Can You Take Possession of Precious Metals in an IRA?
IRS rules don’t permit an investor to own his/her IRA-eligible coins or bullion directly; rather, these precious metals must be stored with an approved depository.
Many individuals wonder whether they can claim physical possession of their gold once it has been deposited with a depository. This article will provide answers to this and other inquiries related to gold storage facilities.
Precious metals have long been seen as an effective store of value and hedge against inflation. Since central banks can only create paper money, the price of gold provides a powerful protection from both inflation and deflation.
IRS considers most coins and bars collectibles rather than precious metals, so finding an IRA custodian that will facilitate physical transfer and storage can be difficult and expensive. Furthermore, insurance is typically required when insuring collectibles.
Purchase of shares of an exchange-traded fund (ETF) that tracks the value of precious metals is one way for investors to gain exposure without dealing with the complications and expenses involved in moving and storing individual coins, but investors should carefully weigh its risks against any possible greater returns; alternatively, working with a broker who offers segregated storage space may provide better results.
Many investors ask if they can take physical possession of the gold and precious metals held within an IRA account. Unfortunately, according to IRS code coins and bullion eligible for inclusion must remain under custody or control of an independent trustee or custodian, which explains why most IRA providers don’t permit direct ownership.
Reason for this rule is simple – taking an IRA distribution and then purchasing precious metals can be treated as a taxable event. To prevent this tax burden from accruing, invest in a self-directed precious metals IRA instead and store coins at an approved depository until taking required minimum distributions (RMDs).
Your precious metals IRA offers world-class protection without the hassle of purchasing and storing coins or bars, plus diversification opportunities available from investing in stocks of mining companies, mutual funds that own mining stocks or ETFs.
Exchanged Traded Funds (ETFs)
Precious metals can provide your retirement portfolio with essential diversification benefits. Their long-standing track record of financial security during economic downturns and greater protection against currency devaluations make precious metals an attractive choice that should not be ignored.
Investors with Individual Retirement Arrangements (IRA) must follow stringent IRS rules when purchasing and storing precious metals, such as gold. You cannot store IRA-approved gold at home or in a safe deposit box as any violation could incur distribution penalties against their contributions.
Interested in adding precious metals to your IRA? Consider opening a self-directed individual retirement account (SDIRA). This type of account allows you to invest directly in physical precious metals without incurring penalties; traditional or Roth SDIRAs can be used. Just keep in mind that once your reach age 70 1/2 your IRA must take required minimum distributions in order to receive physical possession of its investments – you won’t be able to take physical ownership until then!
Metals IRAs with allocated storage allow you to retain physical ownership while giving the custodian oversight for safekeeping and management. This arrangement reduces custodian fees but may pose certain risks; for instance, liquidating precious metals before reaching age 59.5 could incur steep taxes and penalties.
ETFs offer more immediate opportunities, since gains on these investments don’t need to be taxed separately from their underlying assets. Unfortunately, ETFs typically don’t provide the same level of reassurances that physical metal does.
Midas does not advise creating an LLC IRA or Super IRA due to IRS requirements for storage. Storing precious metals at home would also violate laws, leading to potentially severe penalties from tax authorities. As an alternative, IDS offers fully segregated storage facilities in Delaware and Texas – one of eight COMEX/CME/Intercontinental Exchange bullion depositories across America that offer fully segregated storage solutions.