Saving for your retirement is one of the most important things you’ll ever do, and setting up a precious metals-backed self-directed IRA is a great way to do this! If you’re new to these retirement accounts, you might wonder whether you can store gold and other precious metals at home.
It’s important to know what the law says before planning a home storage gold IRA. In this post, we’ll take a look at the restrictions that apply to gold IRA account holders and answer the question, “Can I store IRA-purchased gold and silver at home?”
Before looking at the legal implications of a home storage gold IRA, it is important that you understand what silver and gold IRAs are. A precious metal IRA allows people to invest in gold, silver, palladium, and/or platinum of high purity.
Unlike other types of self-directed IRAs backed by tangible assets, such as real estate or cryptocurrencies, these IRAs are backed by rare and precious assets sought-after because of their ability to hold their value and even grow in value over time.
You must engage with an IRS-approved custodian to create a precious metals IRA. In most cases, this is a bank or another financial firm. They will manage the payments, maintain the account’s records, and submit the necessary IRS reports to ensure you are compliant.
Once your IRA has been established, you can add money by rolling over funds from another retirement account or sending a check or bank transfer. If you’re 50 years old or older, you can contribute up to $7,000 every year.
You can instruct your IRA custodian on what gold and silver coins or bars to purchase after financing your account. Once acquired, the bullion must be kept in a designated depository facility.
Experts recommend including a variety of investments in your portfolio to ensure that you are protected from risks, and including a precious metals investment in addition to other forms of retirement savings is a smart way to cover all your bases.
Because precious metals such as gold, silver, and platinum have historically held their value, they are often sought-after by investors worldwide. Because they serve as a safe haven when economies collapse and serve as a hedge against inflation, they are a great backup plan.
Moreover, since metals such as gold and silver are always in demand, you can rest assured that your investment will continue to grow.
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If you have been looking for a precious metals IRA, you may have heard of a “home storage gold IRA. These assets promise the benefits of a self-directed IRA in which you store your gold and other precious metals in your home or place of your choosing.
At first glance, advertisements for these products seem quite intriguing and alluring, but you should undoubtedly conduct your own research before investing your hard-earned cash in a retirement account.
Related Reading: Gold IRA Storage Fees Explained
These adverts for “home storage” retirement accounts have caused a lot of misinformation regarding gold IRAs. You still can’t keep the bullion on your property, even though you can create a limited liability company (LLC) and manage your IRA investments yourself.
According to IRS rules, your IRA purchases must be kept in the LLC’s name in a safe depository.
Technically, storing the precious metals under your bed or in a safe at home will count as a distribution.
What is a distribution, you may ask? Distributions are considered early withdrawals if you are under the age of 59.5, and while this may not seem like such a bad thing, they are subject to a 10 percent penalty. This could present a considerable setback in your retirement savings.
If you purchase gold outside an IRA, you could choose to store it in a home safe. However, the IRS sternly forbids doing so with gold, silver, and other precious metals bought with IRA funds.
The IRS regulates these retirement accounts, so it is essential to check what it has to say about storing your IRA assets before you go ahead and plan home storage IRAs.
Related: How to Move Your 401k to Gold Without a Penalty.
According to Section 408(m) of the IRS code, the types of precious metals that may be purchased in an IRA are regulated. The code also states that the precious metals purchased in an IRA must be in the possession of a trustee.
Moreover, according to the IRA regulations, gold and other metals are considered “collectibles,” and the law forbids the holding of collectibles in self-directed IRAs. If a financial institution or an IRS-approved nonbank trustee has the bullion in their possession, there is an exception.
Unsurprisingly, ignoring IRS rules and setting up a home storage IRA comes with harsh penalties. To individual investors, this could pose a significant risk and setback for retirement savings.
Suppose the IRS decides to contact you regarding your self-storage of IRA-purchased precious metals. In that case, you could be subject to taxes, fines, and charges on your entire IRA. Moreover, at any point, the IRS has the right to pursue investors who engage in this activity.
Investors who violate the regulations and store the gold and silver from their IRAs at home may first be penalized for distributions.
