Yes, you can cash out a gold IRA, but the process involves selling your metals through the custodian and then taking a distribution from the account. Understanding how this works and what it costs in taxes helps you plan ahead.
To cash out, you contact your custodian and instruct them to sell some or all of the precious metals in your IRA. The custodian coordinates the sale, and the proceeds are deposited into your IRA as cash. From there, you request a distribution, which is a withdrawal of funds from the account to your personal bank account.
The tax consequences depend on your age and the type of IRA. If you have a traditional gold IRA and you are 59 and a half or older, the distribution is taxed as ordinary income at your current tax rate. There is no early withdrawal penalty. If you are under 59 and a half, you owe ordinary income tax plus a 10 percent early withdrawal penalty on the amount withdrawn.
If you have a Roth gold IRA, qualified withdrawals are completely tax-free and penalty-free. To qualify, the account must be open for at least five years and you must be at least 59 and a half. If you meet both conditions, you can cash out without owing anything.
Some gold IRA custodians also allow in-kind distributions, where the actual physical gold is shipped to you instead of being sold for cash. This is still treated as a distribution. The fair market value of the gold on the date of distribution is what gets taxed. After receiving the physical gold, you own it personally and can hold it, sell it privately, or store it however you choose.
Taking required minimum distributions is another form of cashing out that applies to traditional gold IRAs starting at age 73. The custodian will sell enough metal to meet your RMD amount and distribute the cash to you. Planning ahead for RMDs is important because you want to control when and at what price the gold is sold.
Before cashing out a gold IRA, consider whether a partial distribution or a rollover to another account might serve you better than a full liquidation. Once you take the distribution, the tax-advantaged status of those funds is gone permanently.
