Can I Take Physical Possession Of Gold In My IRA? Is it allowed by the IRS, or will doing this lead to me being heavily penalized? In today’s article, I will take you through this interesting topic with the hope that I enlighten you on the rules surrounding the ownership of gold meant to be held through an IRA. Read on till the very end to find out more.
Investing in gold through a gold IRA
The term “gold IRA” refers to a self-directed individual retirement account that is primarily used to invest in gold and other IRA-approved precious metals. Individuals who open Gold IRAs often do so to diversify their retirement investment portfolios. The one thing to note is that a self-directed IRA is not limited to the purchase of gold or other precious metals. Investors can add a wide variety of assets to their account, including the following:
- Real estate
- Hard-money loans
- Promissory notes etc.
How do I hold Gold in my IRA?
According to the Internal Revenue Code Section 408(m), investors are required to invest in a specified range of gold coins and bullion, that they can only purchase through a self-directed IRA. Section 408(m) also stipulates that the precious metals you purchase for the purposes of investment in an IRA must be held by an approved trustee.
The word bullion refers to pieces of metal, whether coins or bars, that are plated with precious metals. The one unique attribute of bullion is that its value comes from its mass and purity, not just its face value ( which is the case with paper money). You can purchase bullion in the form of bars or coins.
Internal Revenue Service Code 408(a) and 408(n) define a trustee as a bank ( trustee or insured credit union) or person who meets the set requirements to administer a trust. This means that not all trustees are qualified to serve gold IRA owners, hence you are required to confirm that your trustee can support any type of investment you can make today, as well as in the future.
For you to hold Gold in an IRA, you have to work hand in hand with a qualified trustee, who is required to hold the investment on your behalf. Since your gold IRA is a type of self-directed IRA, you have the authority to make investment decisions as you please, provided that they are not unlawful. Self-directed IRAs offer more control than regular IRAs and also allow them to invest in a wider variety of assets, as already highlighted.
How to Hold Gold According To The Law
According to IRC Section 408(m), you should hold all your precious metals ( gold, silver, platinum, or palladium) through a U.S. trustee. This was reiterated and reaffirmed in December 2021, in McNutty v. Commissioner, making it clear that holding gold for investment purposes without the involvement of a custodian is illegal.
To guarantee the safety of your gold, it is required that you hold it in an IRS-approved depository. There are, however, many investors who have been trying to establish whether they can hold all their precious metals in safe deposit boxes in any of the banks in the U.S., with the notion that the Self-Directed IRA LLC should support such a move. As much as this is a sound approach to investing in precious metals through a self-directed IRA, no IRS guidance has been offered so far, hence no one should attempt to do this without sufficient information from the relevant authorities.
It is therefore advisable to only hold IRA-owned gold in an approved depository. It is, however, very clear, that you should not hold any IRA-owned personally, whether in your own safe or a regular depository.
Quite frankly, the rules surrounding the ownership of gold in an IRA are quite complicated, which is why it is essential to work with an IRA expert right from the get-go. They can help you with the account setup process, and provide you with sufficient resources on how to purchase and sell precious metals. Choosing the right expert to partner with will not only save you a lot of time but will also enable you to get started quite smoothly.
When can I take physical possession of my IRA-owned gold?
There is only one circumstance in which you can take physical possession of the gold in your IRA – when you are ready to take your distributions. At this point, you can decide to either cash out your precious metals or take the gold.
If you’re working with a reliable IRA service provider, then it is highly likely that they have a simple process through which you can liquidate your gold IRA when you are ready. With some, it is as simple as:
- Contact your portfolio manager.
- Signing the required documents
- Waiting to receive the gold at your preferred location within several days ( the time may vary from one company to the next one).
Frequently Asked Questions on “Can I Take Physical Possession of Gold in My IRA?”
1. Can I buy physical gold with my IRA?
Yes. You can do this through a simple transaction, though there’s a lot about how investing in gold for retirement works. Upon deciding that you want to include gold in your retirement investment portfolio, you need to find out how much of your savings will go into purchasing gold. The amount of money you decide to invest depends on your personal philosophies and preferences about investment, though most experts advise that you only invest 5% to 15% of your retirement savings in gold. After that, you can roll over your current IRA into gold.
2. Can I see the gold that I invest through my gold IRA?
Yes. Most of the IRS-approved gold depositories allow for investors to make arranged visits to the storage facilities to see their investments. You may, however, need to confirm this as you create your gold IRA, to avoid a scenario in which you cannot access and view your assets when you need to do so.
3. How can I turn my gold IRA into cash instead of taking physical possession of the gold?
If at the time you are ready to receive your distributions you decide that you want to receive cash instead of gold coins or bars, you can request the IRA service provider to send you the money. You will typically be required to:
- Confirm the request to cash out your gold
- Accept the gold IRA company’s buy-back offer.
- Receive the payment.
Opening your gold IRA with a company that’s customer-centric maximizes your chances of getting the highest payout possible.
4. Can I sell my gold after taking possession of it?
Yes, you can. There are many options available for those who would like to liquidate their precious metals. You can:
- Contact the gold IRA company that held your investment until the maturity date to see if they can buy back the gold. It is, however, advisable that you take advantage of this option before requesting that they deliver the gold to your doorstep at the time you are starting to take distributions.
- Reach out to any of the many precious metal dealers to see if they are buying the gold coins and bars you want to cash out.
You might also want to read some of our other posts on precious metals IRA, 401(k), and retirement investments in general, plus more, and other related subjects:
Also read: What is a 401(k) to gold IRA rollover?
That will be all for this post in which we have answered the question, “Can I take physical possession of gold in my IRA?”. I hope you found it informative, and that you now know how to go about the ownership of gold in your IRA. If you still have some unanswered questions pertaining to today’s topic, do let me know so that I can present you with more resources. Do not forget to check out our recommended reviews as well.
I wish you well,
Eric, Investor and Team Member at Gold Retired!