There are two ways to invest in gold using an IRA. One option is to set up a self-directed gold IRA, which allows you to buy physical gold and silver with retirement funds. These funds buy up a basket of gold-related investments, such as stocks in various gold mining companies. Examples include American Gold Eagle coins, Canadian Maple Leaf gold coins, American Silver Eagle coins, American Platinum Eagle coins, and gold, silver, platinum and palladium bars (bullion) that meet applicable purity standards.
According to the latest PLR, the rules that prohibit direct IRA investments in gold do not apply if the gold is held by an independent trustee. The annual return on gold coins after tax is the lowest and is around one percentage point below that of the gold investment fund, which is subject to LTCG treatment. This increased demand for gold can trigger a chain reaction that increases the price of gold even further. Once a traditional IRA owner reaches 72 years of age, the annual IRA minimum distributions (RMDs) must also be completed.
These investments are available in a normal brokerage IRA, which means you don’t have to go through the work and additional costs of setting up a self-directed gold IRA. Gold has attracted investors for centuries because of its rarity and beauty, which explains why almost half of the world’s demand for gold comes from the jewelry industry (World Gold Council, Gold Investor, Vol. Gold IRAs follow the same general rules as traditional IRAs when it comes to tax benefits. You can choose between a traditional IRA or Roth IRA contribution limit and withdrawals. The restriction should restrict the hoarding of gold, which, according to the monetary gold standard, inhibits economic growth. It lasted for more than 40 years before it was repealed in 1975. Once you’ve opened a self-directed gold IRA, you can transfer cash to the account to fund your purchase of physical gold.
However, the IRS has introduced additional tax filing and record keeping requirements for gold IRAs due to the more complicated assets they own. The results for Emma and Lucas shown in Figure 3 suggest that after tax returns on gold investments in a traditional IRA dramatically exceed those of gold investments in a brokerage account or a Roth IRA. A gold ETN does not own physical gold, but gives a return at maturity that is equivalent to a gold investment. Gold ETFs give you exposure to gold and its benefits without having to worry about the logistics associated with physical gold.
As with all IRA investments, gains from gold sold within an IRA are not taxed until cash is distributed to the taxpayer, and distributions are taxed at the taxpayer’s marginal tax rate.
