How to Buy Gold with a SEP IRA: What You Need to Know


Protect Your Retirement with Precious Metals in a SEP IRA

Imagine you’re mid-way in your career. You’ve been successful working for others, building up knowledge, experience, and contacts in your expertise along the way. You decide to break out and start your own company. Again, you find success and begin raking in enough income you want to put some away for retirement. What do you do?

You can’t continue to contribute to your old 401(k), since you are no longer with your former employer. You look into various IRAs, but find the annual contribution limits of $6,000 to be inadequate. You also want to make sure you have the right options inside of a plan that lets you diversify and build up a secure nest egg.

You have options. For many, their first go-to is starting their own 401(k) plan, a retirement option that many people have heard of but that can be costly and overcomplex to set up.

You have another option in the SEP version of a Self-Directed IRA (SDIRA).

“SEP” stands for “Simplified Employee Pension”, although it’s sometimes colloquially referred to as a “Self-Employed Plan.” These types of plans are ideal for freelancers and small business owners with few or no employees. The reason is simple: you can contribute nearly ten times the annual limit as other IRA plans.

And because this is an SDIRA, you get the widest range of investment options. They are easy to set up and are approved by the IRS to hold a broad range of asset types beyond just stocks, bonds, and funds. With an SDIRA, you can buy and hold assets like precious metals to diversify your savings, hedging against inflation and possibly providing some security.

But before we dive into the details of how to set one up or what kind you might want, let’s dig into the “whys” of a SEP IRA.

(If you’d like to skip straight into the steps involved in buying gold with a SEP IRA, click here.)

Why Choose a SEP IRA Over Alternatives?

Most salaried employees have a pretty good idea of what they are going to earn annually. They might get a small bump in pay here or there, but the yearly math is generally somewhat straightforward.

Freelancers and small business owners, on the other hand, often deal with far larger fluctuations in annual income. And when it comes to IRS rules on retirement account contributions, this point is crucial.

With more freedom to choose how much and when to contribute, SEP IRAs are tailor made for the latter. Let’s look at some of the benefits if you choose this type of plan over a similar Traditional IRA.

  • Significantly Higher Contribution Limit – A Traditional IRA caps annual limits at $6,000 ($7,000 if you are older than 50). The cap on a SEP IRA is the lesser of either 25% of compensation or $57,000. In good years when you earn more of your income, this higher limit can really help your retirement savings grow.
  • Easy to Setup – Setting up a SEP IRA is simple. While there are a few extra steps if you do have a few employees, the process is not difficult (more on this later).
  • Works Well with Other Plans – SEP IRA contributions don’t restrict how much you can put into other plans you might have. This isn’t always true, especially in the case of 401(k)s, which can reduce the limit of one account by the amount contributed to another.
  • You Hold the Reins – For freelancers and small business owners who don’t have any employees under their plan, there’s no contribution requirement. The amount you put into a SEP IRA each year is completely up to you.

With all plans, there are additional considerations for business owners. A small business owner with qualifying employees must match the same contribution to their plans as his or her own (as a proportion of income). Meaning, if you have two or three employees under your SEP, you’d have to contribute potentially large amounts to their accounts in good years.

There are some other considerations to keep in mind. There is no Roth option with a SEP IRA; however, the already outsized annual limits negate this concern pretty easily. Also, there are no “catch-up” contributions after the age of 50. We’ll address that in the next section below.

Does a SEP IRA Grow Tax-Free?

The simple answer to this is yes, a SEP IRA will grow tax-free. But clearly, when it comes to taxes, there is always a bit more to learn.

We are not tax advisors; for the best advice geared to your particular situation, you should consult directly with a certified tax professional.

But as you consider your retirement savings and try to make informed decisions about your financial planning for the future, it can help to learn the IRS rules regarding SEP IRAs.

  • Contributions Are Tax-Deferred – Like most other IRAs, any contribution made is on a pretax basis. The amount contributed can be deducted from your gross income come tax time. This also lets you put more cash toward retirement each year.
  • Early Withdrawal Penalties Still Apply – Again, this is just like most other IRAs. Unless you withdraw from your SEP for a specific prequalified reason, you’ll still face both a tax bill on the amount withdrawn and a 10% penalty.
  • No Roth Option – As noted above, there’s no such thing as a Roth SEP IRA. Meaning, if you prefer to face the tax bill upfront when you contribute rather than on the backend when you take deductions, you are out of luck.

