Once, people who were saving for retirement could fund their Individual Retirement Accounts only with stocks, bonds or cash. Then, federal lawmakers later decided to expand those investment options to include gold and silver coins and bars. Investors who wish to diversify the assets they hold in an IRA now have the opportunity to add silver coins to their retirement portfolio.
Silver Coins Approved
Congress voted in 1997 to approve silver coins for IRA investment. The law related to silver coin investments for IRAs specifically mentions American Silver Eagles as being approved for IRAs. Silver Eagles are .999 fine silver. Other silver coins must be at least .999 fine to be eligible for IRAs. Canadian Silver Maple Leaf coins are .9999 fine, which also makes them eligible for inclusion in IRAs.
Same Rules Apply
The IRS sees silver coins in the same light as all other assets in an IRA. Silver coins cannot be withdrawn from the account without penalty until the owner of the account turns 59 1/2 years old. At age 70 1/2, federal laws require the owner to start making mandatory withdrawals from the account. You'll be required to start cashing in some of those silver coins -- and that's when Uncle Sam will want his share of the proceeds.
When you consider that stocks and bonds can be bought instantly with the click of a computer mouse, adding silver coins to an IRA will require far more labor and effort. You'll have to identify a self-directed IRA custodian who handles precious metals accounts, open an account and fund it with cash. You'll then need to contact a coin dealer and lock in a price for the silver coins you wish to buy. The IRA custodian will then issue a purchase order to the coin dealer, and the dealer ships the silver coins to a depository. Once the depository notifies the IRA custodian that the silver coins have arrived, the custodian documents it into the IRA account and pays the coin dealer.
You buy the coins and you own the coin, but you never actually hold the coins while they are in the IRA. You can sell the metals while they are in the IRA and take a cash distribution from the account, or you can withdraw the silver coins as a distribution from the IRA. But IRS rules prohibit IRA owners from taking possession of precious metals while they are part of the owner's retirement portfolio.
Tim Grant has been a journalist since 1989 and has worked for several daily newspapers, including the Charleston "Post & Courier," the "Savannah News-Press," the "Spartanburg Herald-Journal," the "St. Petersburg Times" and the "Pittsburgh Post-Gazette." He has covered a variety of subjects and beats, including crime, government, education, religion and business. He graduated from The Citadel with a Bachelor of Science in business administration.