How to Buy Gold With IRA Trustees

Investors are legally able to hold gold in their IRAs.

Though it is illegal to hold many types of valuables in an individual retirement account, the 1997 Taxpayer Relief Act specifically allowed taxpayers to hold some types of precious metals, including gold, in the form of either bullion or government-issued coins.

Significance

Those who wish to purchase gold assets for their IRA must find a reputable IRA custodian to arrange the transaction. Different types of IRA custodians provide different investment options: banks offer certificates of deposit; brokerage houses offer mutual funds and stocks. To purchase gold, investors need an Internal Revenue Service-certified, self-directed IRA custodian who knows the law regarding gold investments.

Warning

IRA owners who use their accounts to purchase tangible items, like gold, must be careful not to violate the IRS's prohibition against personally using IRA assets. This means that IRA owners cannot have access to the gold themselves; otherwise, the account could loose its tax-preferred status. A reputable IRA custodian should know this and arrange for a third party to store the gold.

Function

After signing with a self-directed IRA custodian, investors who want to purchase gold should deposit money in their accounts and direct the custodian to purchase it. In addition to custodial fees, IRA owners can also expect to pay a gold storage fee. For tax purposes, the cost of the gold is based on its fair market value the day an investor takes a distribution from her IRA.

References

• Zachs Investment Research: Illegal For 53 Years - IRAs Now Gold Friendly
• IRS Publication 590: Investment in Collectibles
• IRA Central: Gold and Silver Held Physically in Your IRA