Investing in gold comes with a few different costs and expenses. There are transfer fees to consider when creating a gold IRA, storage fees for keeping the gold at an exchange or online brokerage account, and maintenance fees to make sure the investment is properly funded and managed. But those aren’t the only fees you’ll pay when investing in gold. There are also taxes to consider from the IRS when you sell the gold to take advantage of a profit. Here is what you need to know about gold IRA fees and taxes in the U.S. so you can make the most informed decision when investing in gold—whether it’s through a self-directed IRA or a gold ETF like the SPDR Gold Trust listed below.
Transfer fees
When you transfer gold from a self-directed IRA into a self-directed gold IRA, there are transfer fees that you’ll pay. These fees vary depending on the amount of gold being transferred and the gold dealer you choose to transfer the gold to. The cost to transfer a small amount of gold is usually $50 to $100. The cost increases for larger amounts, up to $500 or more.Transfer fees are standard with any type of transaction, whether it’s moving money from your checking account to your savings account or moving gold from one account to another.The best way to avoid these fees is to find a trusted company to transfer your assets to. In some cases, you may be able to do it yourself with a wire transfer.
Self-directed gold IRA maintenance fees
When you set up a gold IRA, you may be asked to fund it by making an initial deposit (also known as a minimum initial investment). Then, at regular intervals throughout the year, you may also be required to make additional deposits to keep the account fully funded.These types of maintenance fees are the same whether you fund a gold IRA or any other type of self-directed IRA.The minimum initial deposit for a gold IRA is usually $500, though it may vary from one company to another.The other deposits are usually $100 to $200, and they’re due on a monthly or quarterly basis.
Self-directed gold IRA storage fees
If you choose to store the gold that you own in a self-directed gold IRA, there may be storage fees associated with the account. These fees are usually a percentage of the value of the gold that’s being stored.For example, there may be a $50 fee for every 100 ounces of gold that you store.Depending on the amount of gold that you have in your account, the cost of the storage fees may increase over time.
Self-directed gold IRA tax considerations
As with any other type of investment, the IRS imposes taxes on the gains you earn from a gold IRA.The rules for self-directed gold IRAs are a little different from the rules for regular IRAs. The first thing to know is that any gains you make from a gold IRA are treated as long-term gains, which are taxed at a maximum rate of 23.8 percent.If you’re in a higher tax bracket, this could cause you to pay more in taxes, so you may want to consider using a different investment that falls under a lower tax bracket.
Taxes when selling gold to take advantage of a profit
When you sell the gold that you own in a self-directed gold IRA, there are two taxes that you’ll pay. The first is a capital gains tax, which is the standard federal income tax rate that you’ll pay on the profits you made from the sale of the gold. Depending on the tax bracket you fall in, the tax rate could be anywhere from 0 percent to 37.5 percent.The second tax that you’ll pay when you sell the gold is the self-directed gold IRA tax. This is the amount that you’ll pay in taxes on the gold that’s being withdrawn from the account. The amount of taxes that you’ll pay will depend on the value of the gold that’s being withdrawn and the amount of income tax that you paid in the past year.
Bottom line
Investing in gold is a great way to diversify your portfolio and get some protection from market volatility. But before you decide to invest in gold, you need to understand all of the costs and taxes associated with this investment. The best way to make sure that you get the most out of your gold investment is to open a self-directed gold IRA and make sure that the company you choose to invest in is trustworthy. Remember, the only fees that you don’t get a say in are the taxes that the IRS imposes.