August 22, 2022


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All You Need to Know About IRA - Eligible Gold 

The majority of wealthy individuals are very much familiar with investments rather than savings. This has enabled them to earn greater returns on investment. Some of the areas they put their wealth is investing in things like real estate and others that appreciate over time.

In situations like unseen uncertain economic times, having gold investments can provide security to some extent. Looking back at the old times, gold was used as a tool against the persistent increase in prices of commodities within the economy as a result of increased demand by consumers, otherwise known as inflation.

Even though some investors can acquire gold (purchase gold) instantly, using IRA can amount to valuable tax benefits. Perhaps you’re thinking along that line but aren’t sure of IRA Eligible gold means and whether it’s a good investment. To help you grab this concept, get on board and fasten your seatbelt as you are about to be taken through what IRA-eligible gold entails, and whether you can consider it in your retirement account.

Qualifications to be IRA – Eligible Gold Coins and Bars

Are you familiar with this term, IRA-eligible gold? Pretty easy, it is gold that meets IRS standards to be kept (held) in a self-directed individual retirement account (IRA).

For gold to be eligible for investment in an IRA, there are some requirements that it needs to meet. Here’s what the IRS requires:

  • Bars and rounds. The purity of bars and rounds is expected to be 99.5%.

Other bars and round rounds requirements include:

  • Small bullion bars must be manufactured to exact weight specifications.
  • Bars and rounds must be produced by the national government or by a certified source mint and meet fineness requirements.
  • Coins. The expected percentage purity is 99.5%.

Other coin requirements include:

  • Non-proof coins must be in an uncirculated and radiant condition.
  • Most collectible coins are eliminated (excluded).
  • Unlike non-proof coins, proof coins must be elaborated in mint condition and must include a certificate of authenticity.

Three of the Most Popular Minted Coins for Physical Gold IRAs are:

  • American Gold Buffalo
  • American Eagle Gold Coin
  • American Eagle Gold Coin (not 99.5% pure, but eligible for Gold IRAs)

It is important to note that some coins may meet the IRS requirements but are not eligible for an IRA. This is because they are regarded as collectible. Among them include several bullion coins such as French 20 Franc gold coins, United Kingdom Sovereign Coins, and U.S. Liberty Coins.

On the contrary, some coins don’t meet the IRS purity requirements stated above (99.5%) but IRS has provided an exception that makes them IRA eligible. A good example is the American Eagle Gold Coin.

How to Open a Gold IRA Account and Start Investing?

You can employ the following steps to successfully open your self-directed IRA account:

1. Find a Gold IRA Company to Work With and Open an Account

You will be provided with a form to fill in your details. After successful completion of the form, you then select your self-directed IRA which is held by a custodian. In this case, the custodian may be entities approved by the IRS, banks, or other trust companies. You will be notified of your account number.

2. Fund your IRA Account

Once the Gold IRA account has been opened, you’ll need to fund your account. Your custodian will help with the paperwork to fund the account. You will need to determine if you are funding the account with a rollover from another IRA or 401(k) from a previous employer. Understanding your options, funding personally yearly, or completing a rollover, is important to stay eligible with the IRS. Once the funds are in your account you can move on to the next step of choosing the precious metals.

3. Decide What to Buy

This step is the most important yet. Choosing the IRS-approved Gold coins, bars, or bullion is important to keep your account in good standing. You also research and decide which precious metals are best for your account. Working with a genuine, honest, and trustworthy company is important for the security of your investment. 

4. Choose Depository

Invested precious metal in a self-directed IRA must be stored in an approved depository. It is vital to note that you cannot store the precious metal for your IRA yourself. When you work with a trusted Gold IRA company they will have agreements with depositories across the U.S. to choose from. It is important to know that you can choose your depository and not go with the one suggested by your Gold IRA company. 

5. Complete the Transaction

Now that you have a dealer, custodian, and depository, don’t you think it's time to complete your purchase? The payments are handled by the IRA custodian while the dealer is involved in the shipment of the precious metal to the depository.

This is when you can sit back and wait. Watching your Gold IRA statement will drive you bonkers. Gold is a slow-moving investment. We'd relate checking your statement to watching the grass grow. It's a slow-moving process. 

