Gold coins and bullion have long been seen as an effective hedge against inflation. Unfortunately, however, the IRS doesn’t permit their direct inclusion into an IRA account.
An Individual Retirement Account (IRA) allows only certain forms of bullion to be held within it, such as American Eagle coins with a minimum fineness level and bullion bars and rounds manufactured at national government mints or COMEX/NYMEX approved refineries.
Coins are pieces of metal or other materials with images or marks on them that bear denominational information and other details, typically stamped with images of an American Eagle and/or Krugerrand coinage. Not all coins, however, qualify to be included in an Individual Retirement Account; only precious metals that meet minimum fineness requirements set by the IRS can be included in an IRA account.
IRAs are generally prohibited from investing in collectible assets such as coins; however, the IRS provides an exception for certain gold, silver, platinum, and palladium bullion that meets purity standards; this coin must then be held by a trustee or custodian instead of its IRA owner; section 408(m)(3) requires physical possession by this trustee of such coins or bullion for Sec 408(m)(3) to apply; McNulty asserted that purchasing AE coins did not trigger taxable distributions; instead she claimed physical possession did not trigger tax distributions due to being non-bullion nature of her purchases; McNulty also claimed this did not trigger tax distributions from her IRA in accordance with Sec 408(m).
Precious Metals IRAs enable investors to invest in physical precious metals such as gold, silver, platinum and palladium – with certain purity requirements set by the IRS for these investments. Investors may purchase coins or bars directly or invest in exchange traded funds that track value of these precious metals.
An Individual Retirement Account, or IRA, generally only allows the ownership of legal tender coins and bullion with minimum fineness levels such as 0.999 for silver bullion coins and rounds; Krugerrands or older US silver coins do not qualify.
Investors interested in precious metals should select a reliable dealer and conduct extensive research before investing. Industry trade groups such as the American Numismatic Association or Industry Council for Tangible Assets could provide guidance when searching for dealers who meet this criteria, while their IRA custodian can ensure any products purchased qualify as being IRA eligible.
Precious metals are widely recognized as an effective hedge against inflation and an appealing investment option to diversify retirement portfolios in a low-risk alternative to stocks and bonds. Before shopping for gold coins or bars, however, keep in mind that precious metals investments fall under IRS’s IRA rules for collectibles.
IRS guidelines permit traditional, Roth, SEP and SIMPLE IRAs to invest only in coins or bullion that meets strict purity standards. This rule applies equally for traditional, Roth, SEP and SIMPLE IRAs.
When choosing to add physical precious metals to an IRA, if you choose the latter option you must choose a depository that accepts products approved for storage within an IRA. These products include bars and rounds meeting minimum fineness standards as well as coins issued after 1985 from Treasury Department (American Gold Eagle coins) to keep in a secure vault – the IRS strictly forbids storage at home or other private storage areas which put you in possession of these assets.
Your retirement account could give you access to collectibles like artwork, rugs, antiques, metals and gems; or more traditional investments such as stocks, bonds or exchange-traded funds depending on which type of IRA it is. There are two commonly-held IRA types – traditional and Roth. Additionally, investors may set up Simplified Employee Pension (SEP) IRAs or Savings Incentive Match Plan for Employees (SIMPLE) IRAs as an additional way of saving for retirement.
An Individual Retirement Account (IRA) typically offers more investment options and tax savings than its 401(k) counterpart, and early withdrawals could incur taxes and a 10% penalty until age 59 1/2 has been reached unless certain exceptions exist. You can learn more about IRA rules by reviewing a summary prospectus or mutual fund prospectus that details investment objectives, risks, charges and expenses; any investments made through an IRA could fluctuate over time as market risk arises and threatens their value.