Market anxiety is one of the common reasons people might have questions about gold backed IRAs. Because gold can act as a safety net guarding against market volatility, it becomes a key question point for their retirement plans. A recent article in Nasdaq highlight the struggles some advisors have in dealing with common client questions.
This should come as no surprise. Clients commonly see gold as a safe-haven of sorts whenever there is market volatility. As an advisor, you should know the basic rules so you can be ready for those questions. For example, contrary to the implications of TV ads, IRA gold cannot be held at home or in a personal safe. It must be purchased by the IRA.
In general, IRAs are pretty flexible when it comes to the types of investments they can own. Other than S-corporation stock, life insurance and collectibles, an IRA may own anything. While the term “collectibles” conjures up images of classic cars and comic books, it also generally includes coins and metals, including gold.
Although it’s often wise to place your portfolio in the hands of a trusted advisor, it’s also a good idea to have at least a modicum of understanding about the various Knowing at least a little about the the standard rules and regulations can save you headaches down the road:
If a client wants to roll over their gold, they must roll in-kind assets over to another IRA. If they sell the gold for cash and try to roll that cash over, it would be a violation of the “same property” rollover rule. If clients do it anyway, the initial distribution would be taxable and could lead to additional excess contribution penalties.
Knowing the rules can save clients — and their advisors — time, money and aggravation. Just consider the IRS private letter ruling (PLR) 201535026 from August. This ruling aptly illustrates the pitfalls of misunderstanding IRS regulations around IRA gold.
Please see our very comprehensive guide to gold ira investing and get a head start on the ‘game’ of gold strategy.
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