How to Hold Gold in an IRA

After understanding the entire steps involved in opening an IRA-eligible gold account, you are wondering, how can I hold gold in the IRA self-directed account?

Gold and other precious metals fall under Collectibles in Individually Directed Qualified Plan Accounts through IRS Section 408(m). This means that to qualify you must not hold physical gold in an IRA personally. In addition, you cannot transfer currently owned gold coins or bars into your newly formed Gold IRA. 

How Much Can I Contribute to my IRA Every Year?

Self-directed IRA accounts fall within the same restrictions as standard IRAs. According to current guidelines, you can open a self-directed IRA and contribute $6,000 per year if you are under the age of 50 and $7,000 per year for persons over the age of 50. 

Requirements are to fund the account personally you have to have earned income. That is you are receiving a paycheck for work performed. 

The self-directed IRA has the same contribution requirements and similar tax savings as standard IRAs. Therefore while contributing make sure you are not exceeding your allowable contributions for all your retirement accounts. Check with your tax advisor or accountant for contributions allowed.

Can I or Should I roll Over my 401(k) to a Gold IRA?

One of the many decisions you will need to make when you change jobs involves your 401(k) retirement account. When you change companies you have the right to roll over your 401(k) to an IRA account or you can choose to keep your investments where they are with the prior employer.

Here are some of the benefits of rolling over your 401(k) to IRA-eligible gold:

  • Lower fees and Costs. When you roll over, you don’t have to pay the administrative and management fees you’ve been paying for your employer account. You will have fees for your self-directed Gold IRA but you have new options
  • Clearer rules. As opposed to 401(k) which has complicated rules, IRA has standardized rules which make it easier to understand.
  • More investment choices. The 401(k) has limited investment choices as you have a choice of mutual funds from one provider. But this is not the case with IRA. With IRA, you can invest anywhere because there are more kinds of investments to choose from
  • When rolling over you can choose to roll over to two or more accounts. You can complete a partial rollover to a self-directed Gold IRA and at the same time roll over the remainder to a traditional IRA. Or, you can choose to keep some funds in the employer account and create and do a partial Gold IRA rollover. You have choices.
  • Other benefits of rolling over are estate planning advantages and more control over the investment outcomes. 

Why Invest in a Physical Gold IRA?

Physical gold is a financial and monetary means to exchange money that has been in existence for thousands of years. Today, we don't use physical gold or silver as a means of exchanging payment for services or a product. We use precious metals as a way to hedge inflation and an investment vehicle that is not tied directly to the economy or the stock market.

Some of the benefits of investing in physical gold include:

  • Inflation Hedge 
  • Options of Coins, Bars, and Mints to choose from
  • Diversify Retirement Accounts
  • Easily Purchased and Several Sources that Buy 
  • Could be an easily transferable asset
  • Own Physical Asset
  • No Maintenance - just manage your asset

IRA–eligible gold is among the great return on investment earners. This is considered an advantage for those individuals who are nearing retirement or those looking to diversify their retirement portfolio.

Final Thoughts on IRA Eligible Gold

You, as an educated and knowledgeable investor, should consider all your investment options. Are you looking for an investment that can stabilize your portfolio with the potential of greater returns than cash in your bank account? How about securing your principle and understanding that Gold, as an investment, has appreciated over time?

Understanding the requirements of IRA Eligible Gold will make your choices easy. Working with a precious metals company with an exceptional track record of satisfied customers and thousands of new Gold IRAs being opened will make your work easier. We have a few options that we provide in our review of the 5 Best Gold IRA Companies

The Plug's mission is to educate the consumer about Gold and Silver as an investment. We provide information to assist you in making decisions and hope that information gives you insight into gold and silver. Like all precious metals companies, we can only provide the best information or option, we cannot control the markets and value of gold going forward. Please make an informed decision and understand value or spot price of Gold could increase or decrease at any time during or after the transaction. 

For those interested in purchasing gold outside an IRA. That is a great option and you can get more information from us here

Ready to Get Started with a Gold IRA? Click the GREEN button below. No purchase is necessary to get a FREE Gold IRA Kit!