Whether you’re just starting to open IRAs or wondering if it’s time to rethink your IRA investment strategy, a gold IRA is worth considering. Rolling over a portion of your IRA to gold can help you sidestep the volatile stock market. Of course, gold itself is volatile, but the rise of gold past $1,300 per ounce on May 2, 2016, the highest since January 2015, had many people taking a new look at the metal.

“IRAs can invest in virtually any asset as an investment like stocks, bonds, real estate, private equity, etc. A gold IRA is just a fancy name for one that chose to invest in gold,” says Daniel Sentell, former director of communications at Broad Financial, a Monsey, N.Y.-based financial services company that offers gold IRAs.

If you already have an IRA or 401(k), either regular or Roth, you have the option of rolling over some or all of your investment into a gold IRA. With 401(k)s, rollovers generally are permitted when you switch jobs (and have to decide what to do with retirement money at the employer you are leaving) or when you retire. With an IRA, you can switch to a different custodian more freely.

Different rules and tax treatments apply, depending on whether your retirement money is funded with pre-tax dollars (traditional IRAs and 401(k)s) or after-tax dollars (Roth IRAs and 410(k)s).

“Gold IRAs can be either Traditional or Roth options,” says Sentell.

For more on the differences between Roth and regular retirement accounts – and rules about rollovers – read Should You Roll Over Your 401(k), Common IRA Rollover Mistakes and Know The Rules For Roth 401(k) Rollovers.

The question at hand is, when you do decide to roll over some of your retirement money, should any of it go into gold?

Golden Rules

A gold IRA can only be invested in actual gold, be it coins or bullion. Consider whether you want to have a physical investment in your portfolio rather than a stock, mutual fund or an exchange-traded fund that tracks a gold index, says Brett Gottlieb, an investment advisor representative and founder of Comprehensive Advisor in Carlsbad, Calif.

With a physical asset, such as gold, you're actually purchasing the item itself – not a piece of paper that represents the item or a fund that holds the item. As when making any major purchase, it pays to shop around.

“Although gold has a going rate, there are markups depending upon whether you want gold bullion, coins, proofs, etc.,” says Sentell. “Similarly, each form of gold presents its own set of requirements when an investor has to sell the gold. It pays to get educated so that you know what you're getting into.”

That education includes knowing the fees are associated with this type of retirement account compared to another type of IRA or retirement vehicle.

The fees that an investor will face include:

  • The seller’s fee (mark-up). Sentell says the mark-up can vary depending upon the gold product and vendor. However, this is a one-time fee.
  • Retirement account set-up. Also a one-time fee, this is charged to establish your new IRA account. This also varies by institution.
  • Custodian fees. Federal law mandates that every IRA be held by a custodian. Custodians are financial institutions that oversee and protect the assets in an IRA account. For that protective service, they typically charge an annual fee, as well as any associated asset or transaction fees.
  • Storage Fees. The gold purchased by gold IRAs is held by a qualified storage facility for which storage fees are charged. However, Sentell says consumers who open a Checkbook IRA, a self-directed gold IRA that doesn’t require management of a custodian, can purchase Gold Eagles, a U.S. Treasury-minted coin, with their retirement funds and hold them personally, sidestepping custodian and storage fees. (Other sorts of coins do not come under this tax code exception, described in Internal Revenue Code 408 (m).) Checkbook IRAs require a complicated financial setup and are currently under scrutiny, according to some financial experts. Be extremely cautious and check with your accountant or financial advisor before opening one.

Making It Happen

Since Gold IRAs are not a unique investment entity – they're merely a regular IRA with gold as its investment asset – the rollover process is the same as for any other retirement fund.

“Setting up these type of accounts and making the transfer of assets is a relatively painless process that most reputable firms can assist with and handle without any concerns,” says Gottlieb.

You typically fill out an account application (whether online or on paper), and the account is usually established within 24 to 48 hours of completion and receipt of the application. “Once the signed transfer request is received by all parties, the two custodians will communicate with each other to transfer the funds to the new custodian and fund a new gold IRA,” says Gottlieb. When funds are available in the new IRA account, an account representative will review the current precious-metal options a consumer can purchase. “You advise them as to the exact type you want to purchase and prices are locked up at that time,” adds Gottlieb.

The Bottom Line

If you’re contemplating a rollover of retirement assets to a gold IRA, or any investment account, it’s important to consider your overall financial plan and goals. “You should be considering all possible options for your retirement assets and determine what amount of your overall portfolio should be invested in each of the various categories,” says Gottlieb.

In general, it's never a good idea to put all of your eggs in one asset basket. See Introduction to Investment Diversification. Nobody can predict how the stock market will perform or where the price of gold will go; gold prices have been particularly volatile in some years. When gold is rising, you also have to decide whether you'd be buying at – or close to – the top of the market if you invest at that point. Waiting could make more sense. For more on the elements you need to consider, see Analysis: Should You Get A Gold IRA?

If gold seems like a solid choice for you, Sentell suggests rolling over no more than one-third of your retirement funds into a gold IRA. Gottlieb recommended people have no more than "10% to 15% of a personal total portfolio invested in gold, whether in paper form [note: not permitted in a gold IRA] or the physical holdings."

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