A self-directed IRA allows you to invest in physical gold and other precious metals. Not all investments in gold can be owned by an IRA. The basic rule is that an IRA cannot own a collector's item and precious metals are defined as collectibles, whether the investment is in ingots or coins. Fortunately, there are exceptions to the general rule for gold, silver, platinum and palladium, which hold true in certain forms.
If you want to keep physical gold in an IRA account, it can't be your regular account. It has to be a special, independent account, called a golden IRA. With self-managed IRAs, holders can purchase ingots or coins made of various precious metals, including gold. Gold IRAs require a custodian (a third party who securely stores investments), since gold IRAs involve buying and storing physical gold and precious metals.
Related to gold futures contracts are gold options, which allow buyers to purchase a futures contract within a set period of time, rather than simply buying a futures contract right from the start. When you turn 72, you will be required to accept the minimum distributions (RMDs) required from a traditional gold IRA (but not from a Roth account). Proponents of investing in gold IRA claim that one of the important benefits of gold is that it is an effective hedge. If you already have an IRA or 401 (k), regular or Roth, you have the option of transferring part or all of your funds to a gold IRA.
People who believe that physical possession of gold or other precious metals is safer can gain that peace of mind with a gold or silver IRA. IRA investing in gold is gaining popularity among investors and retirement plans because it diversifies investment income. These may include exchange-traded funds (ETFs), gold mining company stocks, precious metal commodity futures, and gold-oriented mutual funds, all of which have indirect ways of holding gold. While it's legal to own gold or silver through an IRA or other retirement account with some restrictions, it's not the best or most efficient way to own precious metals.
To avoid violating the tax rules on self-trading, self-directed IRAs, including gold IRAs, must have an IRS-approved depositary. During his tenure as director of the Mint, Moy says that there was little demand for gold IRA accounts because they involved a very complicated transaction that only the most persistent investors were willing to make. The IRS rules allow funding a gold IRA with money extracted from another IRA, the 401 (k), 403 (b), 457 (b) or the Thrift Savings Plan. Gold futures contracts are contracts that describe when to buy and sell an amount of gold in the future.
A key rule to know about keeping physical gold in an IRA is that precious metals MUST be kept in an approved custodial institution, such as Delaware Depository Service Company or Brink's Global Services, and not in your home or in a safe. The possibility of using gold and other materials as securities in an IRA was created by Congress in 1997, says Edmund C. Self-directed IRAs, of which gold IRAs are one type, have the same types of limits on contributions and distributions depending on age as traditional IRAs. You should also select a precious metals dealer who will make actual purchases of gold for your IRA (your custodian may be able to recommend one).