According to the IRS, “Your IRA can invest in an ounce, a half, a quarter, or a tenth of an ounce of U.S. gold coins or an ounce of silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bars. This includes silver IRAs, gold Roth IRAs, and even gold-backed
IRAs.
Therefore, the transaction is characterized as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (you). In fact, this general rule prohibits IRAs from investing in precious metals or coins made from precious metals. As the court found, third-party sellers advertised that their customers could physically take possession of the coins purchased from IRAs. It discovered the gold coins and concluded that the coins were distributed to taxpayers as they physically owned the coins
.
One unanswered question regarding these IRAs is whether the IRA account holder can physically own gold, silver, or other precious metals. The term gold IRA refers to a specialized individual retirement account (IRA) that allows investors to hold gold as a qualified retirement plan. Investors with gold IRAs can hold physical metals such as gold bars or coins as well as securities related to precious metals in their portfolio. Self-directed IRAs are just IRAs offered by custodian banks and allow account holders to have more control over investments in the
IRA.
Therefore, gold IRAs require the use of a custodian bank, usually a bank or brokerage firm, to manage the account. The Internal Revenue Service (IRS) allows holders of standalone IRA accounts to buy bars and coins minted from gold or other approved precious metals such as silver, platinum, or palladium. Although IRAs used to be limited to holding American Eagle gold and silver coins, IRAs can now invest in IRS-approved gold, silver, palladium, and platinum bars and coins. 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.
McNulty’s receipt for any purchase of the AE coins paid for with their IRA funds was a taxable distribution under Section 408 (d). A gold IRA is a type of self-managed individual retirement account that allows individuals to keep physical gold, silver, platinum, and palladium in the account as investments. Buying shares in an exchange traded fund (ETF), which tracks the value of a precious metal, is an option for those who don’t want to address the issues associated with physically owning precious metal coins or bars through IRAs. The practical concern is to find an IRA trustee who is willing to set up an independent IRA and facilitate the physical transfer and storage
of precious metal assets.
