The four precious metals that may be held in an individual retirement account are gold, silver, platinum, and palladium, as long as they are IRS-approved coin or ingot products. 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 the investment is 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. To invest in gold with an IRA, you must follow two IRS guidelines.
First, you can only invest in IRS-approved gold. While the list of approved options is changing, the IRS says it must be “highly refined precious metal.” Specialized custodian banks such as Fidelity, Schwab or TD Ameritrade do not manage physical gold in an IRA. So if you want to keep gold in your IRA, you’ll need to set up a self-directed IRA first and then you’ll need to find a custodian that specializes in self-directed gold IRAs.
A quick Google search for “self-directed Gold IRA” yields numerous results. I know that American Bullion has been around for years, and so has APMEX. While it’s legal to own gold or silver through an IRA or other retirement account with some restrictions, it’s not the best or most efficient way to own the precious metals. I believe the idea behind storing gold or silver in a Roth IRA is to create a tax haven against such an egregious move by the government.
The IRS has issued private letter rules to major gold ETFs, which state that IRAs may own the ETFs. Gold IRA companies vary in terms of experience, service, and costs. So take a look around and compare your options before you proceed with opening an account. If this is the only IRA account or if there isn’t enough liquidity in the other accounts, you’ll also need to sell some of the gold to raise the money to make the RMD. This is a prohibited transaction, as an IRA owner is not allowed to make any purchase or sale transactions with the IRA.
If you suddenly need gold to trade in groceries, you’d need to call your custodian manager first and fill out the necessary paperwork to get access to your own gold. If you really think it’s a good idea, at least check out the IRS rules and custodian fees before you deposit gold into your IRA. Before you open a gold IRA, keep in mind that it’s not the only way to invest in gold with your retirement funds. You probably also know that gold is a “collectible” and that IRAs are not allowed to own collectibles.
Gold bars and round gold and silver coins are also allowed in an IRA if they have a fineness of 99.9%. These investments are available in a normal brokerage IRA, which means you don’t have to go through the work and additional costs of setting up a self-directed gold IRA. However, the IRS has introduced additional tax reporting and accounting requirements for gold IRAs due to the more complicated assets they own. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian bank.