A gold IRA is a type of self-directed IRA that allows you to invest in gold bars for retirement. In a regular IRA, you can’t own physical gold, although you can invest in a wide variety of assets that are invested in gold, such as gold stocks or gold ETFs. Not all gold investments can belong to an IRA. The basic rule is that an IRA cannot own a collectible and precious metals are defined as collectibles, regardless of whether it is an investment in gold bars or coins. Luckily, there are exceptions to the general rule for gold, silver, platinum, and palladium, which are held in specific forms.
If you want to hold physical gold in an IRA, that can’t be your regular account. It must be a separate, specialized IRA known as a Gold IRA. The basic rule is that an IRA cannot own a collectible and precious metals are defined as collectibles, regardless of whether it is an investment in gold bars or coins. If you already have an IRA or 401 (k), either Regular or Roth, you have the option to convert some or all of your funds into a Gold IRA
You may love South African Krugerrand gold coins, but you can’t add them to your IRA Gold account. You can invest in gold coins, but the coins must remain in the custody of the IRA trustee or custodian. It may be better to invest your IRA in a precious metals ETF or own precious metals in a taxable account. However, the distribution of tax benefits and contribution limits differ from those of
traditional gold IRAs.
You retain complete control over the gold you purchase and the portfolio of your choice as long as both are approved by the IRS. The custodian is an IRS-approved financial institution (bank, trust, brokerage firm), but many financial services and mutual fund companies that process regular IRAs don’t do the self-directed version. Physical metals must meet IRS fineness standards in terms of purity and weight and be stored in an IRS-approved, insured warehouse. The ETF is also able to buy, store, and insure gold at a much lower price than you or an IRA custodian
It allows us to conclude that only gold coins — and not gold coins — must remain in the possession of the trustee. For example, the purity of gold must be 99.5%, silver must be 99.9% pure, and both platinum and palladium must be 99.95% pure. However, these rules do not state that the self-responsible IRA account holder can physically take possession of the coins or the metal. The same goes for those who have physically taken possession of gold, silver, or other precious metals that belong to their IRAs
Since most traditional brokerage firms and banks don’t allow these types of investments, investors must use self-managed IRA custodians for these investments.