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.. If you decide to invest in a precious metals IRA, you should do so conservatively. Depending on your financial situation, most experts recommend investing no more than 5 to 10% of your retirement savings in precious metals. Acceptable products that meet these criteria include Canadian Maple Leaf coins, Australian koala investment coins, and PAMP Suisse bars.
The IRS also allows American Eagle coins even though they don’t meet the 99.5% purity standard for gold. You can’t currently hold rare or collectible coins, Swiss francs, British government bonds, and German marks in a self-governing IRA. In either case, contact your custodian bank to start the transaction. Remember, though, that precious metal IRAs are subject to the same rules as normal IRAs.
Your investments can appreciate in value tax-free as long as they are in the account. However, if you withdraw them, you can pay taxes and penalties depending on your account type and age. In any case, remember that precious metals and precious metals funds should only add a bit of sparkle to your retirement plan and should not become part of your overall investment strategy.. In general, an IRA investment in a metal or coin is considered an acquisition of a collectible item.. Therefore, the transaction is marked as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (you).
In fact, this general rule prohibits IRAs from investing in precious metals or coins made from precious metals. You can hold coins or gold bars in a precious metal IRA. Despite the colloquial term “gold” (IRA), you can hold silver, platinum, and palladium on this account.. 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.”. If you withdraw gold from your IRA before you’re 59½ years old, you’ll be charged income tax on the value of that gold, as well as a 10% penalty for making an early withdrawal from a retirement account.. Opening a self-directed IRA and investing in precious metals is a bit more complicated than opening a traditional IRA or Roth IRA.
To avoid violating tax rules for proprietary transactions, self-governing IRAs, including gold IRAs, must have an IRS-approved custodian bank.. Most IRA companies may buy back gold, but be aware that the price at which they buy gold is lower than the price at which they sell gold.. Annual fees are generally charged by the account custodian, and storage and insurance fees are more often owed to the custody account than to the Gold IRA company.. People who believe that physically owning gold or other precious metals is safer can find that peace of mind with a gold or silver IRA..
Several companies are promoting gold IRA arrangements based on the checkbook control strategy, in which the IRA does not directly own the metals but owns a limited liability company (LLC) through which the taxpayer buys and stores the metals. Once a traditional IRA owner reaches 72 years of age, the annual IRA minimum distributions (RMDs) must also be completed.. For example, you could have an IRA that is invested in precious metals and another IRA that invests in liquid assets such as publicly traded stocks and mutual funds.. Even with a long time horizon, gold investors have no guarantee of making money from their investment, particularly if you’re planning to rely on a gold IRA company’s repurchase program to sell your gold if you need to accept distributions from that IRA..
If you’re not sure whether a gold IRA or a silver IRA is right for you, contact a fee-based financial planner who isn’t affiliated with a gold IRA company to determine whether it would be a good addition to your portfolio.. It’s important to be aware of all costs and expenses before you buy physical gold to keep in an IRA.. You don’t want to fund a gold IRA with cash because you’ve already paid taxes on that money, and the point of using an IRA as an investment tool is to take advantage of the tax benefit that comes with using pre-tax dollars.. There are plenty of rules and regulatory hurdles that you’ll need to overcome if you’re thinking about buying a Gold IRA..
They sell gold coins, gold bars, and the like, but they don’t offer IRA investment advice (regardless of what their websites or other marketing materials might suggest).