Can You Put Precious Metals in an IRA?

Are you looking to diversify your retirement portfolio with precious metals? You may have heard that you can't keep physical precious metals in a regular individual retirement account (IRA). However, there are specially designed precious metal IRAs that allow you to invest for retirement using gold, palladium, silver and other valuable metals. Track the prices of the precious metals market and take advantage of favorable price fluctuations to increase your account. When you want to sell metals, tell your IRA custodian what metals to sell.

The IRA custodian will hold proceeds from the sale in your cash account pending instructions from you. There are no tax consequences as long as transactions for buying and selling precious metals remain within the IRA and you are not paid anything. When you retire, tell the custodian if you want your retirement distributions to be paid in physical metals at fair market value or in cash on the sale of your metals. Our beloved Congress established an important legal exception to the above general rule. The exception is that IRAs can invest in certain gold, silver and platinum coins and gold, silver, platinum and palladium bars that meet applicable purity standards.

However, coins or bullion must be held by the trustee or custodian of the IRA, rather than you being the owner of the IRA. These rules apply equally to traditional IRAs, Roth IRAs, SEP IRAs, and simple IRAs. Gold IRAs are called self-directed IRAs, but you can use them to purchase specific IRS-approved gold and precious metal bars. They can also be used to purchase real estate, businesses and other assets. A gold or precious metal IRA is an individual retirement account in which physical gold or other approved precious metals are held in escrow for the benefit of the IRA account owner.

It works the same way as a normal IRA, only instead of holding assets on paper, it contains physical coins or bullion. Examples of willing precious metals IRA trustees include GoldStar Trust Company, Entrust Group, American Estate & Trust, and New Direction Trust Company. The depositary of the IRA will use your cash account to make the purchase and store your physical metals in a deposit service company. At the time, there were concerns that the acquisition of shares in a precious metals ETF by an IRA could be treated as the acquisition of a collector's item. Thanks to the Taxpayer Relief Act of 1997, which expanded the precious metal holdings allowed in IRAs to include one, half, quarter or tenth of an ounce U. S.

Examples of unapproved precious metal products include pre-1933 gold, gold Krugerrands, and 90% U. S. UU. Some gold IRA companies argue the inclusion of certain currencies in a precious metal IRA; however, several of those companies have been investigated by the government for misleading customers and aggressively selling numismatic coins instead of gold bars. Fortunately, the IRS now says IRAs can buy shares of precious metals ETFs that are classified as grantor investment trusts without any such problems.

Thanks to the aforementioned Tax Code exception, IRAs can own certain precious metal coins and ingots. Open a self-directed Roth or traditional IRA with a trustee or custodian experienced in handling precious metals transactions. Only a few groups are willing to act as trustees of self-directed IRAs that contain allowable precious metal coins or ingots. At one time, there were concerns that the acquisition of shares in a precious metals ETF by an IRA could be treated as the acquisition of a collector's item. If you are considering an IRA for gold, consult a financial advisor to determine how the metal would fit into your overall portfolio objectives. Your self-directed IRA custodian can help you arrange for the transfer or transfer of your existing IRA to a precious metal IRA.

You may face taxes, penalties, and fees throughout your IRA if the IRS decides to call you for your precious metals storage. The four precious metals that can be held in an individual retirement account are gold, silver, platinum and palladium, as long as they are in the form of IRS-approved coin or bar products...

Rochelle Paker
Rochelle Paker

Personal finance specialist. Areas of expertise Banking, business, real estate, consumer credit, retirement accounts.

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