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Gold IRA investors – or any inventors of other precious metals – need to be very careful about the precious metals that they are using. While self-directed gold IRAs can complement a standard retirement account greatly, it is vital to understand the regulations behind your gold investments.
While it is easy to set up a gold IRA account (individual retirement account) and start investing in gold products, you can’t have just any gold stored in your precious metals IRA. In most cases, you can only use IRA-eligible gold or specific forms of the various approved precious metals your IRA account accepts. Knowing the regulations surrounding IRA-approved gold, silver, platinum, and palladium bullion bars (and rounds or coins) can be vital to handling your investments properly.
What is IRA Approved Gold?
A Gold IRA is not just a place to dump any gold item you own or buy. In almost every case, an IRS-approved depository will require particular regulations when purchasing gold – usually due to the purity of the gold itself.
Gold IRAs require at least 99.5% purity, with silver needing 99.9% purity and platinum and palladium needing 99.95%. If you want to invest precious metal into your gold IRA, you need IRA-eligible gold, silver, platinum, and palladium that meet these purity standards.
Why are Approved Precious Metals Important?
Not all precious metals are suitable for investing. Usually, it is only the big four: palladium bullion, silver bullion/coins, platinum coins, and gold bullion or coins.
Gold IRA companies may allow up to all four of these, but the internal revenue service only sees those four as valid in most cases. A precious metals IRA (individual retirement account) can only take IRA-approved gold and other precious metals, so you must consider what you invest in.
Why is Purity Important?
When you invest in gold bullion, you do so on the understanding that it is almost pure gold bullion. This is important for understanding the value of gold, which directly impacts your investments.
Unlike a traditional IRA or Roth IRA, investing bullion/coins into your precious metals, IRA is not like investing money. Precious metal is valued at the actual content of the metal itself, so gold coins that are 100% gold will be worth more than gold coins that are 90% gold and 10% copper.
The only exception is the American Gold Eagle coin, which has its own specific rules separate from the usual gold coins that gold IRA companies will take above 99.5% purity.
The less pure a precious metal is, the less accurate a standard price structure becomes. This means that things like pure gold coins or gold bullion are far more worthwhile than a gold watch, which could be far less than 50% gold, depending on how it has been constructed.
A gold IRA – or IRA for any precious metals – often has specific rules on using coins. A precious metals IRA can generally hold materials in particular sizes, including:
- 1 ounce.
- 1/2 ounce.
- 1/4 ounce.
- 1/10 ounce American Gold Eagle coins.
- Other standard products, such as gold bullion/coins, are used as currency or storage.
If you use a silver and gold IRA, you could invest using gold bars and coins, but not a silver and gold decorative piece. It would also have to hit IRA-eligible gold purity levels to be added to your gold IRA investing account – minimum purity requirements will always apply.
Collectible coins are generally excluded, but proof coins can be an exception. American Eagle Coins, Maple Leaf Coins, and other similar collectibles are usually allowed – as long as they have their original mint packaging, are in excellent condition, and have a certificate of authenticity alongside them.
In general, any coins that are not proof or conventional gold/silver/etc. coins will not be allowed. Certain foreign coins will be accepted, but this might depend on the gold IRA provider.
In either case, you can only submit coins meeting minimum fineness requirements and acceptable purity levels relevant to that IRA (for example, no platinum coins in a gold IRA).
Managing the Requirements of your Gold IRA
Whether you are an existing IRA user or are considering switching to one from your original retirement account, knowing how to identify IRA-eligible gold (or other metals) as needed is essential.
With a self-directed retirement account IRA, you must understand what regulations and requirements apply to your retirement portfolio IRA. In some cases, it might be a minimum investment requirement; in others, it could be down to the minimum fineness requirements of specific metals.
Most custodians charge annual fees for maintaining the account, storage fees, and a fee for opening the account in the first place. This is on top of things like taxes for an IRA distribution, meaning you need to consider fees from the initial account setup onwards.
However, the fees between different providers can vary quite heavily. Ensure you understand the fees you are working with before committing to a specific self-directed IRA.
Meeting Minimum Fineness Requirements
Fineness or purity requirements refer to how pure a material is. As mentioned above, metal purity is vital for maintaining suitable investments in a self-directed IRA. Bullion, coins, and even unique proof coins are often judged by their purity in a single metal.
All precious metals fall under their purity requirements. For example, platinum and palladium bars have the same purity standards, but gold and silver IRA contribution limits differ regarding fineness.
Gold Bullion Type
Gold Bars and Rounds
Gold bars and rounds are often the purest and easiest to handle, with gold rounds often being a little easier to store. Either way, small bullion bars can be perfect for easy investments since they are not too difficult to store and keep track of.
However, gold bullion products need to be high-purity. Bullion bars, such as palladium bars, are also valued based on their size, so it is essential to know how large bullion bars are if you use them to invest in your IRA.
With coins, the coins themselves usually are not much of a concern as long as they are pure enough to use. However, with most forms of gold (or any other metal), exact weight specifications are essential – you would ideally need to use one-ounce silver coins in a silver IRA, for example.
Other Gold Items
As mentioned above, you can’t hold gold in just any form. Just like paper assets, you need to use things that fall under specific criteria. Gold bars, coins, and bullion are preferable to collectibles.
This does not just apply to gold, either. Platinum bars/platinum bullion are allowed in a relevant IRA, but a platinum-plated watch will not be. Even something with the same gold content as pure gold bars may not be permitted if it is not in a conventional form, which often leads to certain people melting down gold items into proper gold bars.
Proof coins need to be in brilliant uncirculated condition, come with their packaging, and have a way of confirming that they are real. Only certain gold-proof coins may be approved, too – this depends on the coins themselves and where they come from. For example, Canadian Maple Leaf and Chinese Panda can be used in certain IRAs and mutual funds.
Precious metals IRAs can accept unique coins like this, but not all collectibles. This makes it essential to look into your available options, choosing the right assets for each situation.
Keep in mind that you still need to choose a suitable metal. If you have an IRA for platinum and palladium bars, an American Gold Eagle coin will not be usable. However, a relevant platinum coin would be helpful since it could be stored alongside platinum bars in most cases.
Authenticity can be a significant part of investing. For example, depending on the provider, you must use coins produced by the national government mint or a similar approved authority. This could be a range of national government mint groups, including foreign countries, or just the national government mint of your own country.
With proof coins, it is essential to show certificates of authenticity issued by the real treasury department or other higher-up authority. With more straightforward options like platinum bullion, the authenticity is more about purity than the source.
However, it’s still important to verify authenticity properly. If you plan to invest, it has to be authentic, and not misleading anybody connected to the investments could become a serious issue.
With many options, from prominent names like Augusta Precious Metals, working with an IRA company that meets your needs is essential. Ensure you understand what they’re offering and the requirements you may be expected to meet.