Proof American Eagles in an IRA

Your IRA can invest in American Eagle coins

Many investors ask us if they can hold proof American Eagle coins in their IRAs. The short answer is “yes.” However, it is a good idea to be familiar with the relationship between proofs and IRAs. A “proof” American Eagle is unusual because it is considered both a collectible, which is categorically disallowed by the IRS, and a bullion product, which is allowed by the IRS.  Let’s look at these two characterizations.

American Eagle coins are commonly known as a bullion product. This type of coin makes it convenient for a consumer to buy a relatively small amount of gold, silver or platinum.  The U.S. Mint also produces “proof” American Eagle coins and it’s common for an investor or a collector to note that the price of “proof” coins is different from regularly minted coins.  But why is that and what does proof mean? 

The U.S. Mint outlines the difference between proof and regularly minted coins in their description of the proof American Eagles on their website, usmint.gov: “The United States Mint produces proof versions of American Eagle Bullion coins for collectors.  American Eagle Proof Coins undergo a specialized minting process, which begins by manually feeding burnished coin blanks into presses fitted with special dies. The coin is struck multiple times so the softly frosted, yet detailed images seem to float above a mirror-like field. After scrutiny by white gloved inspectors, each American Eagle Gold and Silver Proof Coin is sealed in a protective plastic capsule … with its own official Certificate of Authenticity.  ... Since American Eagle Proof Coins are produced by the United States Mint, each coin's content, weight and purity are guaranteed by the United States Government.”

Below you will find the specifications for gold and silver proof American Eagles according to usmint.gov.

Gold American Eagles Proof Coin Specifications
Condition:     Proof
Composition:     91.67% Gold, 3.0% Silver, Balance Copper
Edge:         Reeded
Facility:      West Point
Mint Mark:      W

Silver American Eagle Proof Coin Specifications
Condition:     Proof
Composition:     99.9% silver
Edge:         Reeded
Facility:      West Point
Mint Mark:      W

The IRS allows physical precious metals (gold, silver, platinum and palladium) to be held as assets in an IRA.  There are fineness requirements associated with these metals, and the basic idea is that the IRA is purchasing a bullion product.  In this way, the value is determined by the market price of that amount of that metal.  In other words, it is the raw, intrinsic value of the material that is being purchased.  This is important because the IRS broadly prohibits the purchase of collectibles to be assets of an IRA.

Although silver and gold American Eagle Proof Coins are collectible and the gold eagle doesn’t meet the fineness requirement set forth by the IRS, these coins are available to your IRA. Eagles are allowable for IRAs by virtue of a specific exception within IRS code.

Furthermore, the idea that proofs are collectibles may be a gray area about which the IRS eventually provides clarification, but for now, American Eagles remain an allowable bullion product with some traits that typically apply to collectibles.

Gold IRA How-to: Who are the parties I need to work with to invest my IRA in gold?

Most people don't know that their Individual Retirement Account can be legally invested in almost any type of asset except collectibles and life insurance.  That means you can invest your retirement funds in precious metals like gold, silver, platinum and palladium—and it's a relatively easy process. 

There are four players involved when using your IRA to purchase precious metals:  The IRS, a Self-Directed IRA Provider like New Direction IRA, a Precious Metals Dealer and a Precious Metals Depository.

1. The IRS. In return for the special tax status that retirement accounts receive, the IRS sets some parameters that need to be followed.  First, your IRA is allowed to purchase metals as a commodity but cannot purchase collectible coins.  Therefore, graded coins cannot be purchased.  However, the IRS does specifically allow U.S. minted American Eagles that have not undergone grading. 

Second, there is requirement for the fineness or purity of the metals (note that these requirements do not apply to American Eagle coins):

.995 for Gold

.999 for Silver

.9995 for Platinum and Palladium

Third, your IRA cannot buy or sell your metals from a disqualified person. Disqualified persons include you, your spouse, your ascendants, descendants and their spouses.

2. Self-Directed IRA Provider. A self-directed IRA provider that allows assets like precious metals will help make you aware of IRS requirements as well as perform record keeping for your account.  If your retirement funds are not currently with an IRA provider that allows precious metal investing, you will likely be able to move your funds without a tax penalty to a provider that does allow precious metals.  It is a good idea to set up your self-directed IRA and fund it before negotiating your purchase with a metals dealer. The prices of metals are volatile and brokers are not likely to lock in a price for a long period of time.

3. Precious Metals Dealer/Broker. Self-direction of your retirement account means that you get to select a precious metals dealer with whom you are comfortable.  Due diligence is your responsibility, but once you’re satisfied with your selection, you agree on the deal and direct the IRA provider to fund your purchase. 

4. Precious Metals Depository. The IRS restricts you from keeping your IRA-owned metals in your physical possession.  They must be held in a depository for safe-keeping but the selection of this storage site is up to you.  Factors that you might consider include fees, segregated vs. non-segregated storage, facility location and insurance levels.

Now that we’ve identified the four players involved and established some expectations about their roles, it is time to start putting together your new Precious Metals IRA.  For more detailed information, please visit www.newdirectionira.com or call us toll free at (877) 742-1270.