Physical gold can play an important role in a well-diversified retirement portfolio; however, certain rules must be considered if you want to take advantage of the full benefits a gold or other precious metals individual retirement account (IRA) can offer. IRA-eligible gold can’t be added to just any retirement account. It often needs to be incorporated into a self-directed IRA, one of the few individual retirement accounts that doesn’t limit you to only traditional paper assets. Maximize your retirement strategy, better avoid tax penalties, and take advantage of everything else a gold-backed IRA can offer with these easy-to-understand gold IRA guidelines.
Only certain gold coins, bars, and rounds are IRA-approved.
You may love South African Gold Krugerrand coins, but you can’t include them in your gold IRA account. With fineness of .9167, Krugerrands do not make the cut.
IRA-eligible gold coins, bars, and rounds must meet a set of requirements set forth by the Internal Revenue Code to be held in a self-directed IRA. They must meet a minimum fineness requirement of .995 and be produced by a national government mint or accredited refiner/assayer/manufacturer. Gold American Eagle bullion and proof coins are the only gold coins that are an exception to the purity guidelines. They have a fineness of .9167.
IRA-eligible precious metals include:
- American Eagle Bullion coins
- American Eagle Proof coins
- 1 oz. American Buffalo coins
- 1 oz. and 1/10-oz. Pearl Harbor coins
- Australian Kangaroo coins
- 1 oz. Austrian Philharmonic coins
- 1 oz. Canadian Maple Leaf coins
- 10 oz. and 1-oz. Perth Mint bars
If any of the above IRA-eligible gold coins or bars have been graded for their condition by a certification organization (like Professional Coin Grading Service), they will typically be defined as “collectibles” by the IRS and thus not be allowed in IRAs. Should you desire, you can have your coins graded after you’ve retired and taken possession of them as a distribution in kind, which will be discussed in more detail later.
You can’t add gold you already own to a self-directed IRA.
If you already own some of the gold coins listed above, you may be thinking, “How convenient! I can move them into a gold IRA!” But this isn’t the case. You cannot add gold you already own to a self-directed IRA, even if it meets all the requirements set forth by the Internal Revenue Code.
Instead, you must add funds to your IRA, then have your IRA custodian use those funds to buy gold through a distributor like U.S. Money Reserve. Funds can be added to your IRA through a transfer between IRA custodians, a rollover between retirement accounts, or as a new cash deposit into a new IRA account. In each situation, your custodian buys the precious metals on your behalf and arranges delivery to a third-party depository that specializes in protecting precious metals. You retain complete control over the gold that’s purchased and your choice of depository, as long as both are IRS-approved.
IRA gold must be stored in an IRS-approved depository.
You can’t keep IRA-eligible gold in your home or in a local security deposit box.
Eligible gold can be included in your IRA “provided it is in the physical possession of a bank or an IRS-approved nonbank trustee,” according to the IRS.
Storing your IRA gold at home can be considered as taking a distribution, which means you may lose your tax-deferred benefits and could get hit with a penalty if you’re under 59½ years old. What’s more, if the IRS determines that the day your IRA gold entered your home was the date of “distribution,” you may end up paying additional penalties and back taxes owed from the time of distribution.
“The IRS,” writes The Wall Street Journal, “warns taxpayers to be wary of anyone claiming that precious metals held in your IRA can be stored at home or in a safe-deposit box.”
Commingled vs. segregated storage
There are two main forms of precious metals storage: segregated and allocated. While both are secure, you may prefer one over the other depending on your unique financial situation.
Segregated storage is a form of storage in which your assets are held separately from other gold or silver assets that are either owned outside of the IRA or owned by other people. This may be preferable if you want easy access to your precious metals for the sake of liquidity.
Allocated storage (also known as commingled storage) is where your precious metals assets in your IRA are stored along with other precious metals owned by multiple account holders. Though your precious metals are still properly labeled and attributed to you, this storage method may be better if you don’t need quick access to them.
When you’re ready to withdraw from your IRA, you can take possession of your physical gold.
Once you are 59½ years old, you can liquidate the precious metals in your self-directed IRA without penalty for cash or take possession of your physical precious metals. The latter option is known as a “distribution in kind.”
Unlike withdrawing funds from a traditional retirement account, withdrawing from a precious metals IRA allows you to walk away with a powerful physical asset in hand—gold (or other precious metals)—which you can hold onto, sell at a later point, use as currency in a time of crisis, or pass down to future generations.
