Precious metals are an increasingly popular investment choice, yet the IRS has strict guidelines regarding which coins and bars may be held within an IRA account. This article will outline which types of coins qualify and how you can acquire them.
Donna McNulty purchased and stored several American Eagle (AE) coins in a safe at her home, which the IRS ruled violated the prohibition against commingling IRA assets.
American Eagle Bullion and Coins
American Eagle gold coins are among the most beloved holdings for precious metals IRAs, yet investors should be wary that their Proof and Burnished Uncirculated versions command significant premiums over their bullion value based on Sheldon Coin Grading Scale criteria widely utilized by dealers and appraisers.
No matter if you invest in American Eagle coins or any other forms of gold, be aware that any such assets must be stored with an IRA custodian. The IRS strictly forbids taking personal possession and storing them within your own home.
IRS only permits certain IRAs, known as Precious Metals IRAs, to hold gold, silver and platinum bullion as investments. These accounts offer investors a means of diversifying their investment portfolio with precious metals while taking advantage of tax advantages associated with an IRA account.
Bullion Coins
The IRS only permits certain bullion coins and bars into an Individual Retirement Account. They must meet minimum fineness requirements as set by them as well as being produced at a national government mint or by an accredited refiner, assayer or manufacturer.
Many popular coins are considered collectibles by the IRS and therefore not permitted for inclusion in an Individual Retirement Account (IRA). However, there is an exemption allowing your precious metals IRA to invest in select coins that meet a minimum fineness level requirement; such as American Eagle gold coin as well as certain Canadian Maple Leaf coins and the new Big Five Elephant series from Royal Canadian Mint; however South African Krugerrand coins do not meet this threshold.
United States Precious Metals cautions that rare coins should be considered speculative investments and their past performance does not always predict future investment returns. Therefore, rare coins should only be included as part of a well-diversified portfolio and in consultation with your own independent financial advisor before investing in them.
Bullion Bars
Gold bullion bars are an easy and cost-effective way to diversify an IRA with precious metals. Offering greater purity and value than numismatic coins, they tend to more closely track the spot price of gold.
Bullion bars meet the minimum fineness requirement to qualify as eligible assets in an Individual Retirement Account (IRA). When purchasing bullion from dealers, make sure that it satisfies IRS criteria for eligibility before proceeding with purchase.
Your IRA also gives you access to gold, silver, platinum and palladium investments by purchasing bullion coins and bars from your preferred dealer or depository. When selecting your dealer, ensure they offer competitive prices without hidden fees; industry trade organizations like American Numismatic Association, Industry Council for Tangible Assets or Professional Numismatists Guild can provide impartial reviews of dealers and their products.
Exchanged Traded Funds (ETFs)
Gold coins and bars are popular investments among those who believe the currency will collapse or need an alternative form of wealth. Unfortunately, most IRA custodians do not allow physical bullion as an asset to be held, though some do offer true self-directed IRAs which allow more diverse holdings such as precious metals like gold and silver to be stored safely within an IRA account.
The IRS contended that, since Section 408(m)(3) refers only to bullion and McNulty took delivery from Green Hill of American Eagle coins without making her purchases through Green Hill, McNulty took constructive possession of them upon receipt and thus violated Section 408(a)(5) by mixing her AE coins with non-IRA assets in her safe.
Gold coins may be eligible to be held within an IRA provided they meet IRS purity standards and were produced at a national government mint. Unfortunately, this excludes many collectible coins such as American Eagles, Canadian Maple Leaves, South African Krugerrands and British Sovereigns; however gold bars which meet IRS purity and fineness requirements may still be placed into an IRA account.