Is a Home Storage Gold IRA Legal?

If you’re thinking about diversifying your retirement assets with precious metals and are considering a home storage gold IRA, you don’t want to miss this. In the following article we’ll cover everything you need to know about home storage gold IRAs. Such as…

What is a home storage gold IRA?
How does it work?
Are home storage gold IRAs legal?
What if I already have one?
Are there penalties for having a home storage gold IRA?
A safe alternative to a home storage IRA account.

What is a home storage gold IRA?

A home storage gold IRA, is an investment vehicle, where physical precious metals owned by a retirement account, are stored at one’s residence or in a safe deposit box. This unconventional approach may sound appealing, but there are serious risks involved, including:

Potential IRA audit
IRS penalties
Lose IRA tax advantages
Security threats

While storing your IRAs physical gold in your home may sound attractive, understanding the implications of such a strategy is important.

How do home storage gold IRAs work?

Home storage gold IRAs involve setting up a Limited Liability Company (LLC) within a self directed IRA. Commonly referred to as a checkbook IRA. Once funded from your retirement account, your LLC will then buy gold coins (and other precious metals) to be sent to your home and stored safely. The purpose of establishing an LLC to acquire and store your precious metals is because per IRS rules, you can’t store gold yourself. So the idea is that if you set up a safe deposit box in the LLCs name or buy a home safe with the LLC funds, you technically aren’t storing your precious metals personally.

Is a home storage gold IRA legal?

In short, NO. Home storage gold IRAs operate within a legal loophole, given their need to comply with particular and complex regulations. In order to store IRA gold at home, one would need to apply to the IRS to become a trustee or IRA custodian themselves. They’d have to provide evidence of accounting, fiduciary, audit, and storage capabilities. You must prove you have a reputable financial background and have a net worth of over $250,000, among other things. However, despite these requirements, the IRS has still yet to officially recognize the legality of home storage gold IRAs. In fact, there’s legal precedence to prove that home storage IRAs are not permitted as seen in the court case of McNulty v Commissioner. So according to IRS guidelines, storing IRA-purchased gold at home is not permissible. Non-compliance with these regulations can lead to tax penalties and potential audits. It’s just not worth it.

What if I already have a home storage gold IRA?

If you already own a home storage gold IRA and are concerned you may be audited at some point, contact the company that helped you set it up. They can help you to establish a self directed IRA and walk you through how to move your precious metals to an IRS approved depository.

Are there penalties for having a home storage gold IRA?

Yes, distribution penalties for maintaining a home storage gold IRA may include immediate taxation on the complete value of your entire IRA account for non-compliance with IRS rules. Another potential penalty to be aware of is the 10% tax for early withdrawal, which applies if you are less than 59½. Overall, the consequences of not complying with IRS regulations for a home storage gold IRA encompass:

Taxes owed
Potential penalties
Likely IRS audit
Lose IRA tax deferred status

A safe alternative to a home storage gold IRA.

Instead of dealing with the legal intricacies and risks associated with home storage gold IRAs, a traditional self-directed gold IRA presents a safer alternative. This investment strategy involves a gold IRA custodian and an IRS approved depository, ensuring compliance and offering a more secure option for your retirement savings.

Traditional Self-Directed Gold IRA

A traditional self-directed gold IRA account permits investors to include physical gold or other precious metals as part of their retirement portfolio. This specific type of self-directed IRA allows for the inclusion of alternative retirement assets, such as:

Gold
Silver
Platinum
Palladium

Gold advocates cite its enduring history as a stable commodity and inverse relationship with the value of the dollar as benefits of investing in physical gold bullion. Silver has a range of industrial applications, while platinum and palladium are valued for their rarity and demand in various industries. A significant advantage of a traditional self-directed gold IRA over a home storage IRA is the peace of mind knowing you’re following IRS regulations. You can still enjoy the tax benefits of an IRA while ensuring the proper management and secure storage of your precious metals.

Self-Directed IRA Custodians

An IRA custodian plays a vital role in managing gold IRAs and ensuring compliance with IRS guidelines. They provide secure storage and administrative support for your IRA account. Working with a trustworthy IRA custodian gives you peace of mind, knowing your IRA gold is stored securely and in line with IRS guidelines. This allows you to focus on your investment strategy and retirement planning without the concerns associated with home storage gold IRAs or the need to store gold in a bank safe deposit box. For a complete list of self directed IRA custodians that allow you to hold precious metals visit our Gold IRA Custodians page.

Permitted Precious Metals

The IRS guidelines regarding the types of precious metals allowed in self directed IRAs are as follows. Permissible precious metals are limited to specific gold, silver, platinum, and palladium coins and bars that conform to IRS standards. To meet these requirements, gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must be 99.95% pure. Examples of specific gold coins permitted in self-directed gold IRAs include:

American Gold Eagle coins
Canadian Gold Maple Leaf coins

It’s important to note that not all coins are eligible for inclusion in a gold IRA account, such as collector’s coins.

Storage Requirements

An essential aspect of self directed gold IRAs is the storage requirements. An IRS approved depository will provide secure and reliable third-party facilities for your gold storage. These depositories have all-risk insurance policies that can protect your IRA investment in the event of unexpected occurrences. The most commonly used depositories are the Delaware Depository, Brinks Global Services, International Depository Services and Texas Precious Metals Depository. Visit out Gold IRA Storage Options page for more information.

Common Gold IRA Scams

Misleading advertisements and misinformation frequently lead investors into buying overpriced precious metals at huge premiums. Below are the most scams to watch out for.

Best Gold IRA Company Paid Reviews
Free Gold and Silver Promotions
Zero Fees Promotions
Conservative Celebrity Endorsements
Fake Reviews
Premium or Exclusive Coins
Takes Months to Receive Your Precious Metals
Overpriced Los Angeles Dealers

To prevent becoming a victim of these scams, call our gold IRA specialists at 800-300-0715 or visit our Gold IRA Scams page for more detailed information.

Summary

In conclusion, while home storage gold IRAs may seem enticing, it’s important to understand the legal complexities and potential risks involved. Storing IRA gold at home can be costly. You run the risk of losing your IRAs tax deferred status. And if the IRS finds out, you could owe income taxes on the entire IRA account balance. A safer and more secure alternative is a traditional self-directed gold IRA. By storing gold at an IRS approved depository you’ll steer clear of the IRS and the complications that come with it. Call the Certified Gold Exchange gold IRA specialists at 800-300-0715 to determine if a precious metals IRA is right for you. Written by Pat Collins and John Halloran