When Can And Can’t You Own Gold In An IRA?

While the cost of gold has risen to newfound heights in recent years, you may have witnessed numerous ads recommending that you invest in gold via an IRA.

You are also probably aware that gold is considered to be a ‘collectible’ asset, and that IRAs are not able to own collectibles. However, there are ways that you CAN legally own gold via an IRA.

When Can And Can’t You Own Gold In An IRA?

It Is important to note that while it is possible for gold to be owned by an IRA, this does not apply to all gold investments.

Gold, silver, and platinum (see also ‘Is Platinum A Good Investment?‘) that are held in specific forms are the only precious metals that are able to be owned in an IRA,

This form is known as bullion coins. Gold bullion (see also ‘How To Sell Gold Bullion‘) is legal tender that can be legally owned by IRAs. These coins must also contain a 99.5% fineness level.

While American Eagle coins do qualify alongside some other forms of bullion that are issued by the United States, British Sovereign coins do not meet the exception.

Older forms of bullion also do not tend to qualify.

Bullion bars of gold (see also ‘How Much Does A Gold Bullion Weigh?‘) are able to be owned in an IRA whenever they contain 99.9% fineness.

This usually means that they must be produced within a COMEX or NYMEX approved coin refinery, or issued by the government mint.

The vast majority of IRA custodians will not allow you to own gold in an IRA. This is because they only allow stocks, bonds, options, and futures within their specific IRAs.

These particular investments in publicly-traded securities are considered to be more secure when owned in an IRA.

Thus, to own gold in an IRA (see also ‘How Much Can You Put In A Gold IRA?‘), you will need a self-directed IRA that is offered by a handful of custodians within the United States.

You will require a custodian due to IRS regulations that require bullion to be in direct possession of the custodians themselves.

You cannot use IRA money in order to buy precious metals and store them of your own accord, you always require an IRS-approved custodian in order to do this.

You also cannot transfer IRA bullion that you are already in ownership of.

This is considered to be a prohibited transaction, as the IRA owner is not allowed to engage within the selling or buying process with the IRA.

In order to find a self-directed custodian that offers a self-directed IRA, you should conduct an internet search for “self-directed IRAs”.

You should pay attention to how long the custodian has been operating for, as well as the fees that they charge, and the steps taken during the buying process.

It is crucial to find a custodian that is going to offer you the best price, and not attempt to scam you out of an excess amount of money.

You should also have a good awareness of any insurance fees or storage fees that these custodians may charge, as well as fees that are involved during the transaction process.

Although these custodians can help you, it is your sole responsibility to ensure that any coins you have purchased for an IRA are in compliance with the IRS’s stipulations.

After conducting this thorough and extensive research, you may conclude that gold bullion should not be owned within an IRA.

If you want to directly benefit from an increase in the cost of gold, then it may be more efficient to own it via an exchange-traded fund.

This means that the markets are open, and you can buy and sell your gold at any time. An ETF also allows you to buy, hold, and insure your gold at a far lower price than a self-directed custodian can.

Holding on to gold coins or bullion is a highly inefficient means of investing in these precious metals.

These metals are usually held by those who are concerned about a financial crisis and want an alternative form of currency directly available to them.

If this is your reason for investing in gold, then it may be preferable for you to have it accessible to you quickly, and you may inherently want to own it outside of any IRA.

What Is A Super IRA?

When Can And Can’t You Own Gold In An IRA (1)

A super IRA is often recommended by those who wish to hold gold bullion in an IRA. This is when your self-directed IRA forms an LLC through which it makes investments.

This structure avoids many custodian fees, due to the transactions being conducted via the LLC through a checking account as opposed to the custodian.

However, you may wish to avoid using this structure as a means to have an IRA invested in gold or silver (see also ‘Gold vs. Silver: Which Should You Invest In?‘). This is because the IRS has stated that precious metals need to be in the possession of a custodian.

Thus, if an LLC purchases these metals and you have them in your possession, this is likely to be considered a prohibited investment by the IRS.

These rules are also applicable to all of the different types of IRAs, including traditional, SEP, SIMPLE, and Roth. They also apply to retirement accounts.

Conclusion

To conclude, while it is entirely legal to own gold via an IRA or other form of retirement account, it is not the only means of owning precious metals.

If you are looking to own gold bullion via an IRA, then you should appoint a self-directed IRA custodian in order to own these precious metals without incurring any hassle.

Appointing a self-directed IRA custodian is the only means of legally owning precious metals like gold bullion via an IRA. This is because precious metals are otherwise prohibited from being owned by an IRA.

You should also ensure that you are conducting extensive research into these custodians, ascertaining how long they have been operating for prior to making any decision about which self-directed IRA to choose.

Luke Baldwin
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