Are Coins Allowed in an IRA?
The Internal Revenue Code details what can be held within an individual retirement account (IRA). While self-directed IRAs can invest in alternative assets such as stocks or real estate, certain forms of collectibles, including gold coins are forbidden – so self-directed accounts should invest only in these.
For your precious metals IRA investments to comply with IRS rules, only invest in approved coins and bullion.
Collectible Coins
Many investors are taken aback to learn that not every coin or round qualifies for an IRA, due to the fact that some coins which meet IRS purity standards but do not fall into bullion categories are considered collectibles rather than bullion. Collectible coins usually boast unique features such as dates or mint marks that attract collectors who pay a premium price over what the metal they contain is worth.
So the value of these coins derives from their rarity and desirability as collectibles, rather than from their metal content alone. Therefore, these rare and unique coins cannot be included in an IRA, making it essential to understand the distinctions between bullion coins and collectible coins when investing in precious metals IRAs.
Bullion Coins
Investment of precious metals is permitted by the IRS through self-directed retirement accounts known as Gold or Precious Metal IRAs; however, only certain coins and bars that meet minimum fineness standards may be kept inside such accounts1.
Bullion coins are commonly produced in large volumes by both government and private mints, making them widely accessible. Their designs tend to feature standard, repeating themes that don’t qualify as rare; moreover, these coins typically command a premium over the cost of precious metals they contain due to numismatic value and supply and demand factors.
Bullion rounds and bars may also be held within your IRA, though their costs per ounce may be less. They provide diversification without requiring as much liquidity than bullion coins.
Bullion Bars
The IRS recognizes precious metals and bullion as permissible assets for Individual Retirement Accounts (IRAs). Bars made by accredited refiners, assayers or manufacturers meet specific purity standards in order to qualify as eligible bullion for an IRA; graded coins considered collectibles cannot.
Prior to 1997, IRAs could only hold American Eagle gold and silver coins; this changed with the creation of bullion IRAs in 1997, permitting their owners to invest in bullion coins and bars. For an IRA eligible coin to be produced by an approved national government mint as well as meeting certain purity and packaging standards and meet IRA eligibility standards, such as being non-collectible as well as meeting purity/packaging specifications; similarly for gold bullion bars produced at approved facilities with certain foreign coins also eligible IRA status; in terms of costs associated with commission payments to gold companies, bullion bars more closely reflect spot price of precious metal investments resulting in lower cost effective investments overall.
Proof Coins
The Taxpayer Relief Act of 1997 opened up self-directed IRAs to other investments, such as precious metals. For these metals to qualify as eligible investments for self-directed IRAs, specific standards set by the IRS must be met.
Coins are a convenient choice for investors seeking to add metals to their IRAs. Their compact form makes them easy to transport, while often incurring lower customs fees overseas. Furthermore, coins combine investment value with collectability.
Proof coins (also referred to as collector’s coins) are the highest quality investment pieces produced by mints. Produced in limited quantities and featuring superior finishes and standards of strike than regular circulated coins, proof coins represent some of the finest investments possible.
Expensive yet potentially valuable collectible coins have the ability to increase in value over time, although most investors would find them unsuitable investments due to their collectible nature and so aren’t permitted in IRAs; they can still be purchased outside an IRA as personal keepsakes.
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