How to Put Precious Metals in an IRA

People saving for their retirement may want to consider putting some of their retirement assets into gold, silver and other precious metals. Unlike the typical stocks, bonds, annuities and mutual funds that people put into their individual retirement accounts, precious metals can never become worthless. But they also don’t pay any interest. Investing IRA assets in precious metals requires planning.

Open a self-directed traditional or Roth IRA account with a trustee or custodian experienced in handling precious metal transactions. In a self-directed account the IRA owner decides what to invest in, rather than having the choice restricted to the IRA investment products offered by the bank, brokerage or mutual fund handling your IRA. Decide whether your precious-metal IRA will be a traditional IRA where contributions are tax-deductible but retirement distributions are taxed, or a Roth IRA where you get no tax deduction for contributions but retirement distributions are tax-free.

Deposit money with your IRA trustee or custodian in a cash account. A precious metal IRA is subject to the same Internal Revenue Service contribution rules as other IRAs. As of publication, you can contribute up to $5,000 per year collectively to all the IRAs you own, or $6,000 if you are over age 50. Review how much you already have contributed to IRAs during the year to know how much you can put into your precious metals IRA. For example, if you are under age 50 and had contributed $3,000 to another IRA during the year, you can put only $2,000 into your precious-metal IRA.

Tell the account custodian what precious metals to buy. Choose from the IRS-approved gold, silver, platinum and palladium legal tender bullion coins minted by the United States and certain foreign countries including Canada, China, Australia and Austria. You can also include precious metal bars issued by international banks and major mining companies. These highly liquid assets trade in the markets every day at prevailing bullion prices. Gold coins and bars must be at least .995 fine. Silver coins and bars must be at least .999 fine. Platinum and palladium coins and bars must be at least .9995 fine. The IRA custodian will draw from your cash account to make the purchase and will store your physical metals with a depository service company. The custodian will send you periodic statements listing your holdings.

Track precious metal market prices and take advantage of favorable price fluctuations to increase your account. When you want to sell metals, tell your IRA custodian what metals to sell. The IRA custodian will hold the sale proceeds in your cash account pending further instructions from you. There are no tax consequences so long as precious-metal purchase and sale transactions stay inside the IRA and nothing is paid to you. At retirement, tell the custodian whether you want your retirement distributions paid to you in physical metals at fair market value or in cash from sale of your metals.