You can contribute to multiple retirement accounts for multiple avenues of security.
If you’re part of the 32% of working Americans with a workplace retirement account, congratulations! You’re already steps ahead of many other Americans, two thirds of whom don’t contribute anything to a 401(k) or other retirement account available through their employer, according to Bloomberg.
You can get even further ahead, all while potentially mitigating more risk. In addition to contributing to an employer-sponsored 401(k), you can contribute to a Roth IRA, traditional IRA, or a traditional or Roth self-directed IRA.
If you don’t exceed the maximum contribution limits (based on your income level and age), you can contribute to all of your retirement accounts throughout the tax year. You may consider consulting your tax advisor to determine your eligibility.
“Because gold prices generally move in the opposite direction of paper assets, adding a gold IRA to a retirement portfolio provides an insurance policy against inflation,” says Edmund C. Moy, former United States Mint Director and U.S. Money Reserve Senior IRA Strategist. “This balanced approach smooths out risk, especially over the long term.”
Learn more about the powerful role gold can play in your retirement plans. Request U.S. Money Reserve’s free Gold IRA Information Kit today.
How does a precious metals IRA work?
A precious metals IRA may be a great choice to help you diversify your assets for retirement. Here are some important things to know before considering a precious metals IRA.
What is a precious metals IRA?
A precious metals IRA is a self-directed IRA that allows you to hold certain types of precious metals (gold, silver, platinum, and palladium) as part of your overall asset mix. Although the available asset classes are expanded for self-directed IRAs compared to other IRAs, other traits, such as contribution limits, are virtually the same.
Is a precious metals IRA different from a gold IRA, or are the terms used interchangeably?
The term “precious metals IRA” is often used interchangeably with “gold IRA.” Some prefer the former because it clarifies that there are other precious metals allowed (silver, palladium, and platinum) in self-directed IRAs beyond gold.
Which approved precious metals can be used in a self-directed IRA?
Apart from gold, silver, palladium, and platinum are also approved for inclusion in precious metals IRAs. However, each precious metals product must meet certain standard criteria to be kept as an asset in an IRA. For example, the purity of gold must be 99.5%, silver must be 99.9% pure, and both platinum and palladium must be 99.95% pure.
How much do precious metals IRAs cost?
There is often a set-up fee and annual fee to hold a precious metals IRA, some of which may be waived depending on your initial contribution amount. There may also be costs associated with precious metals storage, as well as liquidation fees and transfer costs.
Are precious metals IRAs safe?
Many believe precious metals like gold and silver can serve as a buffer against more volatile assets like stocks and other paper assets. Before opening a precious metals IRA, consider talking through the pros and cons with a professional.
What are the differences between a traditional gold IRA, a Roth gold IRA, and an SEP gold IRA account?
Most gold IRAs fall into the category of traditional gold IRAs. Contributions are made pretax, which allows for more tax benefits up front and pushes the tax burden to when you begin to receive distributions.
Roth gold IRAs are self-directed IRAs with post-tax contributions, which push the tax benefit to when you have retired.
SEP gold IRAs are IRAs set up by an employer or someone who is self-employed. As with a traditional IRA, taxes are withheld until retirement. However, tax benefit distribution and contribution limits are different than for traditional gold IRAs.
“Because gold prices generally move in the opposite direction of paper assets, adding a gold IRA to a retirement portfolio provides an insurance policy against inflation,” says Edmund C. Moy, former United States Mint Director. “This balanced approach smooths out risk, especially over the long term.” Learn more about the powerful role gold can play in your retirement plans. Request U.S. Money Reserve’s free Precious Metals IRA Information Kit today!
It’s never too late to open a Precious Metals IRA.
Even during times of economic uncertainty, it’s not too late to open your own precious metals IRA. U.S. Money Reserve’s precious metals IRA program combines the traditional protection of gold and silver with the modern convenience of an individual retirement account. The rules surrounding retirement accounts and gold IRAs don’t have to be complicated. Your experienced U.S. Money Reserve IRA Account Executive will help clear things up and be with you every step of the way.
If you have an existing IRA or 401(k) account, we can help you transfer or roll it over into a self-directed IRA backed by precious metals like silver and gold. And if you don’t have an IRA, we’ll walk you through the simple set-up process and your many exciting options for IRA-eligible precious metals. Call 1-844-307-1589 to consult with one of our knowledgeable IRA Account Executives today!
