You can’t hold any physical precious metal in a regular individual retirement account (IRA). However, there are specially designed precious metal IRAs that allow you to invest in gold, palladium, silver, and other valuable metals for retirement. 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 it is an investment 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.
Gold IRAs are individual retirement accounts that store physical gold as an investment instead of traditional stocks and bonds. With this type of IRA, you can manage the account and invest in a wider range of products than other IRAs. Annual fees are generally charged by the account manager, and storage and insurance fees are more often owed to the depositary than to the Gold IRA company. The big practical problem is finding an IRA trustee who is willing to set up an independent IRA and facilitate the physical transfer and storage
of precious metal assets.
In practice, this means that the minimum requirements of many gold IRA companies would require you to invest much more than the 5% or less that financial advisors generally recommend investing in precious metals, which could put your nest egg at too much risk. Therefore, for federal income tax purposes, the transaction is marked as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (that would be you). Gold bars and round gold and silver bars are also allowed in an IRA if they have a fineness of 99.9%. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian
can.
Unfortunately, most Gold IRA companies don’t have a particularly good record when it comes to fee transparency on their websites, so finding out the details can result in a phone call or two. If you choose to wire transfer instead, the money is sent directly to your Gold IRA custodian bank, meaning there are no additional fees or penalties. An important rule to know about keeping physical gold in an IRA is that your precious metals MUST be kept at an approved depository such as the Delaware Depository Service Company or Brink’s Global Services and not in your home or in a safe deposit box. They sell gold coins, gold bars, and the like, but they don’t offer IRA investment advice (although their websites or other
marketing materials might suggest so).
To avoid the prospect of not meeting the rollover limit, many people choose to have their Gold IRA firm coordinate the rollover by transferring the rollover directly from institution to institution. There are plenty of rules and regulatory hurdles that you’ll need to overcome if you’re thinking about buying a Gold IRA. The IRS has sent private letters to major gold ETFs saying that IRAs may own the ETFs. If you’re considering transferring money to a Gold IRA, contact your existing IRA custodian for information about the fees or charges you may incur.
