Tax Implications of Investing in Precious Metal Assets

Investing in precious metal assets can be a great way to diversify your assets and get an economic return on investment. There are, however, some tax implications that you should consider before investing – like whether or not it’s allowed for I.R.A. accounts!

Precious Metal Assets in Your I.R.A.

At first blush, our beloved Internal Revenue Code appears to throw cold water on the idea of holding physical precious metal assets in an I.R.A.

As a general rule, a physical I.R.A. investment in any metal or coin is treated as the acquisition of a collectible for federal income tax purposes. As such, the transaction is characterized by the tax code as a taxable distribution from your I.R.A. to you (the I.R.A. owner), followed by a purchase of the metal or coin by you.

In effect, this general rule appears to prohibit you from using an I.R.A. to invest in precious metals or coins made from precious metals.

But there’s a tremendous big exception to the preceding general rule. Under the exception:

  • You can use your I.R.A. to invest in particular gold, silver, and platinum coins and in gold, silver, platinum, and palladium bars (bullion) that meet the purity standards.
  • Your I.R.A. trustee or custodian, rather than you, must hold the coins or bullion.

These rules apply equally to traditional I.R.A.s, Roth I.R.A.s, S.E.P. accounts, and SIMPLE-IRAs.

Your I.R.A. Can Buy Precious Metal Coins and Bullion (Purity Standards)

I.R.A.s can own certain precious metal coins and bullion, thanks to the exception.

Examples include:

  • American Gold Eagle coins;
  • Canadian Gold Maple Leaf coins;
  • American Silver Eagle coins;
  • American Platinum Eagle coins; and
  • Gold, silver, platinum, and palladium bullion meet the purity standards.

For example, gold bars must be 99.5 percent pure or better, and silver bars must be 99.9 percent pure or better.

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