August 5, 2022

Home Storage Gold IRA

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Ads online suggest opening a Home Storage Gold IRA, but they may be misleading. What are the fines? Keep reading to learn everything.

Are you looking into physical gold IRAs for your retirement savings? If so, you may have seen Home Storage Gold IRA ads.

In other words, these individual retirement accounts let you store gold at home, in your safe.

But these ads may lead you afoul of IRS restrictions.

The IRS has strict requirements for storing IRA gold. You are not allowed to store IRA-related gold at home.[1]

Doing so may lead to fines, penalties, and even an audit of your IRA.

But it's easy to open a gold IRA with the best providers and comply with government regulations.

Keep reading to learn everything you need to know about so-called Home Storage Gold IRAs.

Can You Set Up a Home Storage Gold IRA?

If you're wondering whether or not it's possible to set up a Home Storage Gold IRA, the answer is no.

You can't store your IRA-related gold at home.

Though you may have encountered ads that suggest otherwise, some offer assistance in setting up your gold IRA for home storage, even going so far as to offer a free safe for new customers.

But storing gold at home as part of your IRA is strictly prohibited.

Per Section 408(m) of the IRS code, only certain types of precious metals can be held in an IRA, and they must be kept "in the physical possession of a trustee."

Further, a paper published in 2018 by the Industry Council for Tangible Assets was specifically titled The Prohibition on Home Storage of Bullion Held in an IRA. It goes into detail on how "home storage" conflicts with IRS laws.

IRA assets must be held by a financial institution or an IRS-qualified IRA custodian." The Prohibition on Home Storage of Bullion Held in an IRA. Industry Council for Tangible Assets. 2018.

If you're considering a Home Storage Gold IRA, beware! It's a scam. But you can open a physical Gold IRA or store your gold at home outside of an IRA. You'll learn how below.

Penalties for Improperly Opening a Home Storage Gold IRA

Now that you understand that IRS regulations prohibit Home Storage Gold IRAs, let's cover the consequences of trying to store your IRA gold at home.

Distribution Penalties
Since you aren't allowed to store IRA gold at home, the IRS may consider home storage a distribution, the term used for withdrawals from a retirement investment account.

Per the IRA regulations, you can't take distributions from your IRA account until the age of 59 1/2 without a tax penalty of 10%.[2]

You'll also lose any tax advantages conferred by investing through an IRA account, which means you'll also be subject to income taxes on your distributions. Depending on the size of your investment, it could add up to quite a large amount of money.

Read more: Curious how long your money will last in retirement? Here's a calculator which lets you put in your retirement savings and it will show you how long it will last while factoring in inflation.

IRA Audits
The distribution penalties may only be the first of your troubles if you intentionally store your IRA gold at home.

Once the IRS becomes aware that you've kept IRA gold outside of an approved financial institution, there's a chance they will decide to conduct an audit of your IRA.

If they find you've broken other rules, you may face other fines and penalties in addition to those you've already been hit with.

Why Do People Still Talk About Home Storage Gold IRAs?

If Home Storage Gold IRAs are prohibited, why do people still talk about them?

The problem is that the internet is full of misinformation. Whether it's people intentionally trying to mislead you or simply repeating bad information, there are, unfortunately, several people still pushing the idea of Home Storage Gold IRAs.

It's not entirely surprising. For many investors, part of the appeal of investing in gold and other precious metals is their tactility. They would rather have an investment that they can see and touch rather than one represented by numbers on a screen or in paper statements.

Precious metals scams are increasingly common. FINRA warns you to beware of companies that use scare tactics and make speculative claims.

Gold is also often prized as an investment for those determined to be prepared for disaster. If the financial system fails, they reason, the dollar may be worthless, but they'll still have their gold.

And while it is technically possible to store your IRA gold at home, it's incredibly difficult.

You'd have to set up an LLC and apply to the IRS to become an IRA custodian. You'd have to prove:[3]

  • Accounting abilities
  • Fiduciary abilities
  • Audit abilities
  • Storage abilities and much more

The chances of getting approved are very low, and the chances of fines are pretty high. For most investors, it's not worth it.

But you can easily invest in gold in several ways.

How to Invest in a Gold IRA

Now that we're clear on what you don't want to do when investing in a physical gold or other precious metals IRA, let's talk about how to do it right.

Many reputable, popular gold IRA providers can walk you through the process of opening a gold IRA account.

Some of the best include:

These gold IRA providers are known for high-quality customer service and support. By talking to their representatives or applying for an informational kit, you can open a legitimate gold IRA account.

Most importantly, they all have relationships with legitimate, secure depositories, such as Delaware Depository, Brinks Depository, Texas Bullion Depository, and others. Meaning your gold will be stored safely and legally.

In many cases, you can visit them and see your precious metals if you so choose.

What if I Still Want to Store Gold at Home?

If you are set on storing gold in your home safe, you still have an option that won't get you into trouble with the IRS. And that's buying gold normally, outside of a retirement account.

There will be no tax advantages, which means it won't be as valuable as an investment, but you can do whatever you want with non-IRA gold.

There are also no restrictions on purity or anything else, meaning you can buy a much wider variety of coins and bars than you'd be able to as part of an IRA account.

You can buy gold online from reputed dealers like J.M. Bullion or Vaulted.

If you're already interested in gold to diversify an existing retirement portfolio, you could take that one step further.

  1. You could open a Gold IRA account.
  2. Buy and store gold with your IRA provider's recommended depository.
  3. Then, purchase more gold outside of your IRA.
  4. You'll be free to store that gold at home in case of emergencies.

It might not be a perfect solution, but perhaps it gets you the best of both worlds.

Bottom Line

The most important thing you should take away from this is that Home Storage Gold IRAs are not a legitimate option in the eyes of the IRS, and attempting to store your IRA gold at home could cost you fines and penalties.

You're essentially left with two options.

Either open a Gold IRA with a legitimate provider and have your gold stored safely and securely in an accepted financial institution or depository. Or invest in gold outside of an IRA, in which case there are no restrictions on where you keep it.

References

  1. ^ Internal Revenue Service. IRA FAQs: Investments "If my IRA invests in gold or other bullion, can I store the bullion in my home?", Retrieved 7/13/2022
  2. ^ Internal Revenue Service. IRA FAQs - Distributions (Withdrawals), Retrieved 7/13/2022
  3. ^ Internal Revenue Service. Application Procedures for Nonbank Trustees and Custodians, Retrieved 7/13/2022

Jeremy Harshman is a creative assistant at CreditDonkey, a personal finance comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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