In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as stocks of gold mining companies or exchange-traded gold funds (ETFs). Second, you can’t hold the gold in your possession. Even though you own it, the gold must be stored off-site in an IRS-approved depot. Your Gold IRA custodian can help you recommend a suitable depositary for your investments.
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.
A gold IRA must be kept separate from a traditional retirement account, although the rules surrounding things like contribution limits and distributions 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 IRA, called a Gold IRA.
As long as there is gold on this earth, it is not too late to open your own IRA for self-directed precious metals. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers over other financial assets, such as paper currency and stocks. You probably also know that gold is a “collectible” and that IRAs are not allowed to own collectibles. 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 handle all the documentation and reporting for tax purposes required to maintain a Gold IRA.
The Internal Revenue Service (IRS) allows holders of self-managed IRA accounts to purchase bars and coins minted from gold or other approved precious metals such as silver, platinum, or palladium. One unanswered question regarding these IRAs is whether the IRA account holder can physically take possession of the gold, silver, or other precious metals. You must also choose a precious metals dealer who will make the actual gold purchases for your IRA (your custodian may be able to recommend one for you). After doing this research, you’ll likely come to the conclusion that the gold or gold bars and coins shouldn’t belong in your IRA.
Additionally, if the IRS determines that the day your IRA gold entered your home was the “distribution” date, you could end up paying additional penalties and back taxes owed from the time it was distributed. Such safes do exist, but gold bars are much more accessible than the daily gold owner can imagine. The IRS has issued private letter rules to major gold ETFs, which state that IRAs may own the ETFs. You can invest in gold coins, but the coins must remain in the custody of the IRA trustee or custodian bank.
While it’s legal to own gold or silver through an IRA or other retirement account with some restrictions, it’s not the best or most efficient way to own the precious metals. If any of the above IRA-eligible gold coins have been assessed for condition by a certification authority (such as the Professional Coin Grading Service), they are generally classified as “collectibles” by the IRS and are therefore not allowed in IRAs.