While most IRA investors invest in more traditional assets such as stocks, bonds, and funds, tax legislation allows investments in precious metals such as gold and silver via specialized IRA accounts. To use an IRA to invest in gold, you must follow two IRS guidelines. First, you can only invest in gold approved by the IRS. Although the list of approved options is changing, it must be “highly refined precious metal,” according to the IRS.
If you want to hold physical gold in an IRA, it can’t be your regular account. It must be a separate, special one called a Gold IRA. You can’t store IRA-eligible gold at home or in a local security deposit box. Gold IRA companies vary in experience, service, and costs. So take a look around and compare your options before you proceed with opening an account.
To own gold, whether in coins or gold bars, in an IRA, you need a genuine, self-directed IRA, which is offered by some custodian banks. An IRA also allows gold bars and bullets made of gold and silver if they have a fineness of 99.9%. While it’s legal to own gold or silver via an IRA or other retirement account with some restrictions, it’s not the best or most efficient way to own precious metals. There are currently a variety of precious metals that meet the minimum purity requirements allowed for inclusion in a Gold IRA account.
After doing this research, you’ll likely conclude that gold or precious metals and coins shouldn’t be owned by 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. If the IRS determines that the day your IRA gold entered your home was the date of “distribution,” you could end up paying additional penalties and back tax payments that you owed from the time they were distributed. Gold coins, bars, and cartridges eligible for the IRA must meet a number of requirements set out in the Internal Revenue Code so that they can be stored in a self-directed IRA.
You probably also know that gold is a “collector’s item” and that IRAs are not allowed to own collectibles. If you want to hold physical gold in an IRA, the first step is to open a self-directed IRA (SDIRA), which you manage directly with a custodian bank. You’ll also need to choose a precious metals dealer to make the actual gold purchases for your IRA (your custodian may be able to recommend one). If any of the above IRA-approved gold coins have been assessed for their condition by a certification body (such as the Professional Coin Grading Service), they are generally defined by the IRS as “collectibles” and are therefore not eligible in IRAs.
Keep in mind that not every self-managed IRA custodian offers the same investment options. So make sure physical gold is among their offerings before you open an account. The IRS has issued private letter rulings to the most important gold ETFs, which state that IRAs may own the ETFs.