Although IRAs used to be limited to owning American Eagle gold and silver coins, IRAs can now invest in IRS-approved gold, silver, palladium, and platinum bars and coins. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible, and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms. 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.” Rules against holding collectibles Tax legislation prohibits IRA holders from investing in life insurance, stock in an S corporation, or collectibles. Some types of gold coins are classed as collectibles and would break the rules.
What is confusing and frustrating is that some gold coins and types of gold bars are allowed, others are not. And it’s not like the IRS keeps a master list of what’s allowed and what isn’t. This column covers the details of using IRAs for direct investments in actual precious metal coins and bars, as well as indirect investments in the form of precious metal ETFs (Exchange Traded Funds) and mining stocks, as well as the effects of federal income tax. This author doesn’t know what he’s talking about and has probably never held a precious metal IRA in his entire life.
Presumably, a reputable brokerage firm that acts as an IRA trustee will not allow an IRA to buy shares in an unapproved ETF in the first place. Thanks to the above exemption from the tax code, IRAs are allowed to own certain precious metal coins and bars. Because the gold in a gold IRA must be stored in an IRS-approved deposit, you can’t store it in a safe, a home safe, or under your mattress. Investment coins are allowed in an IRA as long as they are legal tender and have a fineness of 99.5% or better.
If you already have an IRA or 401 (k), either Regular or Roth, you have the option to convert some or all of your balance to a Gold IRA. I believe the idea behind storing gold or silver in a Roth IRA is to create a tax haven against such an egregious move by the government. This is a type of IRA that the investor manages directly and is allowed to own a wider range of investment products than other IRAs. If you’re interested in owning gold or investing in its future value, a self-directed gold IRA account could be a good way to do so.
Because precious metal prices are volatile, using an IRA to invest in precious metal investments becomes more problematic as retirement age approaches and is reached. Since IRA owners are required to accept distributions when they reach 73 years of age, they could be forced to sell gold at a lower price than they would like. Moy, chief strategist at Fortress Gold, who, as former director of the United States Mint, oversaw the world’s largest production of gold and silver coins. So if you want to keep gold in your IRA, you’ll need to set up a self-directed IRA first and then you’ll need to find a custodian that specializes in self-directed gold IRAs.