Welcome to the nitty gritty details of investing in gold and other precious metals with your self-directed IRA. If you missed Part 1, check it out first.
First, some history. The IRS initially said that all coins are collectible and therefore, not a legal IRA investment. In
the mid 1990’s, after realizing that a 400 ounce gold bullion bar would be too expensive for most IRAs, Congress allowed certain coins in addition to bullion.
Generally these IRA allowable coins fall into two
categories:
1.Coins specifically listed in the Internal Revenue Code and minted by the US. . These include:
* American
Gold Eagles
* American
Gold Buffalo coins
* American
Silver Eagles
* American
Platinum Eagles
2.
Some coins meet the minimum fineness requirements but are
not rare enough to receive collector attention.
* Gold
Coins - .995+
* Silver
Coins - .999+
* Platinum
- .9995+
* Palladium
- .9995+
In addition to these American options, there are some coins
issued by mints of other nations that do
meet the fineness requirements. See more detail on specific coins in our coin report. If you’re not sure about the fineness, ask your
self-directed IRA custodian or metals dealer.
Coins that were issued for commerce are not
going to qualify for IRAs. Also, coins issued
for special occasions like Olympic games or national celebrations, and those
issued in small quantities, are desired by collectors and their price
is generally higher than the value of the raw metal. They are not allowed in IRAs.
When you are researching a particular coin, check two
things:
1) Make sure the fineness of the
coin meets the required amount from the table above. If not, then it does not qualify.
2) Compare the price of the coin to
that of an equivalent weight coin of the same metal and to global spot price of
the metal. If you find the price for
your coin of choice significantly higher than one or both of the other prices,
pass it up for your IRA, as it is likely a collectible.
Your IRA’s investment in gold is just an
investment in the raw metal; attractiveness of the coin
should not come into play in your investment decision. In other words, consider the value of the
coin melted down – not as art.
Also remember that you will not be holding the coins
personally when your IRA invests. The
IRA custodian will require the coins be held in a depository and you will
likely never see them unless you take them as a distribution when you retire.
Now that you’re armed with good information on what kinds of
precious metals your retirement account can invest in, you can join the gold
rush. Thankfully, you won’t need to climb mountains with a pick and shovel and freeze your knees in mountain streams to diversify your
retirement portfolio with precious metals.
For more information, check out our Precious Metals page or our page on some specific coins.