IRA Approved Gold
Investing in stocks, real estate, and other financial assets is not recent. Stashing away a significant chunk of wealth into movable and non-movable assets is an age-old practice. Not every individual who saves money or invests in some valuable commodity stands to benefit. You must strategize and assess your risk appetite. Your investing budget matters too.
Diversification is critical to investing regardless of how much money you set aside and where you invest all those funds. Even if your risk appetite is very high and you are well-versed in the stock market, putting all your investing cash in stocks is not advisable. Setting aside some of those eggs in other baskets is wise. And one of those other investment vehicles is precious metals, particularly gold.
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However, owning physical gold is not without its pains. Secure storage is a major consideration. Even if you have a place to store gold, how safe the space is for the gold stored is vital. Other considerations include the form of gold, fineness, etc. If you’re new to buying gold for investing, you’ll have to be on top of quite a few aspects. Luckily, gold investment arrangements such as an IRA ease most of the main points associated with owning physical gold.
But what is a gold IRA? What type, form, and quality of gold do gold IRAs require? Is there a list of gold coins and bars that are permitted or not allowed in an IRA? We have answers to those questions and more in this article. For a complete understanding of the topic, we shall discuss the following:
- What is an IRA? What is a gold IRA? How do the two differ?
- Requirements an article of gold must meet for an IRA
- IRA-approved gold coins and bars
- Coins that don’t qualify for an IRA
- Answers to some commonly asked questions and more
If you’ve never heard of a gold IRA before but are keen on setting one up, the following pieces of information shall help you get started. Keep reading to get enlightened.
What is an IRA?
An IRA (individual retirement account) is a retirement funds or retirement planning account with tax benefits. You contribute to the account either pre- or post-tax funds. The money accumulates either on a tax-free or tax-deferred basis. IRAs are primarily designed for the self-employed who don’t have other retirement accounts, such as 401(k), as an option. You can set up an IRA with the help of a bank, investment firm, personal broker, or online brokerage company.
IRAs can be broadly classified as “traditional” and “Roth.” There are also SEP (Simplified Employee Pension) and SIMPLE (Savings Incentive Match Plan for Employees) IRAs. IRAs are open to all, including those who already have a 401(K) arrangement with their employer. The limitation is usually in terms of how much you can or should contribute to an IRA in a given year.
Do note that contributions to a Roth or standard IRA cannot be in the form of gold or other valuable commodities. That is where a precious metals IRA, such as a gold or silver IRA, comes into play.
Read more: How is Gold Taxed in IRA
What is a Gold IRA?
A gold IRA is a self-directed IRA (SDIRA) that lets investors own physical gold as an IRA owner. Unlike a regular IRA, it allows investing in physical items such as gold, attracting people who want a diversified investment or retirement portfolio. You could set up a gold IRA to function like a traditional IRA or Roth IRA.
Not all physical forms of gold are eligible to be included in a gold IRA. The gold added must meet specific weight and purity requirements. Also, not all gold is allowed within an IRA. The ones in jewelry form are certainly out of the question. Gold bars and coins are the common types of gold included in the retirement account. Here are the criteria gold and other approved precious metals must meet to be included in a precious metals IRA account:
- The gold should be at least 99.5 percent pure or 24-karat. If it’s silver, it must be at least 99.99 percent pure. If it’s palladium or platinum bullion, it must be 99.95 percent pure or more.
- The gold bullion manufacturer, assayer, or refiner should be certified by COMEX, NYMEX, LBMA, TOCOM, LPPM, LME, or be a national government mint.
- The precious metal coins or bars must weigh precisely what their labels claim or meet their exact weight specifications. Therefore, the IRS (Internal Revenue Service) emphasizes the minting facility as weight discrepancies are not a concern with reputable bullion manufacturers.
- If you add proof coins, they should be in impeccable condition, come with an authenticity certificate, and have their original and complete mint packaging intact.
- Gold bullion coins or other gold bullion products, such as small bullion bars, should be damage-free and boast a brilliant uncirculated state.
Although called “gold IRA,” the individual retirement account also accommodates silver, palladium, and platinum. Gold or other precious metals added to the SDIRA can be physical precious metals or paper assets. In other words, a gold IRA could also have paper-based gold, such as a gold ETF (exchange-traded fund), stocks of gold mining companies, gold mutual funds, etc., like a regular IRA. Some brokerages or custodians, however, may only entertain physical gold investments. It all boils down to the gold IRA company you’re associated with.
Running the Gold IRA Show
An IRA custodian (usually a bank, trust company, brokerage firm, credit union, etc.) will help you set up and operate a self-directed gold IRA in conjunction with an IRS-approved depository and a precious metals dealer. The dealer sells you the gold, which is later stored in the repository under your gold IRA account. As the account holder, you call the shots or decide when to buy and add gold to your individual retirement account. The custodian will act as per your instructions.
You can choose all three parties on your own, or you can give the gold IRA custodian the power to find the right storage facility and dealer. You’ll, however, be fully responsible for the custodian you choose. Since the custodian plays a significant role, you must select one wisely. Ensure the IRA company is reputable, experienced, transparent, flexible, and qualified. To protect your investment, the business must have all of the right licenses, insurance, registrations, and bonds.