If you retain your precious metals in your residence, it will count as a distribution and subject you to a 10 percent penalty if you are under the age of 59.5. Additionally, the investments would no longer be made tax-deferred, which would lead to you paying income taxes, which is often a sizable sum of money.
The action can also result in an audit. You can face an IRS audit if the organization learns about your erroneous retirement account activity. Depending on what is discovered during the audit, there may be further penalties and fines.
All necessary measures were put in place by the US government to safeguard the interests of retirees. Otherwise, it’s rather simple to give people direct authority over their retirement assets. You would have no way of knowing where or how your precious metals are being stored without a trustee who is legally bound.
In the event of a payout or withdrawal, the authorities must be informed of all holdings and assets. While these rules are put in place to protect your financial wealth, it’s not inaccurate to say that IRS rules do not make owning and managing your gold IRA account all that simple.
Now that we have seen that home storage gold IRAs are unlawful, are there any legal ways to store gold and other precious metals at home? Yes, there are! You could do this in one of two ways:
Purchase gold outside of a gold IRA account.
Make an early withdrawal on your IRA account and store your IRA-purchased gold in a place of your choosing. If you choose this option, it is important to keep in mind that you will incur a 10 percent penalty if you are under the age of 59.5.
At this point, you might be wondering why you’re still hearing about a home storage IRA if the practice is unlawful.
The issue is the abundance of false information available on the web. Sadly, there are still a few scammers selling the notion of Home Storage Gold IRAs, whether it is through deliberate misinformation campaigns or by simply relaying false information.
Many investors like the idea of investing in physical gold, which is why they continue to listen. Instead of having an investment reflected by figures on a computer or in paper statements, they would prefer to have a product that they can physically see and touch.
The truth is that for people who are committed to being prepared for tragedy, old is frequently appreciated as an investment. They argue that even if the economic markets collapse, they will still have their gold even if the currency becomes worthless.
Furthermore, while technically still achievable, securing your IRA gold at home is extremely challenging.
To do this, you will need to become an IRA custodian, and for this, you would need to create an LLC and submit an application to the IRS. In order to qualify as a custodian, you will have to demonstrate that you have the following:
The ability to conduct audits
Moreover, the likelihood of obtaining approval from the IRS is quite low, while the chances of being fined instead are significantly higher, which is why it is not an advisable approach to saving for your retirement.
The good news is that you can create a self-directed IRA that complies with IRS requirements. You can create a gold IRA account with the help of a number of reliable, well-known gold IRA providers. Here are some of the best-rated options that we recommend trying if you’re hoping to set up your IRA:
Patriot Gold Group
Augusta Precious Metals
These gold IRA firms have a reputation for offering excellent support. You can start a real gold IRA account by speaking with their agents or requesting an instructional kit.
Most significantly, they all collaborate with trustworthy depositories, so you will have the assurance that your IRA assets are legally and safely held.
If you would like to own your gold outright without the help of a self-directed IRA, you can purchase tangible assets from a reputable dealer. Suppose you choose this option. In that case, it’s essential to keep in mind that there won’t be any tax benefits that you can expect with gold IRAs.
However, you will have access to a broader range of gold and silver coins and bars, as there are no limitations placed on the kind of products you can purchase outside of an IRA.
A gold IRA provides a number of benefits. It allows you to enjoy several tax benefits without the fuss of having to store your gold at home. However, there’s a lot of false information out there claiming that investors can keep gold purchased in an IRA at home.
While you could try to set up an LLC and apply to be a custodian, the chances of the IRS approving this is very low, so your gold is best left in the hands of a trusted depository.
Do you have more questions? Here are a few answers to commonly asked questions about home storage gold IRAs:
If the IRS finds that you have gold purchased in an IRA at home, you will face distribution penalties and be subjected to a full IRS audit.
Experts generally recommend investing in a gold IRA because it offers a number of tax benefits while purchasing and storing gold at home doesn’t free you of tax obligations.
No. Technically, it isn’t illegal, provided you have set up an LLC and received permission from the IRS to do so. However, it is important to keep in mind that this is incredibly difficult to do.