Before we get into the details, though, let’s go through a short recap of gold and other precious metals, and their applicable regulations.
Precious metals are addressed in Section 408 of the US Tax Code. There you can find out exactly what kind of gold you may purchase for your self-directed IRA. From an IRS perspective, gold comes in two acceptable products: bullion and coins. Each of these possesses its own unique set of regulations.
Section 408(m)(3)(B) of the Tax Code lays down the guidelines for acceptable bullion. There it states that a retirement account may hold “any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market… requires…" Practically, this translates into two basic requirements: a fineness level of .9950% for the bullion, and it must come from a COMEX or NYMEX approved refiner.
Section 408(m)(3)(A) lays down the rules for coins. Here it’s actually pretty easy for the consumer. Most government manufactured gold coins are acceptable. Popular examples include American Eagles, Canadian Maple Leafs, and Australian Nuggets.
Now that we know what kind of gold the self-directed IRA may purchase, the only question that remains is where the gold may be held. The answer is that it depends.
If you have purchased bullion or most kinds of coins, then Section 408(m)(3)(B) states that it must be held “in the physical possession of a trustee.” Usually, that ends up being a bank or specialized third-party custodian. (There are some legal opinions which state that a safety deposit box located in a bank would also fill this requirement.)
There are gold coins, however, that have no such requirements. These are known as American Eagles. A retirement account can purchase American Eagles and the account holder can then take personal possession. We usually suggest storing them in a safety deposit box, but the choice is up to you.
We have found that gold dealers are often misinformed in this area and erroneously inform their clients that gold coins may not be personally held. This could either be due to the fact that most people, including precious metals dealers, are not well versed in the Internal Revenue Code. Or it could just be that the dealers would rather hold your gold themselves so that they can charge holding fees. Whatever the case may be, the law is clear. Gold bullion and many coins must be held by an approved custodian, while American Eagles may be held personally without restriction.