If you’d like to know more about gold IRA, the stakeholders, contribution limits, hidden fees, insurance costs, etc., we strongly suggest reading our complete guide.
IRA-Approved Gold Coins and Bars
Initially, IRA approved coins and bars list was limited to a handful of precious metal bullion. Today, a gold IRA could accommodate any gold coin or bar that meets the above IRS regulations or requirements. There were also restrictions on bullion weight and size. The 1997 Taxpayer Relief Act expanded the space to include coins and bars of varied proportions. The following is a list of gold bullion coins approved for IRA investing.
- American Buffalo coins
- American Eagle coins
- Australian Nugget/Kangaroo coins
- Australian Lunar coins
- Austrian Vienna Philharmonic coins
- British Britannia coins
- Canadian Maple Leaf coins
- Chinese Panda coins
Note: The above coins have gold, silver, platinum, and palladium versions. Those are also eligible for an IRA, provided they meet the IRS requirements.
The following are the gold bars permissible in an IRA:
Gold Coins Not Permissible Within a Gold IRA
Some popular coins, such as the British Sovereign coins and the South African Krugerrand, are not allowed due to their insufficient gold content. Here are a few other currencies that are not IRA-approved gold:
- Austrian Ducat and Corona coins
- French and Belgian Franc
- British Sovereign coins
- Chilean, Columbian, and Mexican Peso coins
- Dutch Guilder
- German Mark
- Italian Lira
- Hungarian Korona
- Swiss Franc
The coins mentioned above are either not 24-karat gold or are not minted at an IRS-recognized refinery. Do note that the above list is by no means exhaustive. Since many countries have gold versions of their prestigious national coins, the list would be never-ending if we had to put them all down. Here are a few more coins for your reference, however:
- French Napoleon coins
- Tower of David (Israel)
- Swiss Vreneli coins
- Somalia Elephant coins
- The Queen’s Beasts (UK)
- American Double Eagle coins
- Italian Lira gold coins
- Tristan da Cunha coins
- Turkey 100 Kurush coins
- Saudi Arabia Gold One Guinea coins
- Singapore Gold 100 Singold coins
- Bhutan Gold 1 Sertum Jigme Wangchuck coins
- Macau Year of the Monkey coins
- George V India Sovereign coin
- Cayman Islands $25 gold coin
- New Zealand Gold Kiwis
- Poland Gold Zlotych Boleslaw coins
- Romania Gold Lei 3 Kings
- Fiji Gold Takau
Besides the above, all numismatic, commemorative, and collectible coins are not IRA-eligible gold. Most of these coins trade at a significant premium, deeming them not ideal for IRA investing or use as alternative investments. If you don’t know your bullion coins well, some unscrupulous sellers could lure you into buying them.
The above list of IRA-approved gold may not be exhaustive. Similarly, the aforementioned precious metal coins not eligible for an IRA may not show the complete picture either. The coins and bars stated above made it to the list as they are popular within the IRA investing realm. As alluded to earlier, some gold IRA companies could choose to accept or not allow particular gold bullion as IRA contributions. After contacting your custodian, you’ll get a complete picture of what’s IRA-eligible gold. For a comprehensive understanding, it’s advised to have a financial advisor to guide you through the process.
Can you buy gold IRA gold outside of the IRA?
Yes, you can purchase gold eligible for a precious metal IRA even if you’re not willing to start an IRA account. But be wary that the tax benefits of holding the gold in the retirement account will not apply, and storage will become your sole responsibility too.
What are some key gold IRA benefits?
The major reasons a gold IRA is sought after is the protection or hedge against inflation and tax-deferred growth. Since gold is intrinsically valuable, it serves as a value store. And then there’s, of course, the diversification aspect.
Can you add other precious metals to a gold IRA?
Yes, you can add silver coins or bars, platinum bars, and palladium bars to a gold IRA. Silver, platinum, and palladium have unique characteristics, market value, and performance factors. If adding these to a gold IRA, research and learn about their impact on your portfolio. Take stock of your personal finance and talk to financial advisors.
Are non-24K gold investments allowed in a gold IRA?
No, gold bars or coins that aren’t 99.95 percent pure are not eligible for a self-directed precious metals IRA account. However, there is an exception: American Gold Eagle bullion. The American Eagle coin is 91.67 percent gold. The remainder is silver and copper. American Gold Eagle coins are allowed in a gold IRA, despite not being pure gold, due to the coin’s popularity and trade-friendliness.
How much gold should you invest in a gold IRA?
It depends on whatever your financial capacity and appetite are. If you are conservative or highly wary of the economic climate and not very comfortable with stock market volatility, allocate more wealth than usual to a gold IRA. If you don’t want your gold IRA investments to hamper or slow down your financial portfolio’s growth, ensure that gold investments don’t constitute more than 5 to 10 percent of all your assets. And that percentage threshold accounts for all gold investments, including gold IRAs.
Unlike investments in stocks and funds, you’ll not receive dividends on interest payments from a gold IRA. Gold will, of course, increase in value over a period. But those capital gains will be locked to the asset and can be realized only at the time of distribution.