You can find out more about how the IRS handles SEP IRAs here.

Why a Gold SEP IRA?

To be more accurate, this question could read, “Why a Gold SEP SDIRA?”

As noted above, SDIRAs are flexible in terms of what you can actually own. The primary benefit of this is to diversify into areas on which a conventional IRA or 401(k) would set limits. Precious metals, such as gold, silver, platinum, and palladium, fall into this category.

Gold is a store of wealth, with a history of bearing inherent value. Where stocks, bonds, and other investments can fluctuate wildly in price over a lifetime, gold and other precious metals generally keep their value. Gold, for instance, has been a tool for wealth storage for thousands of years. It has outlasted every other currency or investment in history.

Gold has the potential to appreciate in value. While it certainly acts as a store of wealth in the long term, it can and does have its own price tag. And even in more turbulent times, when stocks and even currencies fall in value, gold often increases.

Even without an increase, the persistence of gold is worthwhile. Precious metals like gold retain their value even when currency and markets crash. In fact, historically, their performance often moves in the opposite direction of the dollar when the latter is suffering.

These reasons also make it a fantastic asset for retirement accounts. First, you certainly don’t want your savings to be made up of only assets that fluctuate with the tides of the market. And second, precious metals offer a yin and yang effect during periods of weakness. If economic disaster strikes again, especially in the years you begin taking deductions rather than making contributions, gold’s potential appreciation over paper assets might be a lifesaver.

If security and diversification appeal to you, then a Gold SEP IRA might be the right choice for you.

How to Buy Gold with a SEP IRA?

Perhaps you are trying to start building your retirement nest egg. Or maybe you’re trying to start saving for retirement beyond the existing savings accounts you may already have.

Alternatively, you might be interested in transferring or rolling over savings from an existing retirement account.

Buying gold in a SEP IRA can be straightforward when you have the right resources on-hand—which is exactly the case with Birch Gold Group.

All paths to buying gold with a SEP IRA come down to the same steps, through which you will be paired with a Precious Metals Specialist. Your designated Specialist will walk you through the steps and your options at each one along the way. They will work with you to make sure all of your questions get answered.

  1. Open a new SEP self-directed IRA (SDIRA). Your Precious Metals Specialist can show you options for your new custodian, with whom they can then help you apply for your new SDIRA.
  2. Roll over, transfer or contribute funds. You may choose to roll over funds from an existing 401(k) or other retirement account, or maybe you want to transfer funds from another IRA. You might even want to start a brand-new retirement account with funds that you could contribute directly from your bank account, which an SEP makes it easy to do given its high annual contribution limits. Again, your Specialist can help walk you through the types of considerations that should factor into your final decision.
  3. Choose your precious metals. Through Birch Gold Group, you have four different precious metals options: gold, silver, platinum, and palladium. Your Specialist can show you how others choose to set up their accounts, diversifying across precious metals.
  4. Make your purchase. After confirming that you are ready to proceed, your Specialist will walk you through the paperwork needed to finalize your purchase. Your new custodian will handle the required tracking and IRS reporting on an ongoing basis, but your Specialist will remain your primary go-to for any questions that arise or transactions you’d like to initiate.
  5. Store metals at depository. After purchase, your precious metals will be stored in a secure and insured depository.
  6. Keep track of your SEP IRA. Stay connected with your Specialist so that you can continue to monitor how your Precious Metals IRA performs. As noted, your Specialist can help you initiate any further transactions you’d like to request, assist you in getting any questions answered, or even provide you with the most up-to-date buyback quote.

If you’re a freelancer or small business owner looking to build up retirement savings, a SEP IRA might just be the best answer for you. Choosing a Precious Metals SEP IRA can offer extra diversification and security for you through retirement.

Whether you’d like to talk through options or if you’ve made up your mind that you’d like to proceed with a Gold SEP IRA, a Precious Metals Specialist can walk you through everything you need to know.

Call us today at (800) 355-2116 to get your questions answered.