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. If you want to own gold somewhere, it could be worthwhile to own it directly or indirectly within your IRA. If you want to invest in precious metals or real estate in your IRA, a mutual fund or an exchange-traded fund (ETF) may be a better choice (although you may be subject to corporate taxable income (UBTI)).
However, once you’ve calculated your RMD for each traditional IRA account, you can aggregate the total amount and deduct it from one or more IRAs in any combination, as long as you withdraw the required total amount. With self-directed IRAs, you can invest in a wide variety of unconventional assets, including precious metals, real estate, and even cryptocurrencies. 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. Because of the protection the IRA would provide for the assets in the account, the government did not want to provide funds that could protect stolen works of art from being recovered, says Kirk Chisholm, asset manager at Innovative Advisory Group in Lexington, Massachusetts.
Similarly, it’s not prohibited to own real estate directly in an IRA, but you could get involved in a prohibited transaction if you’re not extremely careful. Switching from a traditional IRA to a Roth IRA could make sense if you think you’ll be in a higher tax bracket when you start the payout, you can pay conversion tax from outside sources, and you have a relatively long time horizon in which assets can potentially grow. In order to be stored in an IRA, coins must contain a very pure mineral content and must not be considered a collector coin. With Roth IRAs, you can deposit money after tax to receive tax-free distributions later on.
If you manage and invest your own retirement money personally through a self-governing IRA, be aware that IRA rules prohibit investing in collectibles, including works of art, rugs, antiques, metals, gemstones, stamps, coins, alcoholic beverages, and certain other tangible personal property. Some people are surprised to learn that IRS rules allow them to keep real gold bars, gold coins, and other precious metals in their retirement accounts. However, the IRA owner cannot directly benefit from the property in any way, such as by receiving rental income or living in the property. Because the IRS prohibits the use of funds or assets in an IRA as collateral for a loan, any type of derivative trading involving unlimited or undefined risk, such as naked call writing or ratio spreads, is considered a prohibited transaction by the IRS.
