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What precious metals are approved for IRAs? If that's your question, then you're probably talking specifically about precious metal IRAs.
These are also known commonly as gold IRAs, although silver, platinum, and palladium might be possible inclusions.
IRA-eligible precious metals are simply products that meet IRS requirements. These are precious metal products you can incorporate into your self-directed IRA that you create through a brokerage.
This can be a useful component of your retirement investing strategy.
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Why Invest in Precious Metal IRAs?
Gold has historically performed well during periods of economic uncertainty. Gold has proven many times to do wonders as a hedge when inflation is rampant.
Other precious metals seem to do this to varying degrees, as their value simply doesn't go down like paper assets do, including fiat currency, stocks, and bonds.
You can buy gold outright and own it personally. However, you'd probably pay full sales taxes on it. You'd also be doing it using income that's already been taxed.
Investing in precious metals using an IRA means you can enjoy serious tax benefits. It's usually possible to fund the account using pre-tax income. Metals in the account can grow in value tax-free until you make withdrawals or take mandatory distributions.
Congressional legislation created and then expanded these accounts. The IRS is who sets the rules for them. That's why there are requirements for what precious metal products can be included and what can't.
Not Just American Eagles These Days
Gold IRAs at one time was restricted to just holding gold and silver versions of American Eagle coins. However, the possibilities were expanded to include coins and bullion of gold, silver, platinum, and palladium. That is, provided they have IRS approval.
The change happened in 1997 due to the Taxpayer Relief Act. It expanded the possible precious metal holdings to include several sizes of United States Treasury gold coins. Certain silver and foreign coins were also permitted.
Requirements All Four Metals Must Meet
Before diving into the requirements for IRS approval for each specific metal, it's worth looking at some general rules that precious metal products in each category must meet. These precious metal products can be coins, bars, or rounds.
However, they must be produced with certain minimum fineness requirements. The manufacturer, refiner, or assayer must also be certified or accredited by one of the following organizations:
Proof coins must be in excellent condition. They also have to be encapsulated in original and complete mint packaging. Including the certificate of authenticity is another requirement.
Non-proof coins can be potentially acceptable bullion. They must be free from damage. They need to be in uncirculated and brilliant-level condition.
Small bullion bars need to be measured to verify the exact weight specifications, but there are exceptions:
The IRS mandates that gold precious metal products for IRA inclusion must be at least 99.5% pure or better. Specific allowable options include the following:
Silver products for precious metal IRAs must be at least 99.9% pure, if not better. The IRS allows the following silver products for precious metal IRAs:
Palladium precious metal products must be at least 99.95% pure or higher. Acceptable examples the IRS lets you invest in include the following:
Platinum precious metal products have to be 99.95% pure or better. Acceptable examples the IRS allows include the following:
Unacceptable Products for Precious Metal IRAs
Technically, anything that falls outside the listed requirements would be an unacceptable precious metal product, so you can't put them in your gold IRA. However, it helps to know specific products that are officially known to be ineligible.
Fortunately, most precious metal brokers won't even offer to sell these to you for your precious metals individual retirement account.
A Famous Exception
American Eagle coins technically fail the IRS purity requirements. However, they are a notable exception that can be included in a precious metal IRA.
That's largely because they were among the few coins permitted before the list of precious metal products was expanded for these retirement accounts.
This Is Just a Guide
When going over these lists, please remember that they are not exhaustive but just an overall guide. There are products of all four precious metals that might be IRA-eligible because they adhere to the IRS requirements for minimum fineness.
Also, there might be rare and collectible coins that are unacceptable, even if they're not listed here as well.
Investing in a Self-Directed Precious Metal IRA
If you decide to do this, then there are three steps you need to take. It starts with opening the account before funding it and then choosing a depository. You'll have certain decisions to make every step of the way.
To open your self-directed IRA, you'll have to choose a brokerage to do this with. The precious metals industry has dozens of gold and silver brokerages you can choose from to manage your account.
Judge them based on consumer reviews, professional critiques, fees, and minimum investment levels required. Once you pick a broker and open your account, you'll need to make two decisions in the funding stage.
The first is how much you want to fund the account. The second is what specific eligible products listed above that you want to invest with.
After you've made your funding decisions and picked specific precious metal products to include in your account, you'll have to choose a depository. Precious metal brokers usually have a few that they partner with.
You might have to choose between segregated or non-segregated storage.
Are These Restrictions Worth It?
If you believe in having a portion of your wealth in precious metals as a hedge against endless money printing and reckless government spending, then we believe these restrictions are worth it.
Investing in precious metals can add a stabilizing element to a portfolio that needs diversification. Hedging against inflation and economic downturns becomes increasingly important as you get closer to retirement.
Investors with precious metals in their portfolio might recover faster if a recession hits just before their golden years.
However, that doesn't always mean the tax benefits are worth pursuing. For starters, there are contribution limits of $6,000 to $7,000 per year based on your age.
You might circumvent that to some degree by doing a rollover from another retirement account, but any precious metals you purchase past that would have to be done with normal taxes.
Also, self-directed precious metal IRAs cost money. Most have account creation fees, and there are usually yearly fees for both account administration and custodial matters at the depository. Some brokers will waive these fees for high-value investors, however.
Minimum investment requirements might keep you out of play with certain brokerages. It's not uncommon to see minimums of $20,000 up to $50,000.
Precious metal investing is usually for portfolios of sufficient size or something you do later in your investing years.
Remember, Restrictions Exist for Your Protection
Precious metal IRAs can be very appealing investment vehicles for retirement, but the restrictions on what specific products and pieces you can buy might make you feel unduly restricted.
For the most part, the IRS restrictions for IRA eligibility simply stem from trying to protect investors from fake gold and other scams that might endanger their portfolios.
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