The IRS i.e. the Internal Revenue Service allows you to invest in gold IRA as long as you adhere to a number of rules and set guidelines. Flaunting these rules and guidelines can lead to serious legal ramifications including penalties and in severe cases, jail term. Therefore, it is highly imperative for you to understand and adhere to all gold IRA rules. Here are the main gold IRA rules that you should know.
Investable IRA coins
The Internal Revenue Service does not allow you to make IRA investments in terms of collectible coins and metals. This is because collectible coins have a high subjective value whose measurement is extremely difficult if not entirely speculative. However, the Internal Revenue Service allows you to make IRA investments in terms of minted coins, a special kind of collectible coin. These minted coins do not have a high subjective value as other kinds of collectible coins do and this is why the IRS allows you to use them as IRA investments.
The Size and Weight of the Coins Matters
Gold IRA rules are very clear on the size and weight of the coins that you can use as IRA investments. For example, gold coins should be in specific ounces i.e. an ounce, half an ounce, one-quarter ounce or a tenth of an ounce. In addition, the IRS only allows one-ounce silver coins if the US Treasury Department minted these coins. Finally, bullions are also acceptable if they come in gold, silver, palladium or platinum.
Rules on Funding the IRA
The funding of the IRA is an annual kind of funding that has to be in cash. The cash settles in the gold IRA and then investors will instruct the custodian on what kind of coins they want purchased. Investors cannot deposit coins already owned into the IRA and then hold them in trust. Other IRA custodians will also purchase metals as well as stocks. In this case, you can maintain both of them if the custodian will allow it.
Maintaining a Gold IRA
All investors must maintain a gold IRA. In other words, the IRA custodian holding the gold, silver or other precious metals must accept these investments. It is up to the investor to find a custodian to maintain the IRA account. The custodian will then take responsibility of storing the gold at a certain depository that belongs to a third party. Remember, depositors should not maintain possession of the coins as the IRS will consider this a part of distribution and therefore, tax the investor’s coins.
Now you know all the applicable gold IRA rules. Follow these gold IRA rules so that your investment does not incur any unnecessary legal hurdles or heavy taxation.