Owning Gold In Your IRA: What Gold is Allowed in an IRA?
Gold is, of course, a "collectible," and IRAs are prohibited from owning collectibles.
You're right on both counts. There are ways to legally own gold through an IRA, which is a collectible.
An Individual Retirement Account (IRA) can't own all gold investments. It is a general rule that an IRA cannot own a collectible, and precious metals, whether in bullion or coins, are included in this definition. Fortunately, there are some exceptions to the general rule when it comes to metals such as gold, silver, platinum, and palladium.
Legal Tender Coins
Individual Retirement Accounts (IRAs) can hold legal tender bullion coins. The coins must also have a fineness level of 99.5 percent. Some state-issued bullion coins, such as the American Eagle, also qualify. An Individual Retirement Account (IRA) can hold Canadian Maple Leafs. Coins like South African Krugerrands and the British Sovereign do not qualify as an exception. Also excluded are Double Eagles and other vintage U.S. coins.
In most IRA custodians, gold is not allowed. Investing in the stock market, bonds, mutual funds and perhaps options and futures is only allowed in publicly traded securities.
True Self-Directed IRA
A true self-directed IRA is only available from a few custodians if you want to own gold in coins or bullion in your IRA. A custodian is required by IRS regulations because the coins or bullion must be in the custodian's possession. Metals can't be purchased and stored with IRA funds. Custodians approved by the IRS are required.
The LLC IRA, or "Super IRA," is a popular choice among some investors. To put it succinctly, this is the process of establishing a custodial self-directed IRA. The IRA is held in an LLC, which is where the investments are made. By using a regular brokerage or checking account rather than the custodian, the structure can save a significant amount of money on custodial fees.
This structure, however, should not be used to invest in gold or silver through an Individual Retirement Account. Precious metals must be held by a custodian, according to the IRS. If the LLC buys them and you keep them, that's probably a prohibited investment or transaction.
All IRA Types
All types of IRAs, including traditional, Roth, SEP, and SIMPLE, are subject to these rules. These rules also apply to solo 401(k)s and other types of retirement accounts.
The best and most efficient way to own gold and silver is not through an IRA or other retirement account; however, it is legal. You may be better off owning precious metals in a taxable account or investing the IRA in a precious metals ETF.
See also: Gold and Silver IRA Companies
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