RMDs when your IRA holds metal

When RMDs begin

Under current federal law, most owners of traditional IRAs, including SEP and SIMPLE IRAs, must begin taking RMDs for the year they reach age 73 (IRS RMD FAQs). The law raises that age to 75 for people born in 1960 or later (Internal Revenue Code section 401(a)(9)(C)(v); Treasury Regulation 1.401(a)(9)-2). IRS pages currently describe the age-73 rule, so ask your tax adviser which age applies to you.

• Your first RMD may be delayed until April 1 of the year after you reach the applicable age. If you delay it, you will generally have two required distributions in that year: one by April 1 and another by December 31 (Retirement topics: RMDs).
• For each later year, the deadline is December 31.
• Roth IRAs do not require distributions while the owner is alive. Beneficiaries who inherit a Roth IRA are subject to RMD rules (IRS RMD FAQs).
• The part of an RMD that is not taken on time may be subject to a 25% excise tax, reduced to 10% if it is corrected within the correction window. The Instructions for Form 5329 explain the window and when the tax may be waived.

How the amount is figured

Each year’s RMD is generally the account’s balance at the end of the previous year divided by a life-expectancy factor from the IRS tables. For an IRA that holds metal, that year-end balance includes the value of the metal as well as any cash in the account. The account balance and the tables are explained in IRS Publication 590-B.

Your custodian must either tell you the RMD amount or offer to calculate it. The IRS notes that the account owner remains responsible for taking the correct amount.

If you have more than one IRA

The RMD is calculated separately for each traditional IRA you own, but the total may be withdrawn from any one or more of them (IRS RMD FAQs). The share owed by a metals IRA can therefore be taken from another traditional IRA you own, without the metal changing form.

Different accounts follow different combining rules:

• 401(k) and 457(b) plan RMDs are taken separately from each plan.
• 403(b) contracts can be combined only with other 403(b) contracts.
• Inherited IRAs can be combined only with other IRAs inherited from the same person.
• Roth IRAs are not part of this calculation.

These rules are set out in the IRS RMD FAQs and the Instructions for Form 5329. Ask your tax adviser how they apply to your accounts.

Taking the RMD from the metals account itself

If the RMD is to be paid from the metal in that IRA, the metal has to change form or change hands. There are two ways this can happen.

Reporting on Form 1099-R follows the Instructions for Forms 1099-R and 5498. Neither path suits everyone. Which one fits depends on your year, your accounts and your plans, and that is a question for your tax adviser.

• If the owner takes possession of coins held in the IRA, the IRS treats them as distributed (Publication 590-B).
• An amount that must be distributed as an RMD cannot be rolled over into another IRA (Publication 590-B).
• Federal income tax is generally withheld at 10% from an IRA distribution paid on demand, unless you choose a different rate from 0% to 100% on Form W-4R. How withholding works when the distribution is metal rather than cash is a question for your custodian.

Questions to bring to your tax adviser

• If you hold more than one IRA, does taking this year’s total from a different traditional IRA fit your situation?
• Should you take your first RMD in the year you reach the applicable age, or wait until April 1, knowing that waiting puts two RMDs in the following year?
• If the metal is distributed in kind, what would the reported value look like at current prices, and how will your custodian determine it?
• If the metal is sold inside the IRA first, does the order of the sale and the distribution matter for your account?
• What withholding election fits the rest of your year?

IRS pages with more detail

• Retirement plan and IRA required minimum distributions FAQs
• Retirement topics: Required minimum distributions (RMDs)
• Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), including the life-expectancy tables
• Instructions for Form 5329, for missed RMDs and the correction window
• Instructions for Forms 1099-R and 5498, for how distributions are reported
• Pensions and annuity withholding and About Form W-4R, for withholding

If you are considering a sale

If you are considering selling IRA-held metals, prepare a list of the products and quantities. Read about IRA-held metals or selling, distributing or transferring IRA metals, or contact Aurstream with general questions.