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Contributing to an IRA with precious metals can be a wise choice in uncertain economic times. Fortunately, the IRS provides rules permitting contributions of some gold coins to an IRA.
Normally the IRS prohibits contributing to an IRA with collectibles, including many precious metals. Art objects, stamps, antiques, collectible alcoholic beverages and most coin collections are prohibited means of contribution. The IRS will consider the contribution of these items as a distribution in the year it is placed in the IRA. As such, the ten percent additional tax may be assessed to the IRA owner.
Gold Coins Permitted
26 U.S.C. section 408 (m) provides an exception to this rule for certain gold and silver bullion coins. In general, one ounce, one-half, one-quarter, or one-tenth gold coins minted by the U.S. Treasury, or one-ounce silver coins minted by the Treasury are permitted for IRA contributions. Gold coins must have a fineness quality of .9999 percent and their value must be based on the purity of the gold, rather than the rarity of the coin.
Exceptions to the purity requirement are the proof and non-proof American Eagle Coins and non-proof American Gold Buffalo. Non U.S. minted coins meeting fineness requirements are:
- Canadian Maple Leaf Coins;
- Australian Nugget Coins;
- Austrian Philharmonic Coins;
- Mexican Libertad Silver Coins;
- Australian Kangaroo Coins;
- Isle of Man Platinum Coins.
Many foreign coins are not permitted because they do not meet the fineness requirements set forth by the IRS. Anyone considering contributing to a gold IRA should ensure the coin meets IRS requirements.
Besides coins, gold, silver, platinum and palladium bullion is permitted as a contribution provided they meet fineness requirements. By statute, the fineness must be equal to or greater than the minimum for a precious metals futures contract under the Commodities Exchange Act (CEA). Bullion fabrication must have been performed by a government mint or NYMEX refiner.
The following are minimum fineness under the CEA.
- Gold .995 percent;
- Palladium .9995 percent;
- Silver .9995 percent;
- Platinum .9995 percent.
A traditional or Roth IRA is a great tax deferment investment tool. Gold and other precious metals, when added to an IRA portfolio, is a fine method of diversifying an account.
To learn more, check out our IRA-approved precious metals page. We have covered all the gold, silver, platinum and palladium bullion coins and bars that are allowed to be held in an IRA.