Trading commodities in IRAs has been allowed since its inception in 1974 and there are some real benefits for both investors and futures professionals. An IRA owner who discovers a collectible item or antique worth thousands of dollars for sale at a garage sale will not be able to cover income tax on the sale of this asset within an IRA or other retirement plans. Collectibles such as works of art, carpets, antiques, metals, gems, stamps, coins and alcoholic beverages cannot be kept in these accounts under any circumstances. At first glance, our beloved Internal Revenue Code seems to pour cold water on the idea of holding precious metal physical assets in an IRA.
He says that, as a rule, an IRA investment in any metal or currency counts as the acquisition of a collector's item. As such, the transaction is characterized for federal income tax purposes as a taxable distribution of the IRA followed by a purchase of the metal or currency by the IRA owner (that would be you). Indeed, this general rule prohibits IRAs from investing in precious metals or coins made of precious metals. Only certain bullion coins can be kept in an IRA, 1 But some traders will increase their profits by charging one-time or monthly hidden fees.
In some cases, customers have reported losing half of their investment due to commissions. The IRS has privately ruled that IRA owners will receive a taxable distribution only if shares of ETFs holding commodities are distributed to them. If your 401 (k) plan doesn't offer a commodity option, you may want to open a self-directed IRA to buy and sell commodities. If you don't want to speculate on futures yourself, you can open an IRA in an investment fund that deals in commodities.