The Internal Revenue Service (IRS) may technically allow you to hold gold in your Roth IRA, but the custodian must physically hold the gold. Investing in gold through a standard Roth IRA is not possible, but there are other ways to do it. Exchange-traded funds (ETFs) that invest in gold futures or companies in the gold industry are one option. You can also buy shares in gold mining companies or purchase an investment fund that includes shares in mining companies.
This is known as buying “paper gold”. Gold ETFs (GLD) and mining ETFs provide indirect access to gold investment. Most experts recommend investing no more than 5-10% of your retirement funds in precious metals. Retirees who reach age 72 must have sufficient liquidity in their retirement account to accept their required minimum distributions (RMDs), which could force them to sell some of their gold holdings.
If you want to benefit from tax advantages, then a gold Roth IRA may be the best option for you. It would be better to invest the IRA in a precious metals ETF or own precious metals in a taxable account. Orion Metal Exchange is a California-based company that offers IRAs for gold and other precious metals, coins and bars. The IRS has provided a specific formula for calculating gains from excess contributions to the Roth IRA.
A balanced portfolio with investments in gold and paper will help balance any losses on the gold side with gains experienced by other assets. Investing in gold through a Roth IRA can be a safe and beneficial strategy, but it is important to understand the rules and regulations before making any decisions. Consider consulting with an expert financial advisor to ensure that you are making the best decision for your retirement savings.