Can Silver Bars Be Used for IRAs?

by Jane Meggitt

The Internal Revenue Service limits the type of precious metals that individual retirement accounts may invest in. Although silver or gold bars cannot be used for an IRA, certain silver or gold coins are permissible. IRA investors may also consider mutual funds that invest in precious metals as an IRA alternative.

IRA Investment Restrictions

Silver bars are not the only items the IRS does not permit as IRA investments. Collectibles of any sort cannot be used for IRA investments. These include, but are not limited to, art, antiques, jewelry, gemstones, rugs, wine or other alcoholic beverages, most precious metals, stamps, automobiles and other tangible personal property, other than certain real estate trusts. Should an account holder erroneously invest in such items, the amount invested must be distributed in the year in which the investment was made, and the owner is subject to the 10 percent tax on early distributions.

Acceptable IRA Precious Metals

Account holders may invest in certain precious metal coins issued by the U.S. government and produced in U.S. mints. These include the one ounce, half ounce, quarter ounce and tenth of an ounce gold American Eagle coins; the one ounce gold American Buffalo; the one ounce silver American Eagle and the one ounce platinum American Eagle.

IRA Investments

Most IRA contributions are invested in mutual funds, stocks, money market funds, certificates of deposit and other financial instruments. IRA trustees, such as brokerages and other financial institutions, may impose restrictions on certain investments. According to the IRS, "Because of administrative burdens, many IRA trustees do not permit IRA owners to invest IRA funds in real estate." Although the law allows IRA investment in real estate, there is no law requiring trustees to offer it as an option. The same is true of the permissible precious metals.

IRA Contributions

As of 2011, annual contribution limits for both traditional or Roth IRAs were $5,000 for people younger than 50, and $6,000 for those 50 and older, provided earned income is at least that amount. Traditional IRAs may be tax-deductible if the contributor does not have an employer-sponsored retirement plan, such as a 401k. Roth IRA contributions are not tax-deductible, but Roth withdrawals are tax-free, unlike withdrawals from traditional IRAs. The minimum age to withdraw IRA funds without penalty is 59 1/2 for both types, but traditional IRA contributors must make mandatory withdrawals by age 70 1/2. There is no mandatory withdrawal age for Roth IRA contributors.

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