When purchasing gold for your IRA, you must be weary of the guidelines, but here’s three you must know.
Not All Gold is Created Equal
You may want a certain type of gold coins in your gold IRA, but you may not be able to include them in your gold IRA.
IRA-eligible gold coins, bars and rounds must meet a set of requirements set forth by the Internal Revenue Code in order to be held in a Self-Directed IRA. They must meet a minimum fineness requirement of .995 and be produced by a national government mint or accredited refiner/assayer/manufacturer.
You Must Buy Gold Through a Gold Custodian
“How convenient! I can move them into a gold IRA!” But this isn’t the case. You cannot add gold you already own to a Self-Directed IRA, even if it meets all of the requirements set forth by the Internal Revenue Code.
Instead, you must use cash in your IRA to buy gold through a custodian. Funds can either be transferred from one gold custodian to another, rolled over from one retirement account into another, or deposited into a new IRA account. In each situation, the custodian buys the gold or precious metals on your behalf and arranges delivery to a third-party facility. You have complete control over the gold that’s purchased and the depository, as long as both are IRS-approved.
IRA Gold Must be Stored in an IRS Approved Depository
You cannot keep gold IRA in your home or a local security deposit box.
Highly refined bullion can be included in your IRA, “provided it is in the physical possession of a bank or an IRS-approved nonbank trustee,” writes the IRS.
Storing your IRA gold at home can be considered distribution, which means you may lose your tax-deferred benefits and could get hit with a penalty if you’re under 59 ½ years old. What’s more, if the IRS determines that the day your IRA gold entered your home was the date of “distribution,” you could end up paying additional penalties and back taxes owed from the time of distribution.
The IRS, says the Wall Street Journal, “warns taxpayers to be wary of anyone claiming that precious metals held in your IRA can be stored at home or in a safe-deposit box.”
So there you have it, 3 tips for achieving greatness through gold. Follow these strict guidelines, you should steer clear of any trouble from the IRS.