Gold IRAs are often the investment type of choice for many investors hoping to secure their financial future. Adding precious metals is a great way to diversify your investment portfolio and enjoy great returns. However, when setting up your precious metals retirement account, you must be prudent, and choosing gold coins and bars that are approved for IRAs is essential.
What is IRA-eligible gold, you ask? Well, in this article, we’ll answer this question in greater detail and ensure that you have all the information you need when purchasing IRA-eligible gold.
About Precious Metals IRAs
Before we answer the question, “What gold coins are IRA-eligible?” it’s important to first ensure that you understand what a gold IRA is.
A precious metals IRA is a self-directed individual retirement account in which valuable assets such as gold, silver, platinum, and palladium are held, rather than paper assets like stocks, bonds, and mutual funds. It gives the investor the opportunity to enjoy certain tax benefits, diversify their portfolios, and protect their wealth.
The IRS requires that all precious metals held in an IRA be stored in an approved facility to ensure that they are safe until the individual reaches retirement age when they can sell their gold.
What Is IRA-approved Gold?
When setting up a gold IRA account, it’s important to do your homework and understand exactly what you’re getting yourself into, rather than just relying on gold IRA companies to do everything for you. While conducting research, the question of “What is IRA-approved gold?” almost always pops up.
Gold must adhere to strict purity and other requirements set forth by the Internal Revenue Service (IRS) in order to be included in a precious metals IRA. One reason for this regulation is that collectibles, including valuable metals like silver and gold, are not allowed to be held in individual retirement accounts.
There are, however, multiple exclusions to this rule. Some types of gold are permissible because they are also regarded as a kind of tender.
However, to qualify as legal tender, they must meet certain standards. Let’s look at the criteria for gold bullion to be considered eligible for an IRA.
The Criteria for IRA Gold Coins
IRS-approved gold coins must have a purity of at least 99.5 percent. However, American Buffalo and American Eagle Coins are the only exceptions to this rule. We will get to them in a minute.
Other requirements for IRA-eligible gold products include the following:
- Proof gold bullion coins need to be sealed, in mint condition, and come with an authenticity certificate to be considered suitable for an IRA.
- Non-proof gold coins must be flawless and uncirculated.
Furthermore, it’s important to note that most collectible coins are not considered gold-IRA eligible. Examples of such coins that meet IRS requirements for purity but are considered collectibles include the following:
- United States Liberty coins
- French 20 Franc gold coins
- United Kingdom Sovereign coins
National Government Mint Gold Bars and Rounds
To be considered IRS-approved bullion, bars and rounds must be produced or acquired from a recognized source. They must also meet the minimum fineness requirements, which state that these assets have a purity of at least 99.5 percent.
Furthermore, small bullion bars and rounds need to be manufactured according to precise weight specifications.
Certain IRA-eligible Gold Coins Are an Exception to the Rules
As mentioned above, there are two coins that can form part of IRA gold investments, even though they do not meet the standards. Let’s take a closer look at these two coins, which are both produced by the US national government mint.
You should also read “how to buy gold in an IRA” to learn more about the proper set up.
American Eagle Coins
American Eagle gold coins must meet specific quality requirements in order to be included in a gold IRA. These gold coins must contain at least 91.67 percent or 22 karats of gold by weight. The coin’s durability is increased by the residual alloy, which is commonly copper and silver.
Moreover, these gold coins come in several weights, such as 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz. Make sure the American Eagle gold coins you choose match the IRS-mandated purity requirements if you want to invest in a precious metals IRA.
Gold IRA-eligible American Buffalo Bullion Coins
American Buffalo gold coins, which are also produced by the national mint, must fulfill a stricter purity standard in order to be included in a precious metals IRA. American Buffalo gold coins must be 24 karats and contain 99.99 percent pure gold to be considered legal tender.
Due to the absence of any other alloys or metals, these coins are regarded as being made of pure gold. The 2006 debut of the American Buffalo gold coins earned them a reputation for their great beauty and purity.
Other IRA-approved Precious Metals to Consider for Your Retirement Account
In addition to gold bars, rounds, and coins, you can also purchase silver, palladium, and platinum for your IRA. Let’s look at the purity requirements for these precious metals.
Silver Bullion Coins and Bars
Silver coins and bars are available in various weights, such as one-ounce silver coins. However, the truth is that the requirements for silver are more stringent than for gold. If you intend to hold silver coins or bars in an IRA, they must have a purity of 99.9 percent.
Palladium and Platinum Coins and Bars
Like silver, palladium and platinum are also held to higher standards. These precious metal products are required to have a purity of 99.95 percent in order to be used in an IRA.
How Purchasing IRA-approved Gold Coins for an IRA Differs from Just Buying Them Outright
While you can just approach a precious metals dealer and simply purchase your bullion coins, you will need to open an individual retirement account to purchase these coins as part of an IRA. Then, you will have to fund your account before selecting your assets and choosing an IRS-designated depository in which to store them.
The good news is that most major gold IRA companies facilitate the process from start to finish and offer a plethora of educational resources where you can learn more about investing in valuable metals for your retirement.
Tips for Purchasing IRA-approved Gold Bars and Coins
If you purchase IRA gold bars or coins, their value will correlate with the “spot price” of gold, which indicates the price at which a single ounce of gold is currently trading.
Irrespective of the producer, gold bars and rounds typically have the same value, though some buyers might prefer to buy from particular mints.
It’s also important to remember that because certain IRA-eligible gold coins are collectible, they are often sought-after, giving them greater value.
Here are a few things that you should consider when choosing IRA-approved bars and coins:
Limitations on Contributions
The IRS has set a cap on IRA contributions, so you will need to purchase your gold outside of an individual retirement account if you wish to purchase more gold each year.
Some gold IRAs have minimal investment requirements that range from $25,000 to more. If you don’t have any funds to roll over, it could be challenging to fulfill these requirements.
Compared to starting a conventional IRA or buying gold outside of an IRA, it’s important to remember that creating a gold IRA is more costly. Annual fees are charged for storing your assets and for account upkeep in gold IRAs. There can also be a one-time setup charge.
Penalties for Early Withdrawal
The federal government doesn’t want you to use your retirement funds before you reach retirement age (which is actually good, as your IRA is intended to provide income when you are no longer able to work). However, this means that withdrawals made before age 59.5 are subject to a 10 percent tax penalty.
There are certain exceptions, but an IRA may not be the ideal choice for you if you believe you might want to sell your gold before retiring.
Now that we have answered the question, “What is IRA-eligible gold?” we hope that you are better equipped to make informed decisions when setting up your precious metals investments. If you’re interested in learning more about gold IRAs or would like to read more about IRA-approved gold bars, please browse our website!
Frequently Asked Questions
1. What Does IRA-eligible Gold Mean?
IRA-approved gold and silver assets contain a high purity and meet other requirements set out by the Internal Revenue Service.
2. Can I Buy Gold Coins in My IRA?
Absolutely. However, they cannot be collectible coins and must meet exact purity requirements to be considered suitable for IRAs.