A gold IRA or precious metals IRA is a type of Individual Retirement Account where the IRA account owner’s physical gold or other approved precious metals are held in custody. Its operation is similar to a regular IRA, with the exception that it involves the storage of physical bullion coins or bars instead of paper assets. Typically, precious metals IRAs are categorized as self-directed IRAs, which allow for a broader range of investments to be held within the account.
Gold, silver, platinum, and palladium are the four precious metals that can be held in an individual retirement account, as long as they are in the form of IRS-approved coin or bar products. Considering that gold is the most commonly acquired among these metals, the industry often refers to a retirement account containing any combination of precious metals as a “gold IRA”. Additionally, terms like “precious metals IRA”, “silver IRA”, “platinum IRA”, or “palladium IRA” are commonly utilized.
To diversify their portfolio and protect against inflation, investors frequently utilize precious metals as a long-term hedge. According to the Internal Revenue Code, specific storage provisions must be followed when holding approved precious metals. Certain trustees possess their own facilities for housing physical precious metals, while others rely on a third-party metals depository for storage.
The Taxpayer Relief Act of 1997 expanded the eligible investment options for IRAs, specifying that IRAs could now include investments in U.S. gold coins weighing one, one-half, one-quarter, or one-tenth ounce, as well as one-ounce silver coins produced by the Treasury Department. From 1998 onwards, IRAs were also permitted to invest in specific platinum coins, as well as certain bullion made of gold, silver, palladium, and platinum.
IRA-accepted precious metals
The IRS authorizes specific precious metals and types of bullion to be used in IRAs. While investing in “Collectibles” with IRAs and Qualified Plans is prohibited, there is an exception that allows for investment in particular coins and bullion that meet specific purity criteria. Selling gold bars can be more challenging due to their higher cost, increased vulnerability to counterfeiting, and the logistical difficulties associated with their weight and security requirements during transportation. Various precious metals presently meet the minimum purity standards for inclusion in a gold IRA account. Some gold IRA companies contend for the inclusion of specific coins in a precious metals IRA; however, a number of these companies have faced government investigations for misleading customers and aggressively pushing numismatic coins over gold bullion. Numismatic coins provide higher commissions for the gold company, whereas bullion bars more accurately represent the spot price of the precious metal.
Approved IRA Gold Bullion
The only exception to have a minimum fineness of .995 percent for gold bullion in an IRA account is the American Gold Eagle.
There are several gold products available for inclusion in an IRA account, such as gold coins or bullion.
- 1 oz American Gold Eagle Coins
- ½ oz American Gold Eagle Coins
- ¼ oz American Gold Eagle Coins
- 1/10 oz American Gold Eagle Coins
- 1 oz American Gold Buffalo Coins
- 1 oz Australian Gold Kangaroo Coins
- 1 oz Austrian Gold Philharmonic Coins
- 1 oz Canadian Gold Maple Leaf Coins
- 1 oz Royal Canadian Mint Gold Bars
- 1 oz UBS Gold Bars
- 50 gram Valcambi Gold CombiBars
- 1 oz Valcambi Gold Bars
- 1 oz Sunshine Mint Gold Bars
- 1 oz Credit Suisse Gold Bars
- 10 oz Credit Suisse Gold Bars
- 1 oz Johnson Matthey Gold Bars
Approved IRA Silver Bullion:
When considering silver investments for an IRA account, individuals have a range of options to choose from, including silver coins and bars that must possess a minimum fineness of .999 percent.
- 1 oz American Silver Eagle Coins
- 1 oz Chinese Silver Panda Coins
- 500 oz American Silver Eagle Mint Case
- 1 oz Canadian Silver Maple Leaf Coins
- 1 oz Silver Britannia Coins
- 1 oz Austrian silver Philharmonic Coins
- 100 oz Royal Canadian Mint Silver Bars
- 100 oz Johnson Matthey Silver Bars
- 1 oz Sunshine Mint Silver Bars
- 1 oz Johnson Matthey Silver Bars
- 1 oz Sunshine Mint Silver Rounds
Approved IRA Platinum Bullion
In order for platinum to be included in an IRA, it must possess a minimum fineness of .9995 percent. Compared to gold or silver, platinum offers a narrower range of options for inclusion in IRA accounts. Some of the available options include:
- 1 oz American Eagle Platinum Coins
- 1 oz Australian Koala Platinum Coins
- 1 oz Canadian Maple Leaf Platinum Coins
- 1 oz Isle of Man Platinum Coins
- Various Bars and Rounds meeting minimum fineness requirements
Approved IRA Palladium Bullion
In order for palladium to be included in an IRA, it must possess a minimum fineness of .9995 percent. Palladium offers fewer options for IRA account inclusion compared to gold or silver, with a limited selection available. Some of these options include:
- Various bars and rounds of minimum fineness produced by a national government mint, a COMEX/NYMEX, LME, NYSE/Liffe, LBMA or ISO 9000 accredited refiner, assayer or manufacturer.
Non-Approved IRA Bullion
It is important to note that not all precious metals products are authorized for an IRA. Therefore, it is highly crucial to exercise caution while making an IRA contribution since the depository will decline any non-approved metals. To be eligible as an IRA-approved item, precious metals need to meet the minimum fineness levels mentioned earlier.
Except for American Gold Eagles, any precious metal products that are not within these ranges are not eligible for IRA contributions. Precious metal products such as pre-1933 gold, gold Krugerrands, and 90% US silver coins are examples of non-approved items.
Distributions from a gold IRA are subject to the same regulations as a traditional IRA. The individual holding the account has the option to sell their IRA metals for cash or physically possess them, both of which are treated as an IRA distribution and will incur the corresponding tax obligations.
In order to meet IRS regulations, all types of IRAs, including precious metals IRAs, are required to keep their assets under the control of a trustee or custodian rather than the owner. According to IRS Publication 590, the trustee or custodian must be either a bank, a federally insured credit union, a savings and loan association, or an institution authorized by the IRS to serve in that role. Nonbank IRA trustees must prove to the IRS that they will adhere to Treasury guidelines regarding accounting, auditing, reporting, and safeguarding of assets.
Gold IRA arrangements that are promoted by various companies rely on the checkbook control strategy, wherein the metals are not directly owned by the IRA but rather by a limited liability company (LLC) owned by the taxpayer, through which the metals are purchased and stored. The legality of these arrangements has not been addressed by the IRS or federal courts, and the IRS has cautioned that they pose a potential risk of disqualifying the IRA.
The purpose of this guide is to provide an overview of the gold, silver, platinum, and palladium products that may be eligible for inclusion in an IRA account. If you have any inquiries about the suitability of certain products for your IRA account, it is recommended to seek advice from your CPA or tax professional.