Rules for Gold IRA

by IRA Rollover in Gold IRA, Gold IRA rollover with Comments Off on Rules for Gold IRA

Whether you are trying to decide what type of IRA to get or rolling over to a gold IRA, there are rules that you must adhere to in order not to incur costly penalties.  You need to learn and obey those rules or retain a custodian to help you.  Just retaining a gold IRA company isn’t enough because most of them just buy the gold that you order and make sure that it reaches an approved storage facility.

Types of Gold Allowed in an IRA

Most people unfamiliar with the rules think that you can buy any type of gold for an IRA.  However, only certain types of gold are allowed.  You can only add bullion or gold bars that come from accredited manufacturers like Nymex, LBMA, or MLE.  The gold must be at least .999% pure.  This rule, like most of the other rules about a gold IRA, is intended to protect the investor and insure that their assets are no inferior products that could compromise the wealth they are accumulating.

You may add bullion coins to your IRA but they must be distributed by certain countries and meet the standards of purity of gold bars.  The Canadian Gold Maple Leaf is allowed but South African Krugerrands are not because they don’t meet purity standards.  One tenth, one quarter, one half and one ounce U.S. gold coins are allowed but the only coins specifically permitted to be included in a gold IRA are American Gold Eagle coins of those denominations.

Gold IRA – No Collectibles Allowed!

No collectible coins other than proof American Eagles are allowed to be included in a gold IRA.  You often see advertisements for coins made of gold or other precious metals that are touted as ideal investments.  You can buy them if you like but collectible coins cannot be part of your gold IRA.  There is nothing to stop you from buying them and storing them yourself for future sale but they can’t be part of your gold IRA.  This is because collectible coins do not hold their value like gold bullion coins and they do not meet the purity standards for a gold IRA.

If you do buy unapproved gold for your IRA the IRS will consider it a withdrawal will charge you income tax on the value.  Worse, if you do this and you’re under 59.5 years you’ll also incur an additional 10% penalty.  So be careful to stick to the rules or the IRS will make it very painful.

Gold IRA – Administrative Rules

You have to have a custodian for your gold IRA or open it as a self directed IRA.  If you don’t want to administer your own IRA, choose a custodian carefully.  You need one that knows the rules and will make sure that your gold is stored safely.  Most custodians work with approved major depositories that meet federal security and safety standards.

If you don’t want a custodian and elect to open a self directed gold IRA you will have to find your own federally approved storage facility and arrange shipments accordingly.

Gold IRA – Time limits

If you’re rolling over a traditional or Roth IRA into a gold IRA you have to do so within 60 days or it counts as a withdrawal and is taxable.  If you go over the 60 days you won’t be able to access your assets for an entire year so consider your choices and timing carefully.

Gold IRA – Funding Restrictions

Any IRA has funding restrictions.  You can only put $5,000 a year into a gold IRA; you’ll have to plan to build up the funds throughout the year and watch your purchases carefully unless you want to make the entire deposit at once.

The only time you can put more than $5,000 in your gold IRA is when it is a transfer or rollover.  So if you have $30,000 in your IRA and are rolling it over into gold that is an allowable deposit.  However, you can’t put that same amount of gold into an established gold IRA all at once, it has to be made over a period of 6 years.

Opening your Gold IRA

Be sure you talk to several custodians or understand how much responsibility is involved in a self directed gold IRA and make your decision accordingly.  Plan how you’ll buy the gold, how you can structure your budget to make maximum contributions, and how you’ll time those deposits.

Above all, diversify your assets and don’t depend exclusively on gold for your retirement savings.  You are allowed to have more than one IRA or you can use an employer sponsored 401K to help diversify your assets with stocks, bonds, mutual funds, commodities, and other allowable financial products.  Although gold is the ideal way to protect your money from inflation and fickle economies, diversifying your assets will help insure that you can retire to a lifestyle that is comfortable and rewarding.

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