The IRS Rules and Regulations for Gold IRAs

Your retirement is something you should consider when still young. You must save and invest in properties that maintain their value.

Saving in a normal currency account can be risky due to factors related to inflation and general economic changes.

One of the best ways to secure your investments, as well as your retirement, is converting your normal account into a gold-based IRA to cushion yourself against market volatility. Such an account allows you to invest gold or silver bullion.

These are physical metals that maintain their value for a very long time.

Before you open such an account, it is necessary that you know and understand the rules governing these accounts.

Keeping in mind that gold is a “collectible” and that IRA accounts do not allow owners to own such assets, there are ways that you can still have such an account and own such precious metals such as gold and silver.

Here are some rules and regulations that you need to understand if you are looking into investing in such an account.

Gold IRAs Cannot Hold Collectibles

You cannot have gold investments such as collectibles in your Gold IRA account. All precious metals, coins, and bullions are considered collectibles.

If you want to have gold in your account, then you should convert them into legal tender and must have a 99.5% fineness level.

Examples of precious metals accepted in these accounts are the American Eagle coins and some bullion coins that some states issue. You can also have rounds of gold and bullion bars as long as they are 99.5% fineness.

These coins are in most cases manufactured by COMEX, or an NYMEX-approved refinery, or the government mint.

You Need a Custodian

Opening a Gold IRA account requires you to have a custodian. It is an IRS requirement that you have a custodian to assist you with the transactions. You can’t use money in your IRA account to buy precious metals.

Only an IRS-approved custodian can carry out such transactions on your behalf. You can search on the internet to find such approved custodians.

These custodians include banks, retirement companies, and insurance agencies among others. You must ensure that the IRS approved before allowing them to run your IRA Gold account. 

Strict Storage Rules

The IRS does not allow you to physically handle your precious metals. Since you will be operating a self-directed IRA account, you will have to hand over your investment to your custodian or administrator.

If you happen to handle those coins at any one time, the IRS considers your precious metals as distributed and will immediately appropriate penalties and taxes on those metals. Your custodian should then hand over those metals to an IRS sanctioned third party to store them in a secure depository.

You will have the freedom to choose a depository of your choice or have your administrator keep them in one that they have a good relationship with.

This depository keeps your metals up to the point you explicitly order them to sell or distribute them to you. 

The depositories keep your gold in an aggregated storage system.

This type of storage means that your metals are kept together with those of other investors. If you need to store yours in a private or segregated account, then you will need to pay higher fees to get this service.

All depositories attract a yearly fee that is deducted from your investment. The metals can only leave their vaults through your express demand that they do.

IRA Tax Requirements and Contribution Limits

There is a limit to the amount you can contribute to your self-directed IRA. Ensure that you confirm this amount or ask your administrator before making an arbitrary allotment.

According to the current regulations, the yearly contributions are $5,000 per year then increases to $6,000 annually once you get past 50 years of age. you can either transfer these funds through a rollover or send a check to your check administrator.

You cannot buy these metals yourself and then mail them to your administrator.

If you decide to take out the gold in the form of distribution or in its physical form, you will pay full income tax on those metals and a 10% tax based on the metal’s value at the time of withdrawal.

Age Limit for Retirement

There is an age limit to which you can access your funds from your Gold IRA account. You can only access those funds when you get past 591/2 years.

You cannot take any distributions until you get above the mentioned age. You cannot also be forced to take any withdrawals until you are above the age of 70.