Money Matters Archive

Your Golden Years

ImageAccording to the Internal Revenue Code, IRAs are generally prohibited from direct physical ownership of precious metal coins and bullion, which the tax code considers collectibles. However, there is an exception to the general rule for certain gold, silver, and platinum coins and for gold, silver, platinum, and palladium bullion that meet applicable purity standards (Internal Revenue Code Section 408(m)).

For instance, your IRA can invest in American Gold Eagle coins, Canadian Gold Maple Leaf coins, American Silver Eagle coins, American Platinum Eagle coins, and gold and silver bars (bullion) that are 99.9 percent pure or better.

The coins or bullion must be held in a storage facility arranged by your IRA trustee. In other words, you cannot have your IRA buy coins or bullion and then stash the stuff in your safe deposit box or keep it in your house.

These tax rules apply equally to traditional IRAs, Roth IRAs, simplified employee pension (SEP) accounts, and SIMPLE-IRAs.

The big issue with physical IRA ownership of precious metal assets is finding an IRA trustee that is ready, willing, and able to:

• Set up a self-directed IRA for you
• Transfer funds from your IRA to the precious metals dealer of your choices
• Facilitate the physical transfer and storage of the purchased coins or bullion

Only a few outfits are in the precious metals trustee game. And those that are will cost you: They typically charge a one-time IRA set-up fee (up to $50), an annual management fee for handling statements and paperwork (up to $250), and an annual fee for storing and insuring the coins or bullion (up to $250 a year). They may charge you additional fees as well for transactions such as account contributions and distributions and purchases and sales of coin or bullion.

Remember to take these costs into consideration when anticipating any increase in the value of your gold holdings; you may find your gains quickly evaporating.

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