Legal Blog

The Weekly Scenario: Can my IRA own gold bullion?

Question: Can my IRA own gold bullion?

Answer: Yes, IRAs are generally pretty flexible when it comes to investments they can hold. IRAs can own virtually anything other than life insurance, S Corp stock and collectibles. By collectibles, this means coins and metals (including gold), but the tax code provides for an exception for Treasury minted U.S. gold coins (in a number of varieties) and gold bullion (995 parts per thousand or greater to be precise). But it is very essential to note that IRA-owned gold must actually be held by an IRA. People wrongly take this to mean that IRA funds are used to purchase gold that can be kept at home, safe deposit or off site undisclosed location. In other words physical gold (like the proverbial James Bond in Goldfinger gold bars or other gold coins) must be held by a qualifed trustee or custodian. Only certain custodians will hold physical gold and my hunch is they charge for these custodial services. Comment: Getting this wrong often means that the IRS deems the gold to be a collectible with the penalty for holding a prohibted investment being that funds use to make the purchase are deemed to be distributed in the year of the investment and therefore fully taxable. If the IRA owners is under 59 ½, they will be subject to a 10% penalty. One option for a client who wishes to own gold within an IRA (without the hassle sometimes associated with gold ownership) are investments such as gold exchange traded funds. As always, if you have any questions or would like to learn more, please let me know.

ABOUT STEVE SHANE

Steve Shane Head Shot for webSteve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.

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