Since its inception in 1974, the Individual Retirement Account (IRA) has changed considerably. The basic idea of an IRA has remained the same. Employees can opt to dedicate a portion of their earnings to a tax-shielded account. By working with a certified custodian, they select stocks, bonds, and other investments that appreciate in value over time. Once the account holder reaches a minimum age and is ready to retire, they’re then able to withdraw their funds without paying taxes.
But the United States economy has evolved since the 1970s. Beginning in the 1990s, a growing number of investors wanted a wider variety of investments in their retirement accounts. Finally, the Taxpayer Relief Act of 1997 allowed citizens to add precious metals to their retirement portfolios.
The decades that followed were characterized by a loosening of regulations. Initially, precious metals IRA contributions were restricted to specific U.S. Mint gold coins. The Internal Revenue Service (IRS) started allowing individuals to add gold, silver, palladium, and platinum bullion products to their retirement accounts.
Where does this leave us now? In 2023, investors are able to add precious metals to their retirement accounts – but there are restrictions.
First, precious metal contributions must meet minimum purity requirements. Gold products must be at least 99.5% pure. Silver bullion rounds, bars, and coins must meet a purity standard of 99.99%. For both palladium and platinum, the minimum purity is 99.95%. Additionally, even precious metal products that meet these purity standards must come from a certified mint.
Consumers are also restricted in the total value of the precious metals they contribute to their IRAs each year. For the tax year 2023, the IRS has set this limit to $6,500, which is a $1,000 increase from 2022. For investors over the age of fifty, their maximum annual precious metals IRA contribution increases to a total of $7,500.
While anyone can open a precious metals IRA, there are two important hoops that investors need to jump through before they’re able to add gold, silver, and platinum to their retirement accounts.
Precious metals IRAs must be self-directed. Opening a self-directed IRA means that investors have more control over which products they add to their portfolio. In the traditional IRA model, investors work with licensed custodians, who help them decide on stocks and bonds to help them build a viable retirement plan. A traditional IRA cannot accept precious metal contributions, which means that investors who want to add gold coins to their portfolios will need a self-directed Individual Retirement Account.
When consumers open a precious metals IRA, they’re also not allowed to store their precious metals on their own. Like a traditional IRA, contributions to a precious metals retirement account are safeguarded by a financial expert called a custodian. For the consumer, a custodian is someone who helps execute their investment objectives and keep their products safe and secure. Before a consumer can open a precious metals IRA, they’ll need to designate a certified custodian to purchase and secure physical bullion assets.
Modern expansions of the IRA system to accommodate precious metal contributions have been a major victory for gold, silver, and platinum investors all over the United States. Working directly with a reputable bullion dealer can help collectors better prepare for their retirement using the coins, bars, and rounds they love.
