The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualifying retirement investment. Investors with gold IRAs can hold physical metals such as bullion or coins, as well as securities related to precious metals within the portfolio. 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. As you can see, not all precious metal products are approved for an IRA.
You will need to be very careful when making an IRA contribution, as unapproved metals will be rejected by the depositary. To qualify as an IRA-approved product, precious metals must meet the minimum fineness levels listed above. Gold IRAs are usually defined as “alternative investments,” meaning that they are not traded on a public exchange and require special experience to value them. As long as there is gold on this earth, it is not too late to open your own self-directed IRA of precious metals.
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. During his tenure as director of the Mint, Moy says that there was little demand for gold IRAs because they involve a very complicated transaction that only the most persistent investor was willing to carry out. IRA Gold companies vary in experience, service and costs, so be sure to search and compare your options before proceeding with opening an account. 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.
There are currently a variety of precious metals that meet the minimum purity requirements that are acceptable for inclusion in a gold IRA account. Products outside these ranges, except American Gold Eagles, are not approved for IRA contributions. For a gold IRA, you need a broker to buy the gold and a custodian to create and manage the account. Once you turn 72, you will be required to accept the minimum required distributions (RMD) from a traditional gold IRA (although not from a Roth).
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. However, American Eagle Bullion gold coins are the only gold coins that are an exception to purity guidelines. 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.
The possibility of using gold and other materials as securities in an IRA was created by Congress in 1997, says Edmund C.