Here are the 5 important IRS Rules you should know before you open a precious metals IRA:

1. Only Certain Coins and Metals are Allowed

When you plan for precious metals investing, you should remember that all precious metals qualify for inclusion in an IRA. The IRS has strict instructions on what you can invest in. The metals eligible must meet the least purity standards, like those mentioned below:

·        Platinum and Palladium: 99.95% purity or .9995 standard

·        Silver: 99.9% purity or .999 standard

·        Gold: 99.5% purity or .995 standard

The coins approved include Canadian Maple Leaf, American Silver Eagle, American Gold Eagle, etc. Numismatic or collectible coins are not permitted, even if they meet purity needs.

2. You Should Use an Approved Custodian

You cannot hold precious metals personally in your IRA. Rather, the IRS requires that your account be administered by an approved custodian, like an IRS-certified trusted company or a bank. This custodian will be responsible for taking care of the account setup, record maintenance, and buying metals on your behalf. Also, this professional will be responsible for ensuring IRS compliance.

When you try to self-store metals, even in a safety box in your home, it can result in your IRA being considered distributed. It may trigger penalties and/or taxes.

3. Your Metals Should Be Stored in an IRS-approved Depository

All physical metals that you buy for an IRA should be stored only in a licensed depository. These storage facilities are equipped to secure and hold precious metals as per IRS guidelines. A few popular IRS-approved depositories include IDS of Texas, Delaware Depository, and Brink. When it comes to storage, two types exist:

·        Commingled storage, where your metals are stored with others of the same type.

·        Segregated storage, where your metals are stored separately

Both of these storage types are allowed. Nevertheless, the preferred option for peace of mind is segregated storage.

4. The Account Can Be Funded Through Transfer or Rollover

To fund your precious metals IRA, the IRS permits:

·        IRA to IRA Transfers from a Roth or traditional IRA

·        Direct rollovers from 401 (k) or other qualified retirement plans

If done correctly, these are tax-free events. Nevertheless, if you take a distribution yourself and do not deposit it into the IRA within 60 days, you might face taxes or early withdrawal penalties.

5. Required Minimum Distributions Still Apply

Similar to a traditional IRA, you should begin taking the required minimum distribution RMDs from your precious metals IRA. You should do this once you reach 73 years of age or 75, based on the IRS guidelines at that time. Let us consider that you do not have sufficient cash in your IRA to meet the RMD amount. In this case, you will have to sell some metals. Otherwise, you should take an in-kind distribution and pay taxes that apply.