It states that an IRA investment in a metal or coin is generally considered an acquisition of a collectible. Therefore, for federal income tax purposes, the transaction is marked as a taxable distribution by the IRA, followed by a purchase of the metal or coin by the IRA owner (that would be you). For example, gold bars must have a purity of 99.5% or more and silver bars must have a purity of 99.9% or better.
The practical concern is to find an IRA trustee who is willing to set up an independent IRA and facilitate the physical transfer and storage of precious metal assets.
Only a few companies are prepared to act as trustees for independent IRAs that hold eligible precious metal coins or bars. You can trade, transfer, swap, or sell the precious metals in your IRA at any time without tax consequences. IRA holders have been allowed to use funds in their IRA account to purchase eligible precious metals since 1998 following the passage of the Taxpayer Relief Act of 1997. Unlike physical ownership of precious metals, which the IRS treats as an acquisition of a collectible item, IRAs can buy shares in precious metals ETFs, which are classified as grantor investment trusts, without such problems. A ROTH IRA can own gold and IRA-eligible precious metals just like any other IRA, including a traditional IRA, SEP IRA, SIMPLE IRA, Inherited IRA, Rollover IRA, and Spousal IRA
.
According to the latest PLR, the rules that prohibit direct IRA investments in gold do not apply if the gold is held by an independent trustee. A rollover usually occurs when you transfer between two different accounts, such as from a 401 (k) to an IRA. To set up a Gold IRA, you’ll need to work with a Gold IRA company to set up an account and buy the precious metals of your choice to fund it. The IRS allows you to add certain costs to the base, which can reduce your tax liability in the future.
The amount of taxes owed on the sale of precious metals depends on the cost base of the metals themselves. With a traditional IRA or other retirement account, you can invest in gold through the stock market by buying stocks in mining companies or mutual funds that hold those stocks. A silver IRA is also a traditional IRA, a ROTH IRA, a SEP IRA, a SIMPLE IRA, or an inherited IRA that is managed by the account holder himself and holds valid forms of physical silver coins or silver bars. In general, an IRA investment in a metal or coin is considered an acquisition of a collectible item
.
As for the second special scenario, if you inherit gold or silver, the cost basis is the market value on the day of the death of the person from whom you inherited the metals. If this isn’t a priority for you, there are other ways to add precious metals to your portfolio besides a gold IRA. The Gold IRA firm also sells you the gold bars and coins (or other precious metals) that you want to invest in your Gold IRA. Storing your IRA metals at home can put the IRA account holder at significant risk
of IRS penalties.
Midas Gold Group generally does not recommend using this structure as it has never been approved or recognized by the IRS.
