What is a gold backed IRA?

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Gold bullion with money on table close up

A Gold IRA or Precious Metals IRA is a type of Individual Retirement Account that allows ownership of physical gold and other precious metals such as silver, platinum, and palladium. The precious metals are held by an IRS approved custodian on behalf of the IRA owner. This means you cannot hold to the precious metals yourself.

A Gold IRA is much like an upgraded version of a regular IRA. The same federal tax rules apply to contributions and withdrawals. You can still hold paper assets like mutual funds and bonds in your Gold IRA, but—and this is a significant difference—you can also add physical precious metals in the form of coins and bars.

What makes a gold backed IRA so special?

The flexibility of a gold backed IRA enables you to diversify your retirement portfolio in ways impossible under a traditional IRA. In this regard, the Gold IRA is also known as a self-directed IRA, because it allows you to exercise a high degree of control over the assets in your retirement account.

What is more, a Gold IRA can include other types of retirement accounts, like the aforementioned regular IRA, the employer-sponsored 401(k), SEP, Roth IRAs and Thrift Savings Plan (TSP). Your assets and money just move from one type of account to another by means of a rollover. Ask your financial advisor about the benefits.

You know by now that Gold IRA, precious metals IRA and self-directed IRA are all names for one and the same investment vehicle. Once in a while you may even see phrases like Silver IRA or Palladium IRA. Because gold is the most commonly bought asset of the precious metals, Gold IRA has become the umbrella term for self-directed IRAs.

What types of metals are allowed in a Gold IRA?

To qualify for inclusion in an IRA, precious metals must meet stringent criteria for quality and reliability set by the IRS. Only a select few precious metals can be hold in a gold IRA: gold, silver, platinum and palladium and they have to be in the form of bullion, coins, and bars. The IRS also has set strict rules regarding fineness of precious metals (listed below).

Wiener Philharmoniker Gold Coin
Austrian Gold Philharmonic

On top of that, the IRS only allows certain coins and bullion. As a rule of thumb, collectibles are not permitted, but some exceptions such as proof coins have become increasingly popular. The reason for this is that proof coins carry both collectible and bullion coin value. Some of the most common IRS-approved coins and bar types are:

Gold

  • American Gold Eagle (bullion & proof coins)
  • American Gold Buffalo (proofs not allowed)
  • British Gold Britannia (from 2013)
  • British The Queen’s Beasts
  • Canadian Gold Maple Leaf
  • Austrian Gold Philharmonic
  • Australian Kangaroo
  • Chinese Gold Panda
  • Gold bars 0.995 fineness)*

Silver

  • American Silver Eagle (bullion & proof)
  • British Silver Britannia (from 2013)
  • British The Queen’s Beasts
  • Canadian Silver Maple Leaf
  • Austrian Silver Philharmonic
  • Australian Silver Kookaburra
  • Chinese Silver Panda
  • Silver bars (0.999 fineness)*

Platinum

  • American Platinum Eagle (bullion & proof)
  • British The Queen’s Beasts
  • Canadian Platinum Maple Leaf
  • Australian Platinum Koala
  • Platinum bars and rounds (.9995)*

Palladium

  • American Palladium Eagle (bullion)
  • Canadian Palladium Maple Leaf
  • Palladium bars and rounds (.9995)*

*Bars and rounds must meet their fineness requirements and must be produced by a manufacturer that is accredited by NYMEX/COMEX, LME, LEMA, or NYSE.

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