Can I Buy Gold in a Self Directed IRA?

Can I buy physical gold in a selfdirected IRA

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Precious metals can make an excellent addition to an IRA portfolio, providing diversification and the potential for tax-sheltered gains. But before making such an investment, several considerations need to be kept in mind before selecting gold for your IRA investment strategy.

Segregated Storage

Keep in mind, though, that keeping precious metals at home will subject them to the same taxation rules as any distribution from your retirement account. Furthermore, the IRS requires any gold held within an IRA be stored with a third-party depository.

By choosing a dealer that stores precious metals segregatedly, your IRA’s gold will remain safe from other investors while being kept confidentially stored away from its counterparts. Most reputable Gold IRA dealers provide this service.

So if you withdraw IRA gold from a depository, it will remain in its numismatic-valued form that was initially delivered. This provides an enormous advantage over storage at home where precious metals could easily be taken by family members or lost due to fire or natural disaster.

Allocated Storage

Though it can be tempting to purchase gold for an IRA and store it at home or bank safe deposit boxes, this is generally not advised by the IRS as they have specific guidelines dictating where eligible gold must be stored – with home storage typically off-limits.

An individual retirement account (IRA) allows you to select the dealer and depository that holds your precious metals, with options to have it stored internationally if desired.

But if your “allocated” gold is stored with a major bank or financial institution, there’s always the risk they could become insolvent and your IRA-allocated gold may be sequestered to pay creditors. Therefore, we advise storing it with an independently-owned, insured, professionally secured depository such as IDS of Delaware; COMEX and Intercontinental Exchange (ICE) both approve this depository; it offers both segregated and allocated options for IRA eligible gold, while being part of London Bullion Market Association membership as well.

Taxes

Physical gold investments through a self-directed IRA provide tangible control over their assets, which reduces counter-party risk. However, investing in physical gold may incur additional expenses and restrictions that aren’t suitable for everyone.

First, there may be a one-time fee associated with opening an IRA account at any particular institution, which varies. Second, custodian fees–which could reach several thousand dollars annually–can vary significantly depending on which metals you purchase for an IRA account.

There may also be storage fees and buying bullion from dealers that add up quickly. Finally, should you decide to close out your account and withdraw physical metal, additional sales taxes could reduce any gains from metal investments, so they should be factored into any overall strategy for ownership of these precious assets.

Investing

Self-directed IRAs allow investors to utilize their retirement funds in nontraditional assets like real estate, private placements, promissory notes and physical precious metals without incurring additional brokerage costs or following IRS rules on prohibited investments. Custodians of self-directed IRAs should take care to avoid conflicts of interest and follow all regulations related to prohibited investments.

John H. Bishop, CPA and Principal at Wellington Capital Advisors suggests it is imperative for custodians conducting due diligence on these types of investments to consult qualified professionals, approaching it like an operational audit to make sure all parties involved understand expectations and valuations correctly.

Researching fees charged by custodians is also essential. NerdWallet’s ratings take this factor into consideration when ranking online brokers offering IRAs, along with minimum deposit and account fees and available investment choices.


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