Although IRAs used to be limited to owning American Eagle gold and silver coins, IRAs can now invest in IRS-approved gold, silver, palladium, and platinum bars and coins. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible, and precious metals are defined as collectibles, regardless of whether the investment is in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms. The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualified 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. Gold IRAs will help diversify an individual’s retirement account and serve as a hedge against specific financial factors. Numismatic coins pay higher commissions to the gold company, but precious metal bars reflect the spot price of the precious metal more directly. But if history is any guide, gold must travel a long way to keep pace with overall economic returns as measured by broad markets.
A gold IRA is a type of self-managed individual retirement account that allows individuals to keep physical gold, silver, platinum, and palladium in the account as investments. If you have a retirement plan from a previous employer, or if you retire or change jobs, you can transfer the funds from your employer plans, such as 401 (k), 403 (b), 457 (b), or TSP, into a self-managed IRA to buy precious metals. If you’re interested in setting up such an account, you’ll need to look for a specialized custodian or firm that is able to manage all documentation and reporting for tax purposes that are required to maintain a Gold IRA. Regardless of whether you’re setting up a brand-new IRA or transferring funds from an existing IRA or retirement plan, you can choose to pay all start-up fees from the IRA’s assets.
A platinum IRA is an IRA in which a portion of its total assets is invested in IRA-approved forms of platinum bars. If you’re still employed by the employer that offers the plan, you should check with your plan administrator to see if you’re eligible to transfer part of your plan to an IRA. Neither the IRS nor the federal courts have commented on the legality of these agreements, and the IRS has warned that they carry the risk of disqualifying the IRA. IRA holders have been allowed to use funds in their IRA account to purchase eligible precious metals since 1998, following the passage of the Taxpayer Relief Act of 1997. A gold IRA can be a traditional IRA, a ROTH IRA, a SEP IRA, a SIMPLE IRA, or an inherited IRA that manages itself and owns IRA-eligible physical gold coins or gold bars.
Custodian banks that offer a checkbook IRA structure generally recommend that their customers store IRA metals in a safe deposit box. While gold can diversify your portfolio and provide insurance against inflation, it can also experience periods of volatility. It may be better to invest your IRA in a precious metals ETF or own precious metals in a taxable account.
