Investors with gold IRAs can hold physical metals such as gold bars or coins as well as securities related to precious metals in their portfolio. A gold IRA must be kept separate from a traditional retirement account, although the rules surrounding things like contribution limits and distributions remain the same. To invest in gold with an IRA, you must follow two IRS guidelines. First, you can only invest in IRS-approved gold.
While the list of approved options is changing, the IRS says it must be “highly refined precious metal.” Additionally, if the IRS determines that the day your IRA gold entered your home was the “distribution” date, you could end up paying additional penalties and back taxes owed from the time it was distributed. Since gold is bought the most frequently, the overarching term gold IRA is most commonly used as industry slang to refer to a retirement account that contains any combination of precious metals. The IRS has issued private letter rules to major gold ETFs, which state that IRAs may own the ETFs.
Some gold IRA companies argue that they should include certain coins in a precious metal IRA. However, several of these companies were investigated by the government for misleading customers and aggressively selling numismatic coins in exchange for gold bars. During his tenure as Director of the Mint, there was little demand for gold IRAs, according to Moy, as it is a very complicated transaction that only the most stubborn investor was willing to make. After doing this research, you’ll likely come to the conclusion that the gold or gold bars and coins shouldn’t belong in your IRA. As long as there is gold on this earth, it is not too late to open your own IRA for self-directed precious metals.
A gold IRA or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are stored for the benefit of the IRA account holder. IRA-eligible gold coins, bars, and coins must meet a number of requirements set out in the Internal Revenue Code in order to be stored in a self-directed IRA. You probably also know that gold is a “collectible” and that IRAs are not allowed to own collectibles. While the price of gold rose to new highs over the summer, you’ve probably seen a number of ads recommending investing in gold via an IRA.
However, to qualify for gold IRAs, custodians must be insured, which protects your investment as long as your account does not exceed the account value specified by the custodian bank. Storing your IRA gold at home can be considered a distribution, meaning you lose your tax-deferred benefits and could be punished with a fine if you’re under 59½ years of age. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian bank. There are currently a variety of precious metals that meet the minimum purity requirements allowed for inclusion in an IRA Gold account.
You can’t add gold that you already own to a self-directed IRA, even if it meets all Internal Revenue Code requirements.