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Did you know that investing in gold was illegal for 53 years? It was illegal from 1933 until 1986 when the U.S. Mint began issue producing gold coins. At this point, an IRA was only allowed to constitute of gold and silver Eagle coins. The Tax Payer Relief Act in 1997 expanded the IRA to include gold, silver, palladium and platinum in bullion or coins. Currently, all types of IRAs (Traditional, Roth, SEP, SIMPLE and self-directed) allow the inclusion of these metals with a requirement that all bullion and coins be .995 fine at a minimum. Exempt from this rule is the American Eagle which is minted in an alloy of 91.6% gold, 3.0% silver and 5.3% copper. Other coins that are allowed are the American Buffalo, which according to the U.S. Mint, is made of 24-karat .9999 fine gold, Canadian Gold Maple Leaf, Australian Gold Nugget and Austrian Philharmonic coins. The South African Kruggerand is not allowed in an IRA because it is only .9167% fine. Numismatics coins are not allowed in an IRA either. Although rules governing IRAs require a minimum of .995 fine or 99.5% pure, most gold bullion bars are 99.99% pure also known in the industry as "four 9s gold." If you have a large IRA, consider the bigger bullion bars like the 10-oz. bars and the kilo bars of 32.15 ounces as these carry smaller markups than the smaller bars. Is a gold IRA a smart thing for you? With a gold IRA, the same rules apply as with any other IRA. The maximum current yearly limit is $5,000 or if you're over 50, it's $6,000. Most companies have a $5,000 initial investment to open an account. You have two options when you withdraw the IRA. You can take cash which means the company will sell the gold at market value and then hand you the proceeds which will be taxed at your ordinary income tax rate. The other option is to take physical gold or an "in kind distribution" which will be assessed at the fair market value of gold that day. People take out an IRA with two objectives. First, to reduce taxes by taking a deduction with the yearly contribution of either $5,000 or $6,000. The second objective is to defer taxes on the income and gains that the IRA produces until after retirement. However, physical gold does not produce income. But if you feel that the economic outlook does not look good for bonds or dividend-paying stocks, then an IRA converted into gold might be a good idea. It could also be that you feel the fund your IRA is currently invested is being managed poorly and you want a way out. In any case, most experts advise that part of your diversified investment portfolio ought to include physical gold. Alexi Aronson is the creator of the newly-launched Web site http://IRARolloverToGold.com. He contributes blog posts on various financial investment methods and can be reached at info@IRARolloverToGold.com
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