Gold IRA Rules ☛
This article will explain the Gold IRA Rules in plain English for you. We’ll answer questions such as:
what constitutes IRA eligible gold?
what are the precious metals IRA rules?
what is allowed in a gold IRA?
what is not allowed in an IRA?
what exceptions are there to gold IRA rules?
We hope that this will help you in making your decision about adding gold to your retirement portfolio. The IRS has set various precious metals IRA rules that you need to abide by. If you don’t then you will risk not getting the full tax benefits that the IRA vehicle was designed for.
Why Have a Gold IRA in the First Place?
The value of paper currency is being eroded every day by inflation whereas the values of gold and silver always rise in the long term.
During financial crises, fiat currencies are threatened. In such situations, gold is a nice thing to hold as it is considered as the ultimate hedge against the financial and economic crisis and inflation.
A lot of people are now trying to convert or invest some of their wealth into gold. Gold can be held in the shape of bars, coins or bullion.
Initially, collectible coins and precious metals were prohibited by the internal revenue service to be part of IRA investment, but it was changed in 1997 with the “Taxpayer Relief Act of 1997” that permitted gold and other precious metals to be included in an Individual Retirement Account.
What is an IRA?
Before we get into the nuts and bolts of gold IRA rules, let’s remind ourselves what an IRA is.
An IRA (individual retirement account) is a tax-deferred financial scheme which is used by employed workers to deposit a specific amount monthly from their income.
The cash deposits can be tax deductibles, but until withdrawn, investment earnings will not be taxable. IRA assets cannot be accessed before the age of 59 and a half. If you want to get access before this age then you have to pay a penalty.
What Assets are Allowed in an IRA?
The following are the assets allowed to be held in an IRA:
Money market accounts
Precious metals and coins may be held in an IRA account but generally you must “rollover” your IRA into a self-directed IRA. Once you do that, IRA eligible gold can be easily held in your portfolio.
Where Can I Open an IRA Account?
Different financial institutes, insurance companies and banks can open an IRA account for you. We have researched various gold IRA providers for you and you can see our top 10 companies here.
An investor needs to ask his IRA custodian about accommodating a gold IRA as not all of the financial institutes can add gold to an existing IRA account.
Few organizations may allow you to accommodate gold in existing IRA whereas others may ask you to open a new account.
How to Add Gold to My IRA?
A precious metals IRA or Gold IRA is one which is held by a custodian through whom investment in Gold and other precious metals is offered.
IRA allowed precious metals are include gold, platinum, silver and palladium.
Gold is the most favored investment as its value tends to be more stable than silver, for example.
It is recommended that you don’t buy gold yourself. Ask your IRA custodian to make an investment in gold and other precious metals by using funds in your account.
How to Withdraw Gold from My IRA?
You have two choices with a gold IRA:
The first choice is that you can withdraw the gold from your IRA by liquidating it. In this case standard IRA tax rules will be applied which means that upon withdrawal you have to pay income tax.
The second choice is that you take the gold but liquidate it afterwards. In such a case, you have to pay income tax on the value of the gold at the time of withdrawal. 28% capital gains tax will also have to be paid for the gold when you liquidate it at a later date.
Which Items are Not Allowed in an IRA?
Under IRS regulations following items are not allowed to be held in IRA investments:
Collectible coins and precious metals.
What is IRA Eligible Gold?
The following are IRA eligible gold products, under gold IRA rules:
- Austrian Gold Philharmonic coins
- Australian Kangaroo or Nugget coins
- American Gold Eagle bullion coins
- American Gold Eagle proof coins
- Canadian Gold Maple Leaf coins
- American Gold Buffalo uncirculated coins (with the exception of proofs)
- Chinese Gold Panda coins
- Gold bars or rounds made by a national government mint or COMEX or NYMEX-approved refinery, with minimum fineness 0.995.
Which US Minted Coins are Allowed in a Gold IRA?
These are the gold IRA rules concerning US minted coins:
These coins must contain a certain amount of gold, specifically, one oz, one-quarter one-half or one-tenth oz of gold.
One ounce silver coins minted by the US treasury Department are also acceptable to be held in an IRA.
US-minted gold coins having 24 karats of purity are also acceptable.
22 karat US Gold American Eagle coin was granted a special exemption.
What Bullion is IRA Eligible?
The following bullions are allowed in a precious metals IRA:
What is a Gold IRA Custodian?
The IRA custodian plays an important role in a precious metal/Gold IRA. An investor cannot physically possess the precious metals or coins as they are not allowed according to the Gold IRA rules.
IRA investors are also not allowed to buy and turn it over to IRA custodian. An investor can ask their custodian to buy on their behalf and store it in the depository.
It is the investor’s decision that if he wants he can order the custodian to purchase or sell more gold on his behalf.
Where to Store IRA Gold?
It is the responsibility of the custodian to do purchasing on the investor’s demand and store it in a third party depository.
The precious metals cannot be stored in just any depository as they need to be stored in an IRS-approved depository that has been specifically reserved for precious metals. Such a depository will have an annual storage fee that should be paid by investor’s IRA account.
What are the Exceptions to Precious Metals IRA rules?
Although you have to abide by all the gold IRA rules or laws that you come across, as in all laws there are a few exceptions.
For IRAs, there is a law that once you have opened the account, you cannot touch the IRA assets before 59 and a half year of age. This law becomes void in the following conditions:
Disability of IRA owner for whatever reasons.
If the owner gets hospitalized and he doesn’t have money or insurance to cover those costs.
After the death of original IRA owner, a beneficiary can withdraw the money.
When the IRA owner becomes unemployed and he cannot cover insurance costs.
When this money is required to pay for the qualified education of IRA owner or his immediate family. This rule is applied for studies, tuition, books and other materials.
10,000 dollars can be used by the IRA owner to buy his first house.
If an equal series of “substantially equal periodic payment” is withdrawn by the IRA owner, the rule becomes void.
Gold IRA Rules Conclusion
Now that you have familiarized yourself with the gold IRA rules, you will be better able to take advantage of the great benefits offered by this investment vehicle.