Investors with gold IRAs can hold physical metals such as bullion or coins, as well as securities related to precious metals within the portfolio. A golden IRA should be kept separate from a traditional retirement account, although the rules involving things like contribution limits and distributions remain the same. Bullion bars and gold and silver rounds are also allowed in an IRA when they are 99.9% pure. This generally means that they must be produced by a refinery approved by NYMEX or COMEX or a national government mint.
To use an IRA to invest in gold, you'll need to follow two guidelines from the IRS. First, you can only invest in IRS-approved gold. Although the list of approved options changes, the IRS says it must be “highly refined bullion. Unlike withdrawing funds from a traditional retirement account, a gold-backed IRA allows you to leave with a powerful physical asset in hand with gold that you can hold, sell at a later time, use as currency at a time of crisis, or pass on to family members.
After you fund your account, you can tell your IRA depository which gold bars to buy (and how much). Storing your IRA's gold at home can be considered distribution, meaning you can lose your tax-deferred benefits and you could be penalized if you're under the age of 59 and a half. To own gold, whether in coins or bullion, an IRA requires a true self-directed IRA offered by a few custodians. What's more, if the IRS determines that the day your IRA gold entered your home was the “distribution” date, you could end up paying additional penalties and back taxes owed from the time of distribution.
Once you are 59 and a half years old, you can liquidate the precious metals in your self-directed IRA for cash or take physical possession of your gold and silver without penalty. With many scams and misleading ads, it's essential to investigate before opening a golden IRA account. In addition, the Technical and Miscellaneous Revenue Act of 1988 allowed IRA owners to invest in state-minted coins as long as they were in the possession of the IRA holder. If any of the IRA-eligible gold coins listed above have been qualified by a certification organization (such as the Professional Coin Classification Service), the IRS will normally define them as “collectibles” and are therefore not allowed in IRAs.
Gold coins, bars and rounds eligible for IRAs must meet a number of requirements established by the Internal Revenue Code to be held in a self-directed IRA. As long as there is gold on this earth, it is not too late to open your own self-directed IRA of precious metals. IRA Gold companies vary in experience, service and costs, so be sure to search and compare your options before proceeding with opening an account. The ETF can also buy, store and insure gold at a much lower price than you or an IRA custodian.
The IRS has issued private letter resolutions to major gold ETFs stating that IRAs can own ETFs. While you can technically set up an LLC and control your IRA purchases yourself (as long as you meet some strict requirements), you still can't store the gold in your home.