In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are engaged in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs). Second, you can’t keep the gold in your possession. Even though you are the owner, the gold must be stored off-site in an IRS-approved depot. Your Gold IRA custodian bank can help you recommend a suitable custodian bank for your investments.
Not all gold investments can be owned by an IRA. The basic rule is that an IRA must not own a collector’s item and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Fortunately, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in certain forms. The term Gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualifying retirement plan. Investors with gold IRAs can hold physical metals such as gold bars or coins, as well as securities related to precious metals, in their portfolio.
A Gold IRA must be managed separately from a traditional retirement account, although the rules regarding things like contribution limits and payouts remain the same. Investors can open gold IRAs through a broker-dealer or another custodian bank. If you want to hold physical gold in an IRA, it can’t be your regular account. It must be a separate, special one called a Gold IRA.
While it’s legal to own gold or silver via an IRA or other retirement account with some restrictions, it’s not the best or most efficient way to own precious metals. The IRS has issued private letter rulings to the most important gold ETFs, which state that IRAs may own the ETFs. After doing this research, you’ll likely conclude that gold or precious metals and coins shouldn’t be owned by your IRA. Those using self-directed IRAs to invest in gold, silver, or other precious metals should contact an experienced, self-directed IRA lawyer.
You probably also know that gold is a “collector’s item” and that IRAs are not allowed to own collectibles. Therefore, gold IRAs require the use of a custodian bank, usually a bank or brokerage firm, that manages the account. You’ll also need to choose a precious metals dealer to make the actual gold purchases for your IRA (your custodian may be able to recommend one). As long as there is gold on this earth, it is not too late to open your own IRA for self-directed precious metals.
One unanswered question regarding these IRAs is whether the IRA account holder can physically take possession of gold, silver, or other precious metals. If the IRS determines that the day your IRA gold entered your home was the date of “distribution,” you could end up paying additional penalties and back tax payments that you owed from the time they were distributed. An IRA also allows gold bars and bullets made of gold and silver if they have a fineness of 99.9%. Storing your IRA gold at home can be considered distribution, meaning you’ll lose your tax-deferred benefits and face a penalty if you’re under 59 ½ years of age.
You can set up the SDIRA either as a traditional IRA (tax-deductible contributions) or as a Roth IRA (tax-free distributions).
