Gold prices have risen significantly over the past several years, and with economic uncertainty and high inflationary pressure, gold continues to be a safe investment with the potential for wealth accumulation.
Investors can purchase gold and other precious metals such as silver, platinum, and palladium physically or through a gold IRA. However, there are additional fees associated with a precious metals IRA that you should be aware of.
This article provides a detailed outline of gold IRA fees along with a few of our top choices if you’re looking for a reputable gold IRA company.
What Is a Gold IRA?
Also referred to as a self-directed IRA, a gold IRA is a lot like a traditional IRA, but with one major difference. While traditional IRAs hold assets like stocks, bonds, and mutual funds, a gold IRA holds precious metals like gold, silver, platinum, and palladium.
As a quick reminder, IRA is an acronym for an individual retirement account. IRAs allow individuals to add to their retirement accounts while getting tax advantages.
How Does a Gold IRA Work?
Many investors are surprised to learn that gold and precious metals IRAs don’t all hold physical gold bullion. In fact, there are even gold IRAs that don’t hold physical gold at all!
Because investors can hold a variety of precious metals in different forms in a gold IRA, the more accurate naming convention might be a precious metals IRA, but the umbrella term “gold” is the industry standard, and it is the term we will be using throughout this article.
Like traditional IRAs, you can purchase gold (and other precious metals) with pre-tax income. However, the Internal Revenue Service (IRS) does have strict rules about the parameters of gold bars you’re holding and other assets in the IRA to ensure that the precious metals you’re holding are investment-grade, rather than collectibles (which aren’t IRA-eligible for preferential tax treatment).
How to Open a Gold IRA
Once you’ve decided that you want a self-directed gold IRA, the next step is setting up the account.
Here’s a brief overview of the process:
- Choose a financial institution (we have recommendations below if you’re looking for the best gold IRA company).
- Fund your gold IRA. Depending on your age, there are annual contribution limits. As of the time of publication, these limits are $6,000 annually for people under 50 years of age, and $7,000 for those who are 50 years of age or older.
Note: You can also do a gold IRA rollover, which allows rolling a 401(k) or traditional IRA into a gold IRA with gold and silver products.
- Buy approved gold. For the tax benefits to apply, only gold that is IRA eligible gold should be purchased. IRS approval requires that physical gold and silver (as well as other precious metals like bullion coins) have a minimum purity rate.
The required purity rate depends on the precious metal. For example, platinum and palladium bullion must have purity levels of 99.95% and above.
- Choose a custodian. The custodian is the entity that administers your account and reports transactions to the IRS.
What Fees Are Associated with a Gold IRA?
Gold and silver IRA accounts tend to have higher fees than traditional IRAs because they purchase precious metals, and there are additional costs associated with managing those transactions and storing the physical gold and other precious metals.
We’ve outlined the fees you can expect to pay with such an account.
Initial Setup Fees
When you first invest in a gold IRA, there are initial setup fees associated with processing your application and creating your account. Fees for a precious metals IRA range from between $50 and $300.
When your gold IRA involves physical assets, you’ll also be on the hook for storage fees. These fees contribute to keeping your physical gold and silver bullion safe in a secure vault.
Whenever you want to buy precious metals or precious metal products, you’ll incur a transaction fee. Part of the fee goes to the administrator for facilitating the transaction, and part of the fee goes to the dealer, who needs to make a profit.
These fees are usually referred to as a “markup,” and it reflects the difference in the price of the precious metal and the price the broker is willing to sell it for.
Gold IRAs also come with an annual account maintenance fee. Administrators charge annual fees to cover the costs of record keeping, as well as holding and distributing assets.
There are additional management fees that could be charged to self-directed IRAs, including liability insurance, termination fees, and wire transfer fees.
Specifically, if you decide to close your precious metals IRA account, you’ll incur “cash-out costs,” which involve selling your gold coins and other assets to a third-party dealer, who then offers them for sale on the open market.
Factors Affecting Gold IRA Fees
Because gold IRAs tend to have higher fees than traditional IRAs, we’ve provided further information about what affects your fees so that you can potentially minimize them.
Typically, the fees you pay are structured as a percentage of your holdings, though transaction fees and who you choose as a financial institution can also play a significant role in maintenance fees and other charges.
We recommend reviewing any agreement with your financial advisor before committing any funds so that you understand the source of any fees.
Is a Gold IRA Taxable?
Like most income, gold IRAs are taxable, but there’s good news. The dollars you put into a gold IRA and the gains it achieves are not taxed until you withdraw the funds at retirement. This, of course, is assuming that you get a traditional gold IRA, which is funded with pre-tax dollars.
