Until 1997, American taxpayers were limited to cash-based investment vehicles for their IRAs. These investments included stocks, bonds, money market funds and mutual funds, but the law made no provisions for the purchase and management of physical assets.
In 1997, Congress changed the laws regarding the types of retirement investments that could receive tax-deferred treatments. The changes included an option to buy and sell physical assets like gold, silver and precious metals in special custodial IRA accounts.
Investors who have a custodial account can create and manage a gold backed IRA. Gold IRA investments allow investors to harness the benefits of gold investments for retirement purposes. Gold IRAs hold physical gold assets like gold coins and afford investors the privacy and stability that gold assets bring to an investment portfolio.
The IRS limits the type of gold investments that can be included in gold IRA accounts. Allowable investments include 1 oz, ½ oz, ¼ oz, and 1/10 ounce U.S. gold coins.
Investors can transfer assets from an existing IRA account that holds cash-based assets to a custodial IRA. To open a custodial IRA, you must work with a specially designated investment firm, which acts as the custodian. You direct the actions of the custodian, so you are responsible for making the buying and selling decisions regarding the physical assets in your IRA.
Once your custodial IRA account is open, you can transfer cash assets to the account and start to buy gold for your IRA. The custodian will receive and store your gold assets in an approved precious metals depository, and file the required accounting for your custodial IRA with the IRS each reporting period.
Certain silver coins and bullion are acceptable IRA investments, provided that you have a custodial account. A Silver IRA is an excellent retirement investment vehicle. Because the spot price of silver is much lower than that of gold, it is much easier for investors to start their precious metals IRA by buying silver assets.
Investors may include 1 oz silver coins minted by the Treasury Department. A limited number of silver coins minted by the Royal Canadian Mint are also approved for Silver IRA investment purposes. Your custodial IRA can also invest in certain platinum and palladium coins, and platinum bullion.
The rollover process for your Silver IRA is similar to that for a Gold IRA. You must open a custodial IRA account with an approved custodian. Once the account is open, you may transfer IRA assets from traditional IRA accounts into your Silver IRA and begin buying silver and selling IRA assets. Silver IRA assets are held in an IRS-approved precious metals depository, and the IRA custodian will file any required reports on your behalf.