Self-Directed Gold IRA Rules and Guidelines

Following These Important Guidelines Can Save You Money In Your Retirement

Nearly all investors reach a point in their career at which they need to reduce the amount of risk and volatility they have in their traditional 401K or IRA. To reduce risk, they seek advisors who can help diversify their portfolio by rolling over a portion of their retirement funds into a self-directed IRA.

This allows individuals to take a controlling interest in their future and reduce risk. If you need to reduce the risk in your retirement account, see how diversifying your portfolio and adding precious metals like gold, silver, platinum, and palladium to your self-directed IRA can help you secure a more stable retirement portfolio.

Before you get started, here are a few important Rules and Guidelines to follow when you roll over your traditional 401K or IRA to a self-directed Gold IRA.

Can I carry Gold in my IRA?

Yes. It is possible to carry Gold in a retirement account, but that hasn’t always been the case. However, when the Taxpayer Relief Act of 1997 was passed by Congress, precious metals and collectible coins have been able to be included in self-directed IRA retirement portfolios. Before you get started, it’s critical you are aware of the various IRS rules that apply to these precious metals IRAs.

IRS Account Administrator Rules

Have An Approved Custodian for Your Gold IRA

In order to have a Gold IRA, you will have to first open it with an IRS approved administrator. Administrators can be from insurance companies, banks, or retirement companies. The important thing to remember is that not every one of these administrators will be able to handle a precious metals IRA. Even ones that do handle these types of IRAs may require that you open a new account for it to be a self-directed IRA.

Under IRS regulations, you can’t add gold or precious metals to your Gold IRA yourself, even if you already own IRA-eligible metals or plan to purchase them for investment purposes. The IRS requires that your IRA account administrator do the transactions under your direction. Additionally, under the precious metals IRA rules, your custodian will be responsible for making all arrangements for shipping and insurance when they conclude the transaction.

Follow IRS Storage Rules

Once precious metals have been purchased, they must be stored according to IRS guidelines for precious metals IRAs. As the investor, you are never allowed to have the precious metals in your possession. You cannot buy the gold with the intention of handing it off to your administrator or custodian. If the assets are in your possession, the IRS will then treat the metals as distributed and start assessing the appropriate penalties and taxes on them.

The custodian of a Gold IRA will receive the precious metals and then hand them over to an IRS sanctioned third party, off-site depository. You do have the authority to select the depository which is used. However, most investors rely on their custodian to select the depository to inventory and safeguard your precious metals. Once the metals are deposited, distributions are sent by insured delivery to you directly.

Before your custodian selects the depository, you can ask questions about yearly storage fees that will come out of the metals in your IRA vehicle. You can also request segregated storage of your holdings, though beware that they may charge you higher fees for this convenience of having your metals kept in their individual safe deposit box.

Know Your IRA Tax Regulations and Contribution Limits

Currently, you can invest $5,000 into your self-directed IRA annually, with an increase to $6,000 annually when you reach 50 years of age. You can fund the IRA by transferring funds via a rollover from a similar qualified plan or sending in a check to the account administrator.

Assuming you decide to take the gold out in the form of a distribution, there will be tax consequences. Once you assume physical possession of it, you will have to pay the full income tax on the metals’ values at the moment you withdrew them. If this is an early distribution, there will also be a 10 percent tax penalty assessed on the value at time of withdrawal. Besides this, the IRS will assess a 28 percent capital gains tax on any profits you realized from your original cost basis of the holdings.

Follow IRA Retirement Age Limits & Early Withdrawal Penalties

Gold IRA funds cannot be accessed by an individual through their custodian until you reach age 59½. At the age 70, you must begin to receive distributions and withdrawals.

If you do choose to access funds prior to age 59½, it is possible, but the IRS will levy a 10 percent penalty (plus applicable taxes based on income) for early distributions. However, the IRS does allow for a number of early withdrawal penalty exceptions which allow you can take a withdrawal without additional fees before age 59½.

Know the Types of Precious Metals Approved by the IRS

While investing in precious metals is a great way to diversify your retirement portfolio. Not all precious metals may be purchased for inclusion in a Gold IRA. The IRS has very strict rules on which specific bullion pieces qualify. They must meet a high minimum purity standard for the relevant precious metal. They also must not be considered to highly collectable.

To learn more about diversifying your retirement portfolio by adding precious metals through your self-directed IRA, contact us today to schedule an appointment.