The IRA Rules That You Must Be Aware Of With Gold In IRA
It is a very good idea to go for a gold backed IRA but there are a number of gold IRA rules that you need to follow. The IRS (Internal Revenue Service) will allow you to invest in a large number of options which certainly includes precious metals. You need to find an IRA custodian that offers gold investments and can include other precious metals. A gold IRA is heavily regulated by the IRS. It is your responsibility to ensure that you follow the guidelines and avoid any prohibited transactions in your IRA.
You Must Use The Right Gold For Your IRA
You cannot use collectable coins and other metals as part of your gold IRA investing. The exception to this is the investment into U.S, minted coins. The reason for this is that other collectable coins have a subjective value whereas U.S. minted coins have a more uniform value. Only certain coins are permissible and these are one ounce, half ounce, quarter ounce or one tenth ounce of gold. It is also permissible to invest in one ounce silver coins that are U.S. minted by the Treasury. Other metals such as platinum and palladium are accepted in some circumstances.
Appoint An Authorized Gold IRA Custodian
You must appoint an IRA custodian that accepts precious metal investments to look after your gold IRA. It is not a regulation of the IRS that custodians offer several investment options so you must find a suitable custodian to maintain your account. This custodian has to be responsible for storing your gold investments at a third party repository. It is not permissible for you to hold the coins yourself as this will mean that your investments are fully taxable.
IRA Contribution Rules
IRA contributions must be made in cash. This can be a contribution made annually of up to $5,000. Or by means of a rollover from another qualified plan. After making the contribution to the IRA, you then instruct the custodians as to which coins to purchase for you. It is possible to maintain both stocks and precious metals in an IRA if the custodian allows this.
A law was passed in 2002 to allow investors over 50 to invest an additional $500 per year. These are seen as “catch up” contributions by the IRS. In 2006 this was raised to an additional $1,000 per year and since 2009 this extra contribution has become an indexed by inflation amount.
Things To Consider With IRA Rollovers
After you decide to rollover or transfer there is no need to immediately contact the IRS. As the rollover is from an existing IRA account to a new one, without you receiving any of the funds, the IRS doesn’t have to be informed that a transfer has occurred. There will be no tax implications for you. But bear in mind that once you make the decision to rollover, the funds will be transferred to you and if you do not transfer these funds to your new IRA account then the IRS wi consider this as a withdrawal of funds. You must make the transfer within 60 days otherwise you will be liable for tax on received income. You can conduct a rollover once a year.
IRS Penalties And IRA Withdrawal Rules
If you withdraw assets from your IRA before reaching the age of 59 years and 6 months then you will be penalized with a10% extra tax on the amount withdrawn. In addition to this you will be taxed on the amount that you withdraw as this wil be considered additional income. If you contribute more than the permissible amount you will be liable to pay an additional 6% tax.
The Above Gold IRA Rules Do Not Apply In These Circumstances:
- You have become unemployed and cannot cover the cost of insurance
- A beneficiary of your IRA starts to withdraw funds after you as the original owner dies
- You are hospitalized and you do not have the money to cover the costs
- You become disabled
- You or a member of your immediate family requires the money for qualified education. This covers tuition, books and other materials and accommodation costs in order to receive the education.
- You are permitted to use up to $10,000 for the purpose of buying your first home.
These rules for gold IRA investment are not exhaustive and it is always best to seek the advice of a qualified IRA custodian. You need to be aware of Roth IRA rules if you want to go down that route. Please remember that the rules are changing all of the time so it is a good idea to be well informed about this.