DEFINITION of 'Gold IRA'

An investment vehicle used by individuals to save for retirement by purchasing and holding gold bullion or coins, or other approved precious metals.

BREAKING DOWN 'Gold IRA'

A gold IRA is an IRA account that is invested in gold coins or bars instead of stocks, mutual funds, etc. The account can either be set up with pre-tax funds or as a Roth IRA, bought with post-tax money.  See Analysis: Should You Get A Gold IRA?

The Internal Revenue Service allows holders of self-directed IRA accounts to purchase bars and coins minted from gold or other approved precious metals such as silver, platinum or palladium.

IRA funds can also be invested in gold-related “paper investments,“ such as Exchange Traded Funds, stock in gold mining companies, precious metals mutual funds or precious metals commodity futures. However the term Gold IRA primarily is used to describe a self-directed IRA with funds invested in hard metals.

Unlike other IRAs, these accounts require purchasing and storing the physical asset. As a result, gold IRAs require the use of a custodian, typically a bank, brokerage firm, etc., to manage the account. For more information, see Gold IRA Rollover.

 

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