Rules for Coins in Individual Retirement Accounts

After the taxpayer relief act of 1997, it is possible for American citizens to include precious metals and collectable coins in their self directed IRAs. Whether you look for a Gold IRA for diversification of your portfolio or preserving the purchasing power of your assets, there are some rules and regulations that have to be followed to reap maximum benefits and avoid penalties.

Gold coins IRA storage rules:

After your gold coins are purchased, they have to be stored with a custodian. As per the IRS, a custodian can be an insurance company, a bank or a retirement company. It is not permissible for you to be in possession of your gold coins at any moment. If you are found in possession of your gold coins, IRS can impose reasonable penalties and taxes on them. You will be required to pay a yearly storage fee for storage charges.

Contribution Limits:

Check with your account administrator about the maximum contribution you can make on a yearly basis. It keeps varying so it is better to inquire when you are about to make contributions. Going with a Gold IRA doesn’t mean that you will have to buy the coins yourself and deposit them to the account administrator later. In fact, it is not permissible. You can only make the contribution by either sending a check or through a rollover to your account administrator.

Age Limits:

IRA Gold coins can’t be possessed, distributed or withdrawn prematurely. IRS has a set of rules about when you are eligible to do so. Before the age of 59.5 years, it is not possible to access your assets. After this, you can make withdrawals and distributions, but it is still not mandatory. You can choose whether to withdraw or not. At the age of 70, though, it is necessary to initiate distributions and withdrawals.

Taxes and penalties:

When you decide to take out gold coins in the form of a distribution, income tax will be applied on the amount of coins taken out. In case of an early distribution, there is going to be an additional 10% tax on the amount withdrawn. Moreover, IRS will also be assessing 28 percent capital gains tax on the profit earned on base withdrawn cost. This makes early distribution, at least apparently, quite a hard leap. However, there are some exceptions where early distribution can be made without being subject to additional penalties. These exceptions include:

  • Investor’s disability.
  • Investor is hospitalized and don’t have money for medical bills.
  • Unemployment.
  • Bearing education expenses of someone from immediate family (spouse and   children).
  • Substantially equal periodic payments.
  • Withdrawing up to $10,000 for buying first time home

Allowed Gold Coins

Not all types of gold coins can be included in self directed IRA. The coins need to meet minimum purity and approval thresholds set by IRS. The minimum purity criterion for gold coins is 99.9% and there is almost no compromise on it. Gold coins that approved by IRS to be included in self directed IRA are:

  • American Eagle coins
  • Australian Kangaroo coins
  • Canadian Maple Leaf coins
  • Austrian Philharmonic coins
  • US Buffalo Gold uncirculated coins

Before purchasing any coins, have a look at our gold IRA reviews.