Although IRAs were once limited to holding American Eagle gold and silver coins, today IRAs can invest in gold, silver, palladium, and platinum bars and coins allowed by the IRS. Are you new to Zacks? Start here. Keep me logged in What does Remember Me do? When stocks and bonds falter, gold tends to remain stable and even rise in value, especially during times of inflation. For this reason, you may want to invest in gold in your individual retirement account.
Although coins are specifically prohibited as IRA investment, some gold coins are allowed. Investing in gold with an IRA presents some challenges when deciding who will act as trustee of the account. IRS Publication 590, which summarizes regulations for IRAs, notes that the IRS prohibits investment in collectibles in your IRA account. This ban includes works of art, metals, carpets, antiques and precious stones.
Coins are also included, but only collectible coins, such as antique or rare coins, of primary interest to coin collectors, not to people interested in the precious metal content of the coin. The tax law clearly specifies certain currencies that can be held in an IRA. U.S. One, Half, Quarter, and Tenth Ounce Gold Coins and One Ounce Silver Coins Made by the U.S.
UU. These are American Eagle gold and silver coins. You can also invest in certain platinum coins within your IRA, as well as platinum and palladium bars. These metals have more industrial value due to their use in the manufacture of catalytic converters for automobiles, but their value tends to follow the movement of gold.
Gold and silver bars are also allowed. The ingot is molten metal in the form of a bar, rather than in the form of a coin. To invest in gold and silver in your IRA, you need an IRA trustee who is willing to manage these investments. Many trustees are unwilling to invest in gold, due to their storage requirements.
In addition, gold must be stored under the control of the trustee to prevent the owner of an IRA from accessing and selling the gold outside the tax-free structure of the IRA. Visit performance to learn about the performance figures shown above. You buy the coins and own the coin, but you never actually have them while they are in the IRA. You can sell the metals while they are in the IRA and take a cash distribution from the account, or you can withdraw the silver coins as an IRA distribution.
But IRS rules prohibit IRA owners from taking possession of precious metals while they are part of the owner's retirement portfolio. To use an IRA to invest in gold, you'll need to follow two IRS guidelines. 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.
The law related to investments in silver coins for IRAs specifically mentions American Silver Eagles as approved for IRA. As such, the transaction is characterized as a taxable distribution of the IRA followed by a purchase of the metal or currency by the IRA owner (you). However, coins or bullion must be held by the trustee or custodian of the IRA rather than the owner of the IRA. To own gold, whether in coins or bullion, an IRA requires a true self-directed IRA offered by a few custodians.
They can invest in gold coins, but the coins must remain in the custody of the IRA trustee or custodian. Once the depositary notifies the depositary of the IRA that the silver coins have arrived, the depositary documents them into the IRA account and pays the coin merchant. .