What are the IRA Investing Rules for Precious Metals?

For a very long time, precious metals have proven themselves to be a store of value. They are also useful in various industries, and at one point, there’s even a gold standard for currencies that many countries follow. Learn more about the gold standard on this page here.

stack of gold bars

Nowadays, gold coins and bullion are popular investment vehicles during inflation, recession, and political turmoil. This is why many investors are considering adding precious metals into their portfolios to insure against a sudden stock market downturn. You can buy precious metals from a legitimate dealer directly and store them in an individual retirement account. Here are other things that you need to know about the process.

What is a Gold IRA?

A gold IRA allows you to invest in other alternative assets besides stocks, bonds, mutual funds, and other paper assets. You can purchase gold, silver, platinum, and palladium and add them to a newly-opened self-directed IRA. There are two types that you need to know about, and they are the following:

  • Roth: This does not offer immediate tax deduction because the funds used are after-tax dollars. You can withdraw it for free upon retirement, and there is no capital gains tax. However, you might risk getting an early withdrawal penalty fee if you take out the gains before you reach the age of 59 ½. Get info about ROTH IRA on this website: https://www.nerdwallet.com/article/investing/what-is-a-roth-ira.
  • Traditional: In a traditional individual retirement account, the contributions are tax-deductible, and the gains are deferred. However, you will be taxed in retirement withdrawals, and the IRS considers your regular income. A tax penalty of 10% is imposed on the account when you withdraw the funds before you turn 59 ½. However, when you reach 72 years old, you must make the minimum distributions on the account.

Those younger than 50 have an annual limit of $6,000 in contributions to their IRA accounts. Those who are above the age of 50 are allowed to contribute a maximum of $7,000 each year. Since you’re investing in alternative assets like precious metals, you need to follow the rule of the IRS to avoid penalties and additional taxes.

What are the Rules?

The type of precious metals you can deposit into your account can be limited. Here are the metals that are allowed in a self-directed IRA that you might want to consider:

  • Gold: Canadian Maple Leaf, American Eagle, Australian Kangaroo coins, rounds, and gold bars. They should have a purity of at least 99.5%.
  • Silver: Australian Kookaburra, American Eagle, Chinese Panda, bullion, silver bars, and rounds. The purity level should be at least 99.9%.
  • Platinum: Allowed coins are Isle of Man Noble coins, American Eagle, platinum rounds, and bars. Purity levels should be at least 99.95%.
  • Palladium: Only Canadian Maple Leaf bars and coins are allowed, and they should have a purity of 99.95%.

Other currencies and collectibles from many countries cannot be deposited into an individual retirement account. These include the Mexican Peso and French Franc, which are very popular with many investors.

It’s also worth noting that you need a custodian to purchase the metals of your choice. You’re not allowed to deposit the bars and coins you own; everything should be processed through the IRA.

You can get in touch with custodians and gold companies specializing in this process. Before that, read this analysis by BMOGAM about these companies and see more information about the rules you need to follow. You can ask an expert about legitimate dealers, limitations, and IRA restrictions to ensure you’re on the right track.

The right company will help you open an SDIRA, and you can fund them through rollovers or by depositing money into the account. After completing the fund transfer, you can select the coins and bars you want to add to your portfolio. They will be sent into a secure depository until your retirement.

This is a long-term strategy that many investors use to preserve the value of their money. As the price of goods and services begins to rise, they are hoping that it will also include the value of gold and silver that they have deposited into their retirement account.

The fun part is deciding what to buy. There are many options in the market with different designs, and they can be from other countries. Many coins are imprinted with special designs but whatever you choose, make sure they follow the IRS guidelines to prevent trouble down the road.

What are the Benefits of Know About?

Investing in precious metals has many benefits, including diversification, hedging against inflation, and potential tax advantages. Here are some things that you need to know about them.


Gold and silver can help diversify your investment portfolio and protect you from the stock market’s volatility. When the stock market is down, the metals’ prices tend to go up. This positive correlation can help offset losses in other investments.

Hedging Against Inflation

Precious metals are a good way to hedge against inflation. As prices rise, the value of gold and silver goes up. This can help preserve your purchasing power and safeguard your savings from eroding.

Potential Tax Advantages

Investing in precious metals may offer some tax advantages. For example, you can defer capital gains taxes on profits from selling gold or silver if you reinvest the proceeds into another qualifying asset. Consult with a tax advisor to see if you qualify for these special transactions to be on the safe side.

What are the Risks?

There are a few risks to consider when investing in alternative assets. These are the following that you should consider.

  1. The price of gold is volatile and can fluctuate rapidly, which could lead to losses if you sell at the wrong time.
  2. Precious metals are not always a hedge against inflation, as their prices can sometimes decrease when inflation increases.
  3. There is also the risk that the government could enact policies that would negatively impact the value of precious metals, such as increasing taxes on them.
  4. Also, there’s the possibility of fraud when buying coins, bullion, and rounds, so be sure to research and only buy from reputable dealers.

Overall, the IRS has several rules and regulations regarding investing in precious metals. While these rules may seem confusing initially, they are designed to protect investors and ensure that taxes are paid appropriately. As long as you understand the basics of investing in gold and other precious metals, you should be able to stay compliant and avoid any penalties.

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