One of the ways individuals have protected their wealth against inflation over the years is by taking possession of physical gold (aka aurum). It is also a great way to protect the privacy of investors. Moreover, it is not volatile compared to other types of assets.
Due to these reasons, many have considered taking possession of this precious metal in an IRA (Individual Retirement Account). If you are asking if you can take physical possession of your gold in an IRA, the answer to that question is not a simple yes or no. Instead, we will need to go into a detailed explanation to ensure you get full understanding and that’s what we will do in this article.
Can You Take Physical Possession of Your Gold in an IRA?
As we said, the answer to this question is not straightforward. However, we will take our time to answer it. First of all, you need to understand what an IRA is.
What is an IRA?
An individual retirement account is a savings account that allows you to save over a long period. This account is designed for employed workers to save for retirement while they get to enjoy some tax benefits in the process. Employees whose workplaces don’t have retirement accounts are usually the target group for this type of savings account.
These accounts can be opened via personal brokers, online brokerage, investment companies, and even banks. With this account, you can invest in financial products such as bonds, stocks, mutual funds, and ETFs (exchange-traded funds). If you noticed, commodities that include precious metals such as aurum aren’t listed as investment options in an IRA.
Therefore, to answer the title question, you can’t take physical possession of your gold if you are operating a traditional IRA. Such an account is not designed to receive such investments. However, if you want to invest in aurum, you will need a special kind of IRA.
With a self-directed (also known as gold) IRA, you can invest in precious metals such as aurum. Then, does this mean this type of individual retirement account allows you to take physical possession of your gold? The answer is still not straightforward, you will need to understand how self-directed individual retirement accounts work to get the answer.
How a Gold (Self-Directed) IRA Works
With this financial option, you can invest in precious metals such as gold, silver, palladium, and platinum. Although you can store or take possession of these physical commodities in coins or bullion bars, you are not allowed to have them in your possession. Sounds confusing right? We did tell you that the answer is not straightforward but let’s break it down further…
To set up this account, you will need to hire the services of a gold IRA company. The company will be responsible for setting up your gold IRA. When hiring, ensure you select a company that is approved by the government.
Although you can deal with the paperwork yourself, you should hire a company to do the setup. This way you get to save time and energy. Furthermore, these professionals know the industry better than you do and are well-informed of the IRS requirements regarding this type of investment.
Once the account is set up, the company will also help you purchase the physical precious metal (in this case, aurum). At this point, if you asked, can you take physical possession of your aurum in an IRA, the answer would be yes and no. The answer is yes because the physical gold belongs to you and is in your possession, which is your account. However, the answer is also no because you are not allowed to hold the gold yourself.
After the purchase, the precious metal is moved to a depository where it is stored. It belongs to you; it is in your possession, but you are not allowed to hold it or store it yourself. Therefore, holding physical gold by yourself when you open a precious metal IRA is not possible.
How to Take Physical Possession of Your Gold
If you are desperate to hold physical aurum from your IRA, the only option that permits this is to make a withdrawal which is known as a distribution. When you opt for this, physical gold will be sent to you instead of cash. However, this isn’t without consequences.
Since it is an individual retirement account, the expectation is that you can only make withdrawals when you’ve retired. Therefore, you are permitted to take a distribution without penalty if you are over 59 ½ years old. Not only do you not get penalized, but you also don’t have to pay taxes on the asset as well. Then when you are above 72 years, the amount you can withdraw annually is limited to what is known as RMDs (required minimum distributions)
On the other hand, if you are below 59 ½ years, then you will have to pay a penalty fee of 10%. Furthermore, you will need to pay taxes on the assets. Once you made all the necessary payments, you will be given the physical aurum to do whatever you want with it.
If you don’t want to go through all this stress, there’s an easy way to take possession of aurum but it won’t be from your IRA. Simply purchase the item directly. You won’t get any tax benefits; however, you can still enjoy the benefits that aurum offers as a means of wealth preservation.
Answering the question “Can you take physical possession of your gold in an IRA?” is not a simple yes or no. Although you cannot hold aurum physically with an individual retirement account in the most literal sense of the word, you still own it as a possession. In this article, we have taken our time to answer this question in detail to ensure you aren’t left with further questions. We also provided alternative methods to hold physical aurum if you so desperately need to do so.