Some taxpayers choose to use funds in their IRA retirement accounts to purchase collectibles and antiques, as opposed to mutual funds, stocks, or other assets. When these collectibles contain precious metals, special tax rules may apply. Details can be found below.

The acquisition by an IRA of any “collectible” is treated as a distribution from the IRA in an amount equal to the cost to the IRA of the “collectible.” (Code Sec. 408(m)(1))

An IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion. (IRS Pub 590-A)

An investment in a coin that has been made into a piece of jewelry is considered an investment in a collectible and will be considered a distribution. That is, the exception from treatment as a collectible for gold or silver coins, etc., will not apply. (Notice 87-16)

The acquisition of shares of a trust invested in gold or silver by either an IRA, or an individually directed account under a qualified retirement plan, won't be considered the acquisition of a collectible. Thus, the amount invested will not be considered a distribution. However, a redemption of shares that results in a distribution of gold bullion would be treated as an investment in collectibles and as a distribution (IRS Letter Ruling 200732026; IRS Letter Ruling 200732027).