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Often called a gold IRA, a precious metals IRA is a type of self-directed IRA (SDIRA) with which you can invest in gold and other precious metals: silver, platinum, and palladium.
Although the IRS prohibits the ownership of collectibles (precious metals) in an IRA, there are exceptions. What are the exceptions? What are the IRS’ criteria for physical precious metals that you’re allowed to invest in and hold as assets in your IRA?
What forms/products made of precious metals have IRA approval? How do you set up, fund, and invest in precious metals with an IRA? We’ll answer all of these questions in this article.
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Did you know the IRS has exceptions for physical precious metals you can purchase and hold in your IRA?
Well, keep reading because we will also talk about IRA-approved precious metals products you start buying today. And we’ll touch on how to open, fund, and invest in a precious metals IRA.
Key Points
IRS Policies on Owning Collectibles in an IRA
The IRS considers works of art, rugs, antiques, and alcoholic beverages collectibles. The same designation applies to gems, stamps, metals, and coins. This doesn’t apply to collectibles invested in an IRA before 1982. These collectibles have grandfathered status.
The IRS considers the acquisition of collectibles with an IRA the same as a distribution. A distribution (withdrawal) counts as taxable income. Thus you incur taxes and penalties on the dollar value amount of the collectible.
IRS-Approved Precious Metals You Can Invest in with an IRA
If you have ever wanted to know, "Can gold coins be invested in IRAs?", then this article is for you. The IRS makes exceptions for certain types of precious metals, allowing you to invest in them with a SDIRA. The IRS’ list of criteria is long, detailed, and a bit complicated. For example, you can invest in the following, very specific examples of precious metals with your IRA:
IRS exceptions also apply to platinum and palladium. In addition, precious metals in your IRA must meet IRS standards for purity values. Gold, silver, platinum, and palladium must be 99.5%, 99.9%, and 99.95% pure, respectively.
Metals must come from a manufacturer, an assayer, or a refiner that has accreditation/certification from a prominent commodity futures exchange, like NYMEX or COMEX, or from a national government mint. Small bullion bars must conform to very specific weights. There are also unique criteria applicable to coins.
The IRS allows you to include bullion and proof coins made of precious metals in your IRA. Bullion coins are those minted for public circulation. Proof coins undergo special minting using unique dies. They come in special packaging designed to showcase and preserve the coin’s integrity.
IRA-eligible bullion coins must be uncirculated and free from damage. Proof coins need to be in excellent condition, in original mint-condition packaging, and have a certificate of authenticity.
Precious Metals: IRA-Eligible Products
As mentioned above, acceptable forms of IRA-eligible precious metals include bars and coins (bullion and proof). Rounds are also acceptable, providing they meet IRS criteria for inclusion in a precious metals IRA. What specific products can you purchase and hold in your IRA?
IRA-Eligible Gold Products
The American Gold Eagle Coin
First minted in 1986, the American Gold Eagle coin remains enormously popular among coin collectors, those who invest in gold, and anyone who has a precious metals IRA. Ironically, the American Gold Eagle coin has a purity value of 92%.
Despite that it doesn’t meet IRS purity requirements for IRA-eligible gold, this coin has tremendous perceived value and an association with the U.S.
Mint, making it an exception. Its face values are $5.00, $10.00, $25.00, and $50.00. The values correspond to 0.1 ounces, 0.25 ounces, 0.5 ounces, and 1 ounce of gold.
On the American Gold Eagle coin’s iconic obverse, Lady Liberty strides toward the viewer. She carries a torch and an olive branch in her right and left hands, symbols of light and peace. The coin’s famous reverse side features the United States' national emblem, the American Bald Eagle.
The coin’s original 1986 design depicted a family of bald eagles. The updated 35th-anniversary design of 2021 depicts a single bald eagle.
Here are some other IRA-eligible gold products:
IRA-Eligible Silver Products
Many IRA-eligible gold products are also available in IRA-eligible silver and, sometimes, in platinum and palladium. For example, American Silver Eagle bullion and proof coins are acceptable so long as they meet IRS purity standards.
Chinese Silver Panda coins, Austrian Silver Philharmonic coins, British Silver Britannia coins, and Canadian Silver Maple Leaf coins are also IRA-eligible.
There are also atypical or less sought-after IRA-eligible silver coins. They’re usually cheaper than other coins, making them accessible prospects for first-time, budget, or moderately risk-tolerant investors.
IRA-Eligible Platinum and Palladium
Investing in IRA-eligible platinum and palladium is a great way to further diversify your portfolio. Platinum and palladium prices compared to the prices of gold and silver allow you to purchase more per transaction.
Later, you can convert your IRA platinum and palladium to cash and use it to buy gold or other SDIRA-eligible assets.
Some examples of IRA-eligible platinum and palladium:
How to Open and Fund a Precious Metals IRA
Find a leading, reputable distributor of government-issued gold, silver, platinum, and palladium. Leading, reputable distributors have:
Positive customer reviews.
They also feature IRA-eligible precious metals in their inventory. When you’re ready to make a purchase, you don’t even have to worry that your purchase meets all of the IRS requirements.
Reputable distributors see to this for you, segregating their IRA-eligible inventory from the rest of their gold, silver, platinum, and palladium inventory.
Fund your precious metals IRA with cash via bank/wire, a custodial transfer, or a 401(k)/IRA rollover. A custodial transfer is when the custodian of your existing retirement account transfers your account to your precious metals IRA custodian.
If you prefer to do a rollover, choose between a direct or an indirect rollover. To complete a direct rollover, have the trustee of your existing retirement account transfer your accounts funds directly into your new precious metals IRA.
To complete an indirect rollover, withdraw all of your retirement account’s funds in the form of a check. Use the check to fund your new precious metals IRA. If you do so within 60 days, there are no tax penalties.
Locate an IRS-Approved Custodian and Depository
When you invest in precious metals with an IRA, the IRS doesn't allow you to keep the physical precious metals in your possession. An IRS-approved custodian must liaise with an IRS-approved depository to store your metals.
Generally, trusted top distributors of IRA-eligible precious metals have lists of preferred IRS-approved custodians and depositories.
Your precious metals IRA custodian ensures that your account stays in good standing with the IRS, filing necessary forms and reporting as required.
The depository keeps and secures your physical gold in a special facility. You, the account holder, serve as the trustee.
As the trustee, you get to personally manage the investments in your precious metals IRA. You decide what to purchase, how much, how long to hold it, and when to sell. Your precious metals IRA custodian performs the transactions.
Get Started Today
You can get started investing in precious metals with your IRA today. Setting up an account entails a handful of steps you can complete in less than an hour. Be sure to focus purchases on gold, silver, platinum, and palladium products that the IRS allows you to purchase with an IRA.
To reiterate, IRA-eligible precious metals must have purity values of at least 99%. There are exceptions, such as the American Gold Eagle coin. IRA-eligible forms of precious metals include bars, rounds, and bullion/proof coins.
To set up a precious metals IRA, open an account with an IRS-approved custodian. Fund your account, then start making purchases. When it's time to start making withdrawals, you can take distributions in cash or have your IRA's precious metals shipped safely to your home.
Remember to read our list of the Top Gold Companies.
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