How to Put Gold in an IRA

In 1997, the Tax Payer Relief Act made it possible for precious metals to be added to IRA accounts. This includes silver, platinum and gold. Many IRA account holders put gold in IRAs as a way to achieve diversification of funds. As a rule, the price of gold rises when stock prices drop. This can even out your portfolio's value in a stock market weak period.

Difficulty:

Easy

Instructions

1. Ask your IRA custodian if you can add gold to your current IRA account. Some plans may not have this capability. In this case, you must start a new gold-silver IRA.

2. Select a gold-silver IRA plan that is administered by a custodian who has a lot of experience dealing in gold. You may add gold to all types of IRAs, including traditional, Roth, simplified employee pension (SEP) and simplified incentive match plans for employees (SIMPLE).

3. Submit paperwork to the new IRA custodian to open your gold-silver IRA account. This includes a storage fee for the gold coins you will hold in your account. According to IRS rules, the gold must be stored at an approved depository, which is in a separate location from your IRA's custodian.

4. Transfer money from your existing IRA to fund the gold account. Ask a tax professional for help with rolling over funds if needed.

5. Decide whether to buy gold coins or gold mining stock and instruct your IRA representative to make the purchase for you.

Tips & Warnings

• Gold coins must be 99.5 percent pure gold to be IRS-approved and put into an IRA. They must also be classified as legal tender to qualify. At this time, the coins that qualify are the American Gold Eagle, Perth Mint Lunar series and Kangaroo-Nuggets from Australia, the Canadian Gold Maple Leaf and Austrian Philharmonics coins.

• Holding stock from mining companies that mine gold is another way to add gold to your portfolio. This can be risky, though, in the event the company folds. However, as stocks rise, the yield can potentially be greater than that of gold coins.

• Factors to consider are your age--the younger you are, the more room for risk--and your total net worth.

• Account holders can choose between gold coins and bullion or gold stock.

• Remember there is some level of risk involved in all investment transactions. Consult your accountant or tax professional before making major decisions involving your retirement accounts.