How to Invest in Gold in IRA Accounts
Individual retirement accounts are investment plans that help you prepare for retirement by providing tax breaks. The Internal Revenue Service has strict rules regarding IRAs. Under the provisions of the Taxpayer Relief Act of 1993, you can invest in gold in IRA accounts. You can invest in precious metals using any type of IRA. However, you must have an IRA account that allows you to make your own investment decisions, which is called a self-directed IRA.
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Account Type
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Consult with your IRA account custodian if you already have an IRA account. The custodian is normally the bank, brokerage or investment firm that provides the account. If your IRA account is not a self-directed IRA or the account provider does not allow gold investments with your account, open a new IRA account that is self-directed with a provider that allows gold investing.
Contributions
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Contribute funds to your IRA account. You can contribute $5,000 per year to all of your traditional or Roth IRA accounts combined. This increases to $6,000 when you turn 50. Alternatively, you may transfer funds from an already existing IRA. The IRS is very strict about transfer procedures, so follow your custodian's instructions to the letter when you transfer the funds. If possible, arrange a direct "trustee-to-trustee" transfer. That way, the money is never in your possession, which simplifies complying with IRS rules.
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Storage
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Select an IRS-approved precious metals depository to store your gold. Under IRS rules you may not take physical possession of the gold. The depository must be separate from your account custodian. However, IRA account providers can usually recommend a storage depository. Arrange for payment of the storage fees from your IRA account.
Types
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Decide what type of gold you wish to buy. IRS rules allow only United States coins that are legal tender and some forms of bullion. As of 2010, coins could be American Eagle or Buffalo gold coins of any denomination. Collectible coins are not permitted, even if they are U.S. gold coins.
Purchase
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Instruct your IRA account custodian to use funds in your account to invest in gold. The purchase must be made in this manner. You can't purchase the gold yourself and take it to the depository.
Gold Securities
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An alternative to buying physical gold coins and bullion is to invest in gold-related securities. Gold mining stocks are one option. Another is to invest in mutual funds that invest in gold and other precious metals. Both investment types are allowed under IRS rules.
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