Gold Is Trading Around $4,140 an Ounce. He Sells $100,000 at 67 Instead of Taking More From His IRA, and the IRS Can Tax the Gain at Up to 28%
Selling gold instead of tapping an IRA sounds like a smart tax move at 67, but two overlooked rules can quietly shrink the advantage and push thousands more of his Social Security into taxable territory.
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At 67, he needs $100,000 on top of his Social Security. It might be for a new roof, a car or one bigger year of retirement spending, and he has two obvious places to get it. He can take another withdrawal from his traditional IRA. With gold prices hovering above $4,100 per ounce, he can also sell some of the physical precious metal he bought years ago.
While gold prices are off their highs, they stand far above the $2,624 it fetched at the start of 2025. Selling feels like cashing in a winner and leaving the IRA alone to keep growing.
Two tax rules complicate this plan. The IRS taxes physical gold as a collectible at a higher rate than stocks, and the gain can also make more of his Social Security taxable.
Only His $40,000 Gain Gets Taxed
Say he paid $60,000 for gold he now sells for $100,000. His long-term gain is $40,000, and the tax applies only to that gain. The $60,000 he originally paid comes back to him tax-free.
Long-term gains on stocks generally top out at a 20% federal rate. Gold bullion falls into the collectibles category, along with silver, coins, art and antiques. Long-term collectibles gains can be taxed at up to 28%. At that top rate, his gain would cost up to $11,200. If his ordinary income tax rate is below 28%, the lower rate applies.
This rule covers physical metal. Gold ETFs and mining stocks can be taxed differently depending on how they are set up.
Why the IRA Withdrawal Can Still Cost More
Suppose his traditional IRA holds no after-tax contributions, so all of a $100,000 withdrawal shows up as ordinary income. The gold sale adds just $40,000. Even with the special collectibles rate, taxing only the $40,000 gain can still cost less than taxing the full $100,000 IRA withdrawal as ordinary income.
How the Gain Pulls His Benefits Into the Tax Net
The IRS counts half his benefits plus his other income, including capital gains, to determine how much of his Social Security is taxable. For a single filer, up to 50% of benefits can be taxed once that total tops $25,000. Above $34,000, up to 85% can be taxed.
Assume he takes in $36,000 a year in benefits and has little other income. Half his benefits comes to $18,000, which is under the first threshold, so right now his Social Security isn’t taxed at all.
Once he adds the gold gain, that total rises to $58,000. About $24,900 of his benefits now counts as taxable income. The 85% cap limits his taxable benefit. His actual tax rate on that money is far lower.
A $100,000 IRA withdrawal raises the total to $118,000, reaching the 85% limit. That makes $30,600 of his benefits taxable, on top of the full withdrawal.
The 2027 cost-of-living raise is tracking between 3.5% and 3.6%, based on estimates, but those income thresholds have never been adjusted for inflation. Every raise can pull more of his benefit toward tax.
His Old Receipts Could Swing the Decision
Everything depends on his cost basis. If his $100,000 of bullion cost him $90,000, the gain is only $10,000. If he paid $20,000 decades ago, the gain grows to $80,000. A larger gain means more money taxed at the collectibles rate and more of his benefits taxed too.
Find your purchase records before you sell. Without them, showing a higher cost basis gets hard, and a lower basis means a bigger taxable gain.
He can stop worrying about one thing: the federal retirement earnings test. He is past full retirement age (FRA), and capital gains do not count toward that test anyway. None of his benefits will be withheld. The sale only affects what he owes in taxes.
Run Both Scenarios Before Selling a Single Ounce
- Figure out his real gain on the gold using his documented purchase price.
- Find his ordinary income tax rate to determine whether the gain is taxed at 28% or lower.
- Work out how much of his Social Security becomes taxable under each option. That shift can add thousands to his taxable income without new cash coming in.
- Consider splitting the sale between December and January to keep more benefits below the 85% limit in each year.
The mistake that’s hardest to undo is selling first and doing the math later. Once the sale settles, the gain belongs to tax year for good. An hour with an accountant before he sells can show him which option leaves more money in his pocket.
The IRA may stay intact, but the tax savings from selling gold instead may be smaller than he expects. Three factors could change which option comes out ahead. His cost basis, his other income and his filing status each matter, so it pays to run his own numbers, as should you.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
