Question

Martha has been impressed with the appreciation of the coin collection she received as a gift from her mother and would like to take advantage of this by using coins as an investment in the IRAs. Which of the following statements regarding coins as investments in IRAs is CORRECT?

A) Coins can be directly held in IRAs, allowing for investment diversity.
B) Coins are prohibited as investments in IRAs by tax regulations.
C) Only gold and silver coins are eligible as investments in IRAs.
D) Coins must be appraised annually for IRA reporting purposes.

Answer 1

The correct answer is that only specific gold and silver coins, along with platinum and palladium that meet fineness standards, are eligible as investments in IRAs. Collectible coins are generally excluded from IRA investments.

Step-by-step explanation:

The correct statement regarding coins as investments in Individual Retirement Accounts (IRAs) is: C) Only gold and silver coins are eligible as investments in IRAs. The Internal Revenue Code permits IRAs to invest in certain precious metals, including gold, silver, platinum, and palladium coins and bullion that meet specific fineness standards. However, not all coins are eligible for IRA investment; they must meet these standards, and collectible coins are generally excluded. It is also important to note that these precious metals must be held by the IRA trustee or custodian rather than the IRA owner personally.