Many Self-Directed IRA owners become confused with the various rules in place concerning prohibited transactions.

Generally, Internal Revenue Code Section 408, which defines allowable Self-Directed IRA holdings, prohibits investment in collectibles, including gems and jewelry. But paragraph (m)(3)carves out some important exceptions:

(3) Exception for certain coins and bullion

For purposes of this subsection, the term “collectible” shall not include—

(A) any coin which is—

(i) a gold coin described in paragraph (7), (8), (9), or (10) of section 5112 (a) of title 31, United States Code,

(ii) a silver coin described in section 5112 (e) of title 31, United States Code,

(iii) a platinum coin described in section 5112 (k) of title 31, United States Code, or

(iv) a coin issued under the laws of any State, or

(B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7)  [2] requires for metals which may be delivered in satisfaction of a regulated futures contract.

In a nutshell, Congress has given the nod only to coins and bullion known to be of sufficient consistency and purity as defined in the Commodity Exchange Act 7 U.S.C. 7, and it gives full faith and credit to state-minted coins as well.

The specific rules are too lengthy to include here, but you can read the Treasury’s specific criteria for IRA investments here.

Gold Coin Criteria for Self-Directed IRAs

• A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold.

• A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold.

• A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold.

• A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold.

In plain English, Congress has approved American Eagle coins, 1-ounce U.S. minted silver coins, for IRAs, provided you don’t hold them directly (you need to have a custodian hold the gold or other precious metals for you).

For other kinds of coins, you must be able to show that they have a purity of at least 99.5 percent. Not every well-known coin can qualify. For example, South African Krugerrands, while popular with gold coin collectors, don’t make the cut.

Can I hold silver and platinum?

Yes, you may hold silver and platinum coins and bullion as well as gold within your self-directed IRA, 401(k), SEP IRA, SIMPLE IRA or other account, if you choose, as long as these coins or bullion comply with Title 31, Section 5112, sections (k) and (e), respectively.

So What, Specifically, Can I Own?

If you have any question or doubt about which coins are legal to hold in IRAs and which are not, call us immediately at 866-7500-IRA(472) before you attempt to purchase it in your IRA. Remember, you cannot take personal possession of these assets, and your IRA cannot purchase them directly from you or a prohibited counterparty. It’s important that you do your research and due diligence ahead of time, before you attempt to make a prohibited transaction, to avoid unwanted taxes, penalties and headaches.

For more information, please feel free to download our exclusive Guide to Gold and Precious Metal IRAs. It’s absolutely free, with no obligation, and it will walk you through the rules and regulations concerning self-directed IRAs and precious metals. You can also download a free copy of our longer-form e-book, which goes into more detail about your other self-directed retirement account options, such as real estate IRAs, private lending, LLCs and partnerships, closely-held corporations and small businesses, and many others!

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