ICTA (The Industry Council for Tangible Assets) has learned from the Internal Revenue Service that it would be prudent for investors NOT to include the Proof version of the US Gold Buffalo Coins in IRAs or other self-directed retirement accounts. This recommendation comes from a recent conversation ICTA had with an IRS official from the Employee Plans Technical Group. ICTA member dealers have been requesting clarification as to whether the new US Buffalo Coins are permitted in IRAs.

Although both Proof and Uncirculated Buffalo Coins meet the technical fineness and metal content criteria in the 1997 Taxpayer Relief Act, this law refers to allowable products as being “bullion” only. The U.S. Mint’s own website states that the Uncirculated Buffalo is a bullion coin, while the Proof is a collector coin.

Other differences between the two versions include: (1) the Proof does not trade based solely on its precious metals value; and (2) the production and distribution methodologies for Proof coins are different than for the bullion issue. Therefore, it MIGHT ultimately be interpreted by the IRS that the Proof issue does not meet all of the criteria required to be an acceptable investment in an IRA. While a Private Letter Ruling (cost: about $9,000) would answer this question definitively, the IRS tax expert ICTA spoke with suggested that, in the absence of such a ruling, it would be prudent to limit inclusion of Buffalos in IRAs to the Uncirculated (bullion) version.

ICTA does not intend to seek a Private Letter Ruling from the IRS. Therefore, without a definitive answer in writing from the IRS, ICTA must recommend that dealers and investors avoid Proof Buffalo coins for IRA purposes. Anyone wishing to apply for a Private Letter Ruling on this matter is encouraged to contact ICTA for more information.

Currently, no collector coins are eligible investment products for IRAs, save one. The only exception ICTA is aware of is the 1986 American Eagle series of coins, where the original legislation authorizing the production of these coins specifically allowed their inclusion in IRAs. The Eagles qualify as investment products for IRAs because a provision in the Internal Revenue Code (26 U.S.C.Sec. 408(m)(3)(A) specifically exempted them from the definition of the term “collectible” for IRA purposes. “Collectibles” in general are specifically excluded from such retirement plans at this time.

ICTA is a member of CERT, the Coalition for Equitable Regulation and Taxation, which is currently proposing a bill in the U.S. Congress (S.1533) that would allow certain numismatic coins for inclusion in IRAs. The bill is currently pending in Congress, and a sample letter of support is available to the numismatic community on the ICTA website www.ictaonline.org (click on the What’s New tab). If this bill passes, Proof Buffalo coins that meet the bill’s requirements would be allowed in IRAs and other self-directed retirement plans.

For more information about these issues, or for more information on ICTA, go to the ICTA website or contact ICTA at the above telephone numbers. ICTA is a non-profit national trade association representing the rare coin, currency and precious metals community.