Types of Self Directed Retirement Accounts
The IRC, or ‘internal revenue code’, also referred to as the USC (U.S. Code), specifically Title 26 under sections 401 through 409A, spells out the definition of different kinds of retirement plans. Usually referred as:
and these plans include –
and many other commonly named plans such as these. All of these plans are forms of either IRA accounts or Individual IRA accounts. Pension plans or their equivalent are not included in the discussion. It should be noted that when one is attempting to invest through one of these types of retirement accounts, the rules of governance will vary slightly due to the fact they are governed by both the IRC and the ERISA (Employee Retirement Income Security Act), specifically USC Title 29 – Chapter 18.
Rules Governing Gold Bullion IRA’s
As stated in the rules, for metals like gold, silver, palladium, or platinum to be permitted, they need to be made of a specific fineness that is equal to or exceeds the contract market requirements for such metals, to satisfy regulated futures contracts, like –
(1) Gold Futures – Must be 0.995 fineness (required by COMEX Rulebook Chap. 113)
(2). Silver Futures – Must be 0.999 fineness (required by COMEX Rulebook Chap. 112).
(3). Platinum Futures – Must be 99.95% pure (required by COMEX Rulebook Chap. 105).
(4). Palladium Futures – Must be 99.95% pure (required by COMEX Rulebook Chap. 106).
We currently have only one that has been approved by the U.S. Commodity Futures Trading Commission, which is COMEX (the Commodity Exchange, Inc.) as the designated Contracts Markets regarding metals future contract market. This limits us to the specifications as laid out by COMEX.
The information above lays out the quality and fineness requirements for precious metals, however, there’s no definition within the IRC in regards to what constitutes ‘bullion’. We can ascertain some information from prior case law, which leaves us with the most often accepted term defined like this –
The term ‘gold & silver intended to be coined’ is attributed to quantities of these metals that are ready to be minted but are as of now lying in plates, bars, lumps, or some other form. It can also apply to ornaments or dishes made of gold or silver, or even foreign coins not currently money, when the intention is to be descriptive of a metal’s adaptability for being coined, and not meant for describing any other purposes it may be used for.
Storing Precious Metals in an IRA
The Storage Vault – This is the second part of the requirements for investment metals –
Bullion is clearly specified within IRC Section 408(m)(3)(B) and it says:
‘The investment must be in physical possession of the retirement account trustee’.
When it comes to coins, the definition is not so clear. Under IRC Section 4975(c)(1)(C) the term ‘prohibited transaction’ is defined as meaning any direct or indirect furnishing of services, goods, or facilities between any plan and any disqualified person. This precludes use of the account owner’s facilities, or any facilities under direct control of an account owner who has been designated as a disqualified person under IRC Section 4975(e)(2). The account owner is deemed to be a fiduciary under IRC Section 4975(e)(2)(A), and this applies to any person exercising any discretionary authority, or having any control over the management of such a plan, or who exercises any authority or control in respect to the management or the disposition of its assets.
Physical possession by the trustee of the IRA does not automatically mean that trustee gets to decide where assets get deposited, how they are stored, or when they can be moved in order to safe-guard the investment. The account owner is the one who owns it and therefore makes the decisions as to how to appropriately direct that trustee concerning the plan.
There are trustees who may offer ‘in-house’ sage-guarding facilities in the form of a value-added service for their clients. Others might work within the framework of depository services.
Whatever method is used, it needs to be noted that trustees are the only ones who can access the metals as well as control sales and purchases, even though it is all done under the direction of the owner of the account or any representative they may have authorized.
This is an overview of the Gold IRA rules to give you some insight into how things work in regard to investing in your IRA with precious metals. We hope this has been helpful and steers you toward a consideration of investing in your own Gold IRA.
Disclosure and Disclaimer: The information included in this article is based on material currently available at the time of writing this article. Conclusions in the articles are based on our own opinion. This article is purely for education and educational discussion purposes. While readers of the article may make investments based on the information provided in this article, the readers should be fully aware that there is no intent by us or the company GoldIRAKnights.com to provide investment advice or recommendations solely based on this article, or any intent by the us or GoldIRAKnights.com to solicit or promote any investment products mentioned in this article. If any reader intends to make any investment, whether based on this article or otherwise, we recommend that they work with knowledgeable professionals who can guide them through specific details pertaining to their situations, after they have disclosed the pertinent facts to such professionals.