If you are reading this article, it is probable that you have invested, or are thinking of investing in gold. Your reason for investing in gold might differ, but at the end of the day, you probably believe that your finances are safer in the form of a gold backed IRA.
What is an IRA?
A good starting point is probably to discuss what exactly an IRA is. It stands for an Investment Retirement Account, where people can choose to deposit a fraction of their income into this account each month. This money is tax-deductible, and you won’t have to pay any taxes on it until it is drawn. However, you cannot access this money until you are nearly 60 years old!
It used to be the case that precious metals were not allowed to be saved in an IRA, but since 1997 the americans have had that option.
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What are the rules for gold coin IRAs?
It is no surprise that the IRS has strict rules when it comes to a gold coin IRA, but if you deal with an official IRA custodian and seek expert advice, you should have no problems with your gold investment.
There are some general rules when it comes to gold IRAs, such as those which state you must open the account with an approved administrator. You also cannot buy gold directly with your funds, but you must go through your IRA account administrator.
You must also realise that you can never handle your own gold, not even for one day. Your official administrator will hand them over to a 3rd party approved by the IRS. If these rules are broken, you will be liable for several penalties.
In addition to the age limits for the gold coin IRA (not being allowed to access the funds until 59 years old), there are contribution limits too. Up to $5000 a year can be contributed to your gold coin IRA, although this limit is increased to $6000 when you reach 50 years old.
The penalties for breaking the rules are rather hefty, but the IRS will be fair in certain situations. For example, if the gold coin IRA account holder becomes disabled or unemployed, there is no penalty for early withdrawal so that they can pay for medical bills or insurance. They also allow for tuition fees to be paid for and even a certain amount to go towards buying your first home.
Specific gold coin IRA rules:
There are also rules which are specific to the gold coins themselves. Each gold coin must be a certain size and weight:
– $5 gold coin: 16.5mm in diameter, 3.3393g, 0.1 troy oz of fine gold
– $10 gold coin: 22mm in diameter, 8.483g, 0.25 troy oz of fine gold
– $25 gold coin: 27mm in diameter, 16.966g, 0.5 troy oz of fine gold
– $50 gold coin: 32.7mm in diameter, 33.931g, 1 troy oz of fine gold
All coins must be minted, have inscriptions of the year issued, plus have the words “Liberty”, “In God We Trust”, “United States of America” and “E Pluribus Unum”.
They must also have an eagle design on one side and a Liberty sign on the other.
Therefore, there are not many gold coins that are this specific and meet the gold coin IRA rules. Two such coins that are popular for those investing in gold coin IRAs are the Gold American Eagle and the Gold American Buffalo.