Key Takeaways:
IRA-approved gold is any gold coin, round, or bar that the IRS allows to be used as part of an individual retirement account, or IRA. In order to be approved, the gold piece must meet certain purity standards and be confirmed by an independent custodian assigned to an IRA account.
Understanding what kinds of gold would be available for placement into a retirement account is especially relevant today. More and more people are looking to anchor their IRAs with physical gold as fiat currency continues to inflate.
The information below will give you all you need to know about putting gold into an IRA, from the required purity standards to the way that custodianship works. Finally, we’ll share some eligible products you can find here at JM Bullion.
View all: IRA Approved Gold – IRA Approved Silver
Precious metals IRAs are individual retirement accounts that allow you to buy gold as part of the asset mixture. They fall under the umbrella of a type of IRA known as a self-directed IRA.
A standard IRA, be it traditional or Roth, restricts the list of eligible assets primarily to publicly-traded ones, like stocks, bonds, or mutual funds. A self-directed IRA allows a wider scope of investments for those who wish to invest, including precious metals.
So, you can choose to place physical gold into your account portfolio. However, unless you choose to invest in 91.67% pure American Gold Eagles, you’ll have to buy gold at least 99.5% pure in order for it to qualify.
This freedom to choose does come with a few costs, though. The first is that the fees for self-directed IRAs tend to be higher than those of standard ones. Before you decide on an IRA, be sure to understand the fees you may incur.
Another issue is that the burden of deciding the composition of your account rests entirely on you with a self-directed IRA. Traditional IRAs permit a more hands-off approach, as those decisions are placed with a brokerage firm or other financial expert.
Finally, you will never be able to hold or store the gold you use for an IRA yourself. Instead, you’ll have to submit it to an IRS-approved custodian, who will be responsible for ensuring that your gold meets IRS requirements and that it is stored according to the government-prescribed standards.
Gold is not the only precious metal that is eligible for placement into an IRA. Silver, platinum, and palladium are all allowed for these purposes. However, there are different purity standards for each precious metal, as follows:
The purity requirement for placing gold in an IRA is not the only mandate you must meet to qualify. The type of gold product you want to place in the account matters, too.
Specifically, you may only infuse your individual retirement account with coins, rounds, or bars. Jewelry, collectibles, or other nonstandard gold forms are ineligible for this kind of endeavor.
Here are some of the products at JM Bullion that meet IRS requirements for your IRA:
The purity requirements for gold aren’t the only standards associated with precious metals IRAs. First of all, the custodian we mentioned must comply with rules that the IRS lays out in detail, which include, in part:
In other words, the custodian cannot, in most cases, be a close family friend or family member the way that the executor of a will can. The person who stores your portfolio will be an experienced financial professional.
The custodian’s necessity stems from the fact that you may not, under any circumstances, handle or safeguard the precious metals committed to your retirement account. To do so would be considered a distribution under IRS rules, and would open you to early withdrawal penalties on the account as a whole. The custodian must also verify that you have not exceeded the contribution limits for your account each year, which is something you could easily do if you were allowed to keep the gold yourself.
The custodian will store your gold et al in an IRS-approved depository. These vaults or storage facilities are required to meet certain standards in the care of your assets. Your contributions will be insured against theft, fire, flood, and other mishaps.
However, understand that you’re paying for all of these people and services that administer your precious metals IRA. The custodian will require several fees for his or her work, as will the storage facility. These costs vary from provider to provider and may include other factors, such as the size and type of storage that you require.
There are some common misconceptions that you may have about starting a precious metals IRA that may cause you grief if you’re unaware. At the end of the day, there are some pointed specifics about which gold truly is eligible for contribution.
For instance, not all gold coins that meet the 99.5% purity standard are approved for your account. Older, specially-made, or rare coins that derive value from their numismatic qualities are usually considered to be collectibles, rather than coins, and are disallowed from entry.
In a way, it makes sense. Put aside the purity requirement for a moment. If you tried to place a 1933 $20 Double Eagle, with its 90% gold content, it would be worth tens of thousands of dollars – far in excess of the annual contribution limit. So, any coin that derives value from its history and heritage, regardless of its gold content, is not permitted.
The custodian you choose will know about these limitations, by the way. If you try to keep a gold coin personally for retirement, its value is only the coin itself, rather than the appreciating asset you get with an IRA.
Be sure to take care with some of the marketing language that various sites may use. You should always doublecheck with your custodian about whether a gold coin or bar qualifies before you move forward with the purchase. Even some products labeled “IRA-eligible” may not be.
Trust, but verify – even if you’re buying from us. After all, at the end of the day, the risk for the IRA rests upon you, not anyone else.
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We hope you have a better understanding of the rules surrounding the gold you can place into an individual retirement account, or IRA. Blasting forward without that information is like heading to an unknown location without a GPS.
That said, we want to stress that JM Bullion is not suggesting that a precious metals IRA is a good investment or something you should do. It is merely an option that you may encounter as you manage your retirement options.
The best thing to do is consult with a tax professional and/or IRS-approved custodian for specific questions. In the end, you need to make the best decision that you can, and have all the information you need to do so.