By contrast, a Roth gold IRA is funded with after-tax dollars, and you’ll also pay taxes when you make a withdrawal from your retirement funds.
Top 5 Gold IRA Companies
The best gold IRA companies have been rated by the Business Consumer Alliance and have a reasonable annual maintenance fee, an offering of precious metals that include gold, silver, platinum, and palladium, an accessible minimum investment, and reasonable storage fees.
We also did some research and have identified five precious metal IRAs that tick all the necessary boxes.
- Patriot Gold Group: The BCA and other outlets rank Patriot Gold Group as the best overall choice. This IRA has a solid reputation in the industry, and it allows investments in gold, silver, platinum, and palladium. It tops our list because investors can usually avoid fees that come from purchasing actual gold and platinum coins.
- Augusta Precious Metals: If you prefer not to be nickeled and dimed by hidden miscellaneous fees, you’ll love the transparent pricing that comes with an Augusta Precious Metals IRA.
- Noble Gold: Beginning investors appreciate Noble Gold for the low minimum investment requirement and the addition of educational resources.
- Advantage Gold: With an AAA BCA rating, Advantage Gold provides the best customer support. Unlike other IRAs that allow you to buy gold, silver, platinum, and palladium, Advantage gold is for gold and silver investors only.
- American Hartford Gold: Known for stellar customer service and a gold buyback commitment, American Hartford Group also stores its physical gold in one of the most secure facilities in the United States.
Another of the many gold IRA companies that gets an honorable mention for customer service is Goldco Precious Metals. Goldco is ideal for smaller investors just beginning their financial journeys because the initial minimum investment is low, and the company offers a lot of educational resources.
However, given the high annual fees proportional to account balances compared to most gold IRA companies, it didn’t make our list of the top three precious metals IRA companies.
Fee Comparison Between Different IRA Companies
Before setting up a self-directed IRA account and purchasing any gold, it can be helpful to see key statistics side by side. Here, you’ll notice that the minimum investment varies widely, and setup fees range from free to $225.
|Precious Metal IRA||Set up Fees||Storage Fees||Maintenance Fees||Minimum Investment|
|Patriot Gold Group||$225 initial fee||Free storage available||$180 for accounts under $100k||$25,000|
|Augusta Precious Metals||$50 one-time setup fee||$150 annually (may vary)||$100 custodian fee and $100 annual fee||$50,000|
|Noble Gold||$80 (includes wire fee)||$150 Limited to Texas only||$80||$2,000|
|American Hartford Gold||Can be waived||Varies (sometimes free)||$180||$5,000|
How to Manage Fees and Reduce Costs
As this investment vehicle grows in popularity, costs like management and transfer fees have begun to drop. However, because precious metals IRAs tend to store physical gold, the fees are higher here than with other IRAs.
You can keep fees and costs low by shopping around and consulting with a financial advisor to find the best bang for your buck.
Because fees vary based on the type of asset you’re holding (physical gold versus an ETF, for example), you can potentially reduce fees by purchasing gold ETFs in higher proportions than physical precious metals. Keep in mind that there are transaction and storage fees for physical precious metals that don’t apply to ETFs, stocks, mutual funds, etc.
How to Choose a Custodian or Company for Your Gold IRA
IRA custodians are helpful because they take care of your gold on your behalf. However, it’s essential to find a custodian that you can trust. An untrustworthy custodian could potentially commit fraud and make off with some (or a lot) of your gold.
When evaluating potential custodians, consider the following qualifications:
- Licensing: Check for a valid and current license
- Fees: Shop around for reasonable and transparent fees
- Track record: Check BBB ratings and ask about the custodian’s track record
- Customization: A good custodian will work to accommodate your individual needs and preferences
- Expertise: It goes without saying that a qualified custodian should have specialized knowledge in this field
- Proactivity: You shouldn’t have to reach out to a custodian for details about our portfolio
The Bottom Line
A gold IRA provides investors with a way to diversify their investment portfolio, particularly their retirement portfolio. Though gold IRAs rarely match mutual fund investments, they come with numerous advantages, including the following:
- A hedge against inflation and geopolitical pressures
- Shield some income from taxes
- Ability to purchase various precious metals and forms of precious metals (including a gold ETF)
- Not having to store gold at home or manage the storage yourself
- Ability to choose a broker and custodian to control your fees
- Insurance against the price of gold falling to zero (unlike a stock)
Want to learn more about gold IRA fees? We’ve included a complete investing guide (along with other recommended gold IRA companies) here.