Solo 401k funds can be invested in precious metals such as gold and silver provided the IRS requirements outlined in Code 408(m) are satisfied.
Most investors believe the greatest advantage to coins or bullion is that their value generally keeps up with or exceeds inflation rates. However, investments in coins or bullion also have disadvantages. For example, no current income, such as interest accrual or rental income from real estate, is associated with coins. In addition, the coin market is often sporadic.
How the purchase of metals (often called Gold Solo 401k) works:
Step 1: Find a Precious Metals dealer: Below are some links of brands acceptable in a Solo 401k.
All Metals: http://www.tocom.or.jp/guide/brand/index.html
Step 2: As trustee of the Solo 401k, choose the metals to be held in the Solo 401k.
Step 3: Have the Precious Metals dealer prepare the purchase invoice in the name of the Solo 401k F.B.O your name as trustee.
Step 4: Write a check from the Solo 401k checking account payable to the precious metals dealer and send the funds directly to the Precious Metal dealer with instructions to where to deliver the metals.
Step 5: The dealer will then send the precious metals (e.g., gold and silver coins) to either:
- You as Trustee of Solo 401k plan for storage at the local bank or credit union , or
- to Storage facility such as Delaware Depository Service Company.
- For guidance on storing requirements See IRS Private Letter Ruling 200217059
Step 6. Lastly, make sure you are not purchasing disallowed metals. Click here to read our blog regarding the negative consequences of investing solo 401k funds in disallowed metals:
Additional Information: Click here to read our blog regarding acceptable metals that may be held in a solo 401k.
No Krugerrands QUESTION:
Your blog indicates that American Eagle Gold Coins are an acceptable investment per IRS rules. You also mention Canadian Maple Leaf as acceptable. Why wouldn’t other similar investment grade coins like the Krugerand qualify ?
No Krugerrands and Double Eagle coins are not allowed because they don’t satisfy the pureness level requirement of .995 fineness (99.5% pure).
Liberty Coin QUESTION:
Within my solo 401k, am I able to purchase the $20 gold US. Liberty coin, which at one point was legal tender, but now is graded as a numismatic coin?
No because the purity is only 90% fineness not the required percentage of 99.5% for gold coins.