3 Common Mistakes Self-Directed IRA Investors Make with Gold

You’d think gold investing would be pretty simple. I mean, you own a hunk of metal that you hope will increase in value. Well, that’s gold investing in a nutshell. But as always, things are a bit more complicated than that! Especially when it comes to investing in Gold with a Self-Directed IRA, since there are a number of specific rules and requirements that apply specifically to IRAs, including laws that restrict the specific types of gold and other precious metals you can own within your IRA.

  • Owning prohibited types of gold. By law, the only kinds of gold you can own directly, via a Self-Directed IRA, are bullion and coinage of established and consistent purity and consistently. Likewise, you cannot own gold, silver or other precious metals in the form of jewelry or other collectibles. In practice, this means that you cannot own certain kinds of coins. American Eagle and Canadian Maple Leaf coins are just fine, both for gold and silver. But South African Krugerrands don’t make the grade. If your Self-Directed IRA takes direct ownership of Krugerrands, and the IRS finds out, you could risk getting the tax advantaged status of your entire IRA account disqualified.

Some examples of coins that are approved for Self-Directed IRA investing include:

  • Australian Kangaroo/Nugget coins
  • Austrian Philharmonic coins
  • Credit Suisse – Pamp Suisse Bars (.999 purity)
  • Uncirculated U.S. Buffalo Gold coins (but not proofs)
  • Bars or rounds minted by a COMEX or NYMEX-approved assayer or refiner, or by a national government, and meeting the following standards for purity:
  • Gold: .995
  • Silver: .999
  • Platinum: .9995
  • Palladium: .995

Examples of prohibited metals include:

  • Austrian ducats and coronas
  • Belgian francs
  • British Sovereigns
  • Chilean pesos
  • Columbian pesos
  • Dutch Gilders
  • French Francs
  • Hungarian Koronas
  • Coins noted for rarity or collectible value, rather than priced on the basis of their purity

If you have any doubts about the legality of a precious metals product you’re considering for your IRA, call us at 866-7500-IRA(472) before executing the transaction. It’s not our place to tell you whether it’s a sound investment or not. That’s between you and your financial advisors and gold/precious metals broker. But we can normally tell you if the specific coin or other product you’re considering is approved for IRA ownership!

  • Taking direct possession. Normally, you cannot have your Self-Directed IRA own gold coins or bullion you have sitting in your basement, gathering dust. You can only own it in your IRA if it sits and gathers dust in the vaults of an authorized IRA custodian! Again, taking direct, personal possession of your gold coins or bullion within your IRA is a violation of prohibited transaction rules. Think of it: The tax laws prohibit you from using your IRA assets as collateral for a personal loan. If the IRS let you store your IRA’s gold coins in your basement, there would be no way for them to know if you had taken them down to the pawn shop and taken a personal loan against them. Restricting personal possession allows the IRS to keep a handle on prohibited transactions.
  • Failing to consider storage considerations. Since you can’t hold the coins or bullion or rounds yourself, you will need to have a custodian take physical possession for you. But there are costs associate with this. The more secure the facility, and the more insurance you or the custodian carries against theft or other casualties, the higher the costs. The more you hold with the custodian, of course, the more cost efficient your storage costs are likely to be as a percentage of your overall holdings.

Your custodian may charge other fees for reporting, record keeping and transactions. These are generally minor, but worth considering overall.

In some cases, you may wish to own gold certificates or gold or mining related securities and partnership interests rather than hold physical gold itself.

With offices in Charlotte and Asheville, North Carolina, American IRA, LLC has years of experience in working with gold and precious metal investors who choose to hold these assets within self-directed IRAs. For a full brochure, or for additional information and a wealth of educational articles and blog posts, visit our website at www.americanira.com, or again, feel free to call us at 866-7500-IRA(472).

We look forward to serving you.