a worthwhile investment you would not want to miss. However, like other investment accounts, it has its rules and regulations.

Most times, a lot of people think that precious metals retirement savings accounts are different from traditional IRAs. It is important to note that they are not quite different from other retirement accounts. What makes them different is that it allows you to deposit funds in the form of precious metals. Thus, it is not free from tax levies. It could be pre-taxed or after-taxed. Therefore, you will need to learn about the tax rules before you invest in one.

Whether you have a traditional gold IRA, Roth, or SEP precious metals retirement savings account, taxes will be charged. It all depends on “when” it will be deducted.  Deposit and withdrawals are usually done through a custodian.

A custodian is a company that offers self-directed IRA accounts. They allow their customers to save up alternative assets like precious metals, stocks, shares, and equities.

In this article, we will do a quick review of tax rules of gold IRAs. Please keep reading as we explain more.

Types of Gold IRA

The following are the types of precious metals retirement savings account:

Traditional Gold IRA

As stated earlier, precious metals IRA help you save gold and other precious metals. This makes the traditional gold IRA different from a traditional IRA. A traditional IRA allows only cash transactions.

The traditional precious metals retirement account is a type of account that is pre-taxed or tax deferred. In simple terms, it is an account that deducts tax when withdrawal is made. In this type of account, the tax on the deposit has not been paid. So, when any withdrawal is made, the tax will be deducted. However, taxes will not be deducted from your gains.  Traditional precious metals IRA usually have limits, depending on the IRS regulations.

SEP Precious Metals IRA

This type of account is similar to the traditional gold IRA. It is also a pre-taxed or tax-deferred account. Taxes are not paid until withdrawal. Put differently, the tax on the deposit is not deducted until withdrawal.  This type of retirement account is majorly used by business owners, self-employed people and other corporate entities.

The contribution limit allowed on this account is usually higher than the traditional gold IRA. So, if you are looking for an account that allows more savings, this will be the best option. You can also save up gold stocks and equities, mutual funds, Exchange Traded Funds (ETF), and bullions. This depends on what your custodian has to offer.

Roth IRA

This type of retirement savings account is quite different from the others. It is also known as a post-taxed or after-tax account. In this type of retirement account, taxes have been paid up front, so upon withdrawal, taxes will no longer be deducted.

Simply put, before funds are deposited into the account, taxes are paid. So, when you want to withdraw after retirement it becomes tax-free. Therefore, it involves an upfront tax payment and no down line payment after retirement.

Forms of Gold Investments

Over the years, investments in precious metals have been in bars or coins. In other words, physical gold investment is most common. However, this is the traditional method of investing in gold. Apart from the physical precious metals, it can be bought in the form of ETF shares (Exchange traded Funds) and CEF (Closed -Ended fund).

ETF is a combination of both physical precious metals with stocks.  On the other hand, CEF is non-physical gold. This could be precious metals mining stocks, ETFs and mutual funds.

In whatever form you buy them, they can be resold at a profitable price. You just need to know which form sells the most. If you need more information about the forms of precious metals IRA investments you can visit:

Tax Rules of Gold IRAs

The first thing to note is that precious metals are considered as collectibles. It can similarly be regarded as an investment in artworks. This makes it challenging to calculate the tax rate. As a result, there is no-one-for-all tax rule.

Investing in gold presents you with two alternatives. Tax deductions are determined by which option you choose. If you invest in precious metals and resell it within a year, it would be regarded as a short term capital gain. On the other hand, if you invest in it and resell it over 2 or 3 years, it would be regarded and taxed as an ordinary income.  This will attract a decrease in the tax rate when compared to the first alternative.

If you also fall within a high income bracket, your tax rate will differ from one that falls within a low income bracket. The higher you earn, the higher your tax. So, you also need to keep this in mind. Additionally, there is an age criteria attached to IRAs. This goes a long way to determine your tax rate. An early withdrawal will attract a percentage of tax.

So, your tax rate depends on the type of account, income bracket, age, and form of investment you have.


Helpful Tips to Consider For Gold IRAs


Here are some tips you should consider:

  • Research and understand how retirement savings accounts work
  • Do not be in a hurry to invest. Study the market well to know which form of gold investment will be more profitable
  • Always seek advice from investment experts
  • Check for a reliable and reputable custodian

These are some helpful tips. If you need more tips you can check here.


We have discussed the types and forms of precious metals retirement accounts in this article. We have also discussed the tax rules. To get the most of this investment you need to be patient and study the market well. Despite the additional costs for storage, and other fees, gold still remains a profitable investment. Get started now and enjoy the future. Sure, you would not regret it.

I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank.