A gold IRA or precious metals IRA is an Individual Retirement Account in which physical gold or other approved precious metals are held in custody for the benefit of the IRA account owner. It functions the same as a regular IRA, only instead of holding paper assets, it holds physical bullion coins or bars. Precious gold investment guide pdf IRAs are usually self-directed IRAs, a type of IRA where the custodian allows more diverse investments to be held in the account.
The four precious metals allowed to be held in an individual retirement account are gold, silver, platinum and palladium, provided they are in the form of IRS-approved coin or bar products. Investors often use precious metals as a long-term hedge against inflation, to diversify their portfolio. Internal Revenue Code requirements state that the approved precious metals must be stored in a specific manner.
Some Trustees have in-house facilities to custody the physical precious metals, others use a third party metals depository as a storage facility. The Taxpayer Relief Act of 1997 broadened the permissible types of investments allowed in IRAs, stating: “Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.
Beginning in 1998, your IRA can invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. The IRS approves select precious metals and forms of bullion for IRAs. Although investment in “Collectibles” using IRAs and Qualified Plans is not allowed, there is a carve-out allowing for investment in certain coins, as well as bullion meeting certain fineness requirements. There are more advantages to holding gold coins as opposed to bars in a gold IRA in terms of liquidation.
Gold bars are more difficult to sell due to their higher price and easier ability to be counterfeited, as well as being more difficult to deliver due to their heaviness and the amount of security required during transport. There are currently a variety of precious metals that meet the minimum purity requirements that are acceptable for inclusion into a gold IRA account. Numismatic coins pay the gold company higher commissions, but bullion bars more directly reflect the spot price of the precious metal.