Gold IRAs, or precious metals IRAs, are an innovative form of individual retirement account designed specifically to hold gold coins and bullion. To qualify as an IRA-eligible purchase, coins must meet certain purity guidelines; South African Krugerrands do not qualify due to not meeting this threshold of fineness.
Like traditional IRAs, gold IRAs incur various fees associated with purchases and storage. Fees may include one-time account setup fees, maintenance costs and custodian expenses.
Taxes
Gold in an IRA can be an excellent way to diversify and protect your portfolio against economic downturns, but it is crucial that you understand its associated tax rules before investing.
Precious metals approved for storage within an IRA must be stored with an IRS-approved depository. Gold coins and bullion must meet specific purity guidelines, such as meeting minimum fineness levels of 995.5 or above; additionally, bullion coins must come from either national government mints, accredited refiners, assayers or manufacturers, or be made by national government mints themselves. American Eagle gold bullion coins, Canadian Maple Leaf coins, Australian Kangaroo/Nugget coins from Australia/Nugget coins manufactured by accredited refiners; Austria Vienna Philharmonic coins; 995.5+ fineness silver bars/ rounds are all suitable IRA assets.
Opting for an exchange-traded fund that tracks the price of precious metals as an investment may also be worthwhile in an IRA; however, investing in precious metals ETFs carries certain risks – among them is that the IRS could treat them as collectibles and charge you with an early withdrawal penalty of 10% before reaching 59.5.
Withdrawals
Precious metals IRAs have long been considered a smart way to diversify retirement portfolios and protect savings against inflation. Furthermore, they may even provide some shelter should a currency collapse occur; however, each precious metals IRA does come with its own set of risks that must be assessed carefully prior to investing.
The IRS recognizes a range of gold products for Individual Retirement Accounts (IRAs), including coins and bullion bars that meet minimum fineness requirements. You can invest in American Eagle coins, South African Krugerrands and Canadian Maple Leaf coins approved for an IRA investment; or invest in bullion bars that qualify as an alternative form of gold investment.
No matter which form of gold investment you select, all withdrawals must comply with traditional IRA withdrawal regulations. If you withdraw funds before age 59 1/2, taxes and penalties may be assessed against them; to avoid them altogether, arrange a transfer through an institution-to-institution transfer.
Investments
Gold IRA investments require working with a dealer specializing in precious metals who offers low markup over spot prices. Investors must also pay one-time account setup fees, annual maintenance fees, seller’s fee storage fees and insurance (to protect against theft of their metals from an approved depository).
Physical gold unlike stocks doesn’t generate dividends and this could present problems for IRA investors who need access to funds for living expenses without incurring taxes.
Although IRAs typically only allow investments in publicly-traded securities, the tax code allows an exception for investing in certain bullion coins and bars of gold, silver, platinum and palladium that meet minimum 99.5% fineness standards issued by state governments; proof and special edition coins don’t meet this statutory requirement and investors should therefore avoid them. Furthermore, such assets must be held by an IRA custodian/trustee instead of its owner.
Custodians
An IRS-approved custodian for your gold IRA manages your account paperwork, ensures compliance with tax regulations and executes transactions for you. They can also help select coins or bars eligible for storage within an IRA account. They may charge one-time fees when opening the account as well as annual management and storage fees.
Precious Metals Specialists can connect you with a qualified custodian. Additionally, they can provide information about IRA-compliant gold products like American Gold Eagles, Australian Kangaroo/Nugget coins, South African Krugerrands and Chinese Pandas; all produced by national governments with minimum fineness standards in mind.
Alongside gold coins approved for an IRA, you may also choose to invest in precious metals ETFs that track the price of gold or other precious metals. These funds offer diversification while protecting against inflation – but it should be noted that ETFs won’t be held within an IRS-approved depository like an IRA-purchased precious metal will.
