Can My Currency or Coin Collection Be Part of My Roth IRA?


Contrary to common beliefs, an IRA (Individual Retirement Account) isn’t just a place to put cash. In reality, IRAs can be a mix of different financial investments, including stocks, bonds, and precious metals as bullion. Advanced investors can also buy options. Unfortunately, collectibles can’t be added to your IRA portfolio.

If you’re under 40 and getting your long term finances together, opening an IRA (tax deferred, taxes paid on withdrawals) or Roth IRA (contributions taxed up front, no taxes upon withdrawal) probably makes sense. IRAs are a great vehicle for retirement investments because they allow individuals to buy and sell a wide variety of financial assets, with the eventual goal of cashing out when you’re finished working for good. The taxation of IRAs isn’t nearly as burdensome as traditional investment portfolios, because the idea to is to save now for 20-30 years down the road.

Roth IRAs are popular because under current tax law, you don’t have to pay any taxes on your withdrawals once you’ve retired. You pay taxes upfront before contributing to your account. Remember, IRAs aren’t just a cash savings account: they are a special mix of investment accounts and bank accounts that allow you to invest your money in a wide variety of products to increase your savings. With a good return on investment, you could potentially retire much earlier than planned, and that’s no so bad. 🙂

Most Roth IRA accounts available at the retail level allow a $5,000 per year contribution. Any money above and beyond $5,000 is subject to a nominal tax. Once the money is in the account, it’s there until retirement, or else you withdraw it with penalties. If you’re sage about investing, you can turn that $5,000 a year into a $1,000,000 with good stock, bond, options, futures, real estate, index funds, mutual funds, and exchange traded funds purchases.

Can my paper money collection or coin collection become part of my Roth IRA?

No. Unfortunately there are some limitations on what qualifies as a valid IRA investment. On the macro level, millions of people contributing up to $5,000 a year into an account they can’t touch until retirement means a ton of money is going to be invested across the market. This is good for business, government, and the individual holding the account if the investments are worthwhile.

Some might feel an IRA is nothing more than a way to fund financial markets and bolster asset prices for greedy companies that get to collect profits on their business activities now, not later. It’s a cynical point of view but there’s some truth to it: If your $15,000 IRA account goes up in value because your stock with company ABCD appreciates, the individuals running the company get to collect right away. You can certainly sell ABCD stock and make a profit, but that money is still stuck in your IRA until retirement, so it goes elsewhere in the market.

The fact that collectibles can’t be included in an IRA portfolio might strike some numismatists as odd: coins and paper money can be great investments, so why not save them for retirement?

The obvious rebuttal to this question is that the collectibles market is mostly unregulated and transaction data – even at public auctions – is private knowledge. It would be burdensome to ask Heritage Auctions or Lyn Knight Auctions to report to the government each time a collectible traded hands for the purposes of an IRA account. They already have to report profits they make after each auction as a business, so corroborating transactions between private individuals for IRA investments would create a tangled web of legal and accounting work no one wants to do.

Stocks, bonds, options, precious metals as bullion,  cds, and other items are already highly regulated and carefully monitored by the government. In fact, on the IRS IRA page, collectibles are considered “personal property”. The IRS does state some collectibles can be included, but you must pay additional 10% tax on monies used to fund a purchase. That kind of kills the joy of investing in paper money for retirement under the IRA program, although you can certainly save a collection for retirement money and pay regular income taxes when you sell it.

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