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Precious metals IRAs offer numerous advantages over traditional retirement accounts. You can use physical gold to hedge against inflation, protect your hard-earned savings from recession periods, and reap the tax-advantaged rewards once you retire. The only question is, should you fund your IRA with gold coins or bars?
Below, we explore the differences between owning gold coins versus gold bars in your IRA so you can make informed portfolio decisions. While this article offers educational information, you should consult your financial advisor for investment support.
What Are the Key Differences Between Gold Coins and Gold Bars as Investment Options for Your IRA?
Gold bullion comes in many forms. Fund your IRA with basic, high-purity gold bars or rarer, more collectible coins. The key differences between gold coins and bars include the following:
Liquidity and Accessibility
Gold coins weigh less than bars, which means they cost less. They offer higher liquidity than bars because they come at a lower price point. You can quickly buy, sell, and trade gold coins, though it may take some time to find a buyer interested in a bar worth thousands of dollars.
Storage and Shipping Considerations
Gold is a highly valuable asset, so you must secure it in a safe or vault. Storing and shipping smaller quantities, like gold coins, offers cheaper vaulting and delivery options. With any IRA, you’ll need to pay for IRS-approved vaulting that may increase in price based on the volume of your purchase.
While coins offer smaller storage requirements, they require much higher levels of upkeep to maintain their condition.
Pricing Entry Points
The market prices gold per ounce. Gold coins typically cost less than bars because they weigh significantly less. Gold bars usually weigh 400 troy ounces, while coins weigh one ounce.
Premiums
All gold bullion typically includes a premium, which is the price you must pay over the spot gold value. Gold coins typically have much higher premiums than gold bars because of the coin’s rarity, collectability, or other features. If you aren’t interested in collector’s items or investing in something rare, you may want to save money by opting for gold bars.
Performance
Unlike mutual funds or stocks, gold coins and bars offer low counterparty risks as they usually only fluctuate with the change in spot gold prices. Each form of bullion gains demand from unique sectors, though. For example, many invest in gold coins for their significant historical or cultural value, while central banks across the globe purchase gold bars in bulk as a political tactic.
Rarity
One of the primary advantages of investing in gold coins is their rarity. Many unique rounds come from limited mints, meaning they’re just one of a few left in circulation. Investing in a rare coin in good condition often means it will gain more value over time as its historical significance amplifies and the remaining similar coins in circulation dwindle.
Tax Advantages
Gold bars are typically subject to capital gains tax. Twelve U.S. states accept gold coins as legal tender, so you may not need to pay taxes on your coin investment since they can operate as currency.
These tax requirements change with IRAs, as retirement funds offer unique tax advantages. You can learn more about the exact taxes when you create your account.
Gold Coins or Bars: Which Are Best for Your IRA?
Owning gold coins versus gold bars in your IRA will depend on your financial goals, how much you wish to spend, and your comfort with taking risks. Explore some of the pros and cons of each below.
Advantages and Disadvantages of Owning Gold Coins in an IRA
Owning gold coins in your IRA allows you to enjoy the following benefits:
- Higher liquidity and accessibility
- Cheaper shipping fees
- Easier and more cost-effective storage or vaulting options
- Lower price-entry points
- Strong performance levels over time as the coin gains rarity
- Cultural and historical significance
- Potential tax advantages in areas where gold coins are legal tender
The primary disadvantage of choosing gold coins may be the high premium. If you or your custodian do not care for the coin properly, you won’t earn this money back when you sell.
Advantages and Disadvantages of Owning Gold Bars in an IRA
The advantages of owning gold bars in your IRA include the following:
- Easy purchase options for bulk buyers
- Cost-effective, low premiums
- High purity levels that only fluctuate with the price of gold
- Simple high-volume portfolio diversification
- More ounces of gold for a lower price
- Easy care requirements
- Simple storage with a compact, uniform size
Unfortunately, gold bars offer lower liquidity due to their higher costs, high entry price points, and more expensive storage requirements when purchased in bulk.
What Types of Gold Coins and Bars Can You Fund an IRA With?
The IRS may allow you to choose between gold bars and coins for your IRA, though you can’t just select any bullion in the world. To meet IRS requirements, you must purchase eligible bullion:
IRA-eligible Gold Coins
To be IRA-eligible, gold coins must have a purity of at least 99.5%. The coin should be in mint condition, encapsulated, and include a certificate of authority. The IRS excludes most collectible coins and requires that non-proof coins be in uncirculated condition.
Popular IRA-eligible gold coins include the following:
You can shop for various IRA-approved gold coins from our selection at Oxford Gold Group.
IRA-eligible Gold Bars
Gold bars should have a purity of 99.5% to meet IRA eligibility, and smaller bars must adhere to exact weight requirements. An accredited or certified source or national mint needs to produce the bar.
At Oxford Gold Group, we offer one-ounce and ten-ounce gold bars for IRA funding.
Factors To Consider When Selecting Gold Coins and Bars for an IRA
IRA custodians have different fees and requirements to ensure your investment meets IRS guidelines. You should consider the following when shopping for your bullion:
- Minimum purchase requirements to open an account
- Storage costs
- Shipping and insurance fees
- Account setup fees
- Annual maintenance costs
Consider how these factors will vary between coin and bar purchases to help you make your decision.
Can You Take Physical Possession of the Gold Coins or Gold Bars in Your IRA?
No, you cannot take physical possession of the gold bullion in your IRA until you reach retirement. The IRS requires you to keep the assets in a secure facility where a custodian will handle trading on your behalf. Once you turn 59.5, you will gain access to the gold.
The Buying and Selling Process of Gold Bars and Coins in an IRA
Upon maturity, you can liquidate your gold bullion for cash. Many gold IRA providers offer buyback programs that make this step simple and fast.
You can request a quote and then decide whether the price is fair enough. If not, you can try selling it yourself by withdrawing the physical gold.
Shop for IRA-eligible Gold Coins and Bars Today
Now that you understand the differences between owning gold coins versus gold bars in your IRA, call Oxford Gold Group at 833-600-GOLD to meet with one of our account managers, who can walk you through the setup process.
