Home Storage Gold IRA
Home Storage Gold IRA ads may be misleading. Can you really keep gold at home? What are the fines? Read on to learn how to properly store your IRA gold.
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You may be tempted by the idea of Home Storage Gold IRAs. It's appealing to keep your gold close to you at home. You know it's right there if you need it.
But beware. Storing your gold at home is actually in violation of IRS regulations. [1] And doing so can result in severe consequences and forfeit of IRA tax benefits.
To stay compliant, it's absolutely crucial that you follow IRS storage rules.
Keep reading to learn about these so-called Home Storage Gold IRAs, and where you should store your gold instead.
Can an IRA Hold Physical Gold?
You can hold gold in an IRA if you have a special self-directed IRA account. This allows you to invest in actual physical gold coins, while getting the same tax benefits as regular IRAs.
To do so, you must open a gold IRA account with a specialized gold IRA provider. Then you can purchase gold coins for your retirement.
But where can you keep your gold? Let's get into that next.
Can You Set Up a Home Storage Gold IRA?
The short answer is no. You cannot store gold for your IRA at home or in a bank deposit box. In order to comply with IRS IRA guidelines, your physical gold assets must be stored in an IRS-compliant depository.
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."
This means that your gold IRA custodian must store your gold, in a depository approved by the IRS.
Essentially, you'd have to set up an LLC and apply to the IRS to become an IRA custodian. You'd have to prove you have accounting, fiduciary, audit, storage abilities and much more :[2]
The chances of getting approved are very low, and the chances of fines are high. Most investors can't meet these criteiria.
If you see a company offering Home Storage Gold IRA, beware! It's most likely misleading advertising. But you can open a physical Gold IRA or store your gold at home outside of an IRA. You'll learn how below.
Where to Store IRA Gold Properly
It cannot be stressed enough that your IRA gold must be stored in an IRS-approved depository.
Not only do you comply with gold IRA rules, a depository will also keep your gold safe. Depositories have insurance policies that can protect your investment in case anything happens.
You can also choose non-segregated or segregated storage. Having segregated storage means that your gold will be stored separately from everyone else's, providing an extra layer of peace of mind.
Gold IRA companies typically work with approved depositories such as Delaware Depository, Brinks Global Services, and International Depository Services. Usually, you can choose which depository you want your gold stored at.
In exchange for security and staying IRS-compliant, you will have to pay a depository storage fee. Usually, it's $100 - $300 per year.
Penalties for Owning a Home Storage Gold IRA
So what happens if you do try to store your IRA gold at home? Here are consequences you might face:
Withdrawal Penalties
If you have your IRA gold transferred to you for home storage, the IRS will consider that a distribution. And you'll be subject to any taxes and penalties that come with withdrawals.
Per IRA regulations, you'll incur a 10% tax penalty if you withdraw from your IRA account before age 59 1/2.[4]
You'll also be subject to income taxes on your distributions. Depending on how much you withdraw and your income tax bracket, it could add up to quite a large amount of money.
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, they could even 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.
How to Invest in a Gold IRA the Right Way
Now that we're clear on what NOT to do when investing in a
Here's how to stay IRS-compliant when investing in gold for your retirement:
1. Open a gold IRA account
You will need to work with a reputable gold IRA provider. It's an important decision, because this company will be safeguarding your retirement funds for potentially many years to come.
Some of the best gold IRA companies are Augusta Precious Metals, Goldco, and American Hartford Gold Group.
These gold IRA providers are known for high-quality customer service and support. They will walk you through the process to open a legitimate gold IRA account.
Most importantly, they all have relationships with legit, secure depositories, such as Delaware Depository and Brinks Depository. Your gold will be stored safely and legally.
Gold IRA Company Integrity Checklist
Free report and checklist that helps consumers compare and choose a reputable gold IRA company
2. Fund your account
The easiest way to fund your new gold IRA account is by rolling over funds from an existing retirement account, like a 401(k) or IRA. There are usually no tax penalties if you directly transfer funds without withdrawing.
3. Buy gold coins
Once you have money in your account, you can use it to buy gold. Your gold IRA company will have a list of IRS-compliant coins for you to choose from.
4. Store in depository
Your gold IRA company will handle the transportation of your gold to the depository, making the process hassle-free for you.
In many cases, you can even arrange with your IRA custodian to visit your gold in the depository.
Legal Ways to Store Gold at Home
If you still want to have some gold with you at home, it's certainly possible! Here are 2 ways you can legally keep gold at home:
- Make a withdrawal.
You can withdraw coins from your Gold IRA and have the physical gold delivered to your home. There's no tax penalty if you're over 59-1/2.[5] - Buy gold outside of an IRA.
Or you can just buying gold normally, outside of a retirement account. There will be no tax advantages, but you can buy as much as you want and keep it wherever you want.There are also no restrictions on purity or anything else. You can buy a much wider variety of coins and bars than you'd be able with an IRA account.
You can buy gold online from reputable dealers like J.M. Bullion or Vaulted.
Having precious metals on hand can protect you in case of emergencies. Just make sure you're not breaking any IRS rules. And of course, you'll be responsible for keeping the gold safe yourself.
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 advice, the concept of home storage gold IRAs is still floating out there, and some investors may be led astray.
Investors may like the sound of storing IRA gold at home because they like having quick, easy access to their investments. Gold is a tangible asset, and they like having an investment that they see and touch.
Additionally, some investors view gold as a safeguard in the event of a financial crisis. So the idea of having their gold within arm's reach provides a sense of security.
However, it's important to understand that home storage IRA is only a myth. Be sure to seek reliable sources of information when opening your gold IRA.
Gold IRA Company Integrity Checklist
Free report and checklist that helps consumers compare and choose a reputable gold IRA company
Bottom Line
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 IRS-approved depository. Or invest in gold outside of an IRA, in which case there are no restrictions on where you keep it.
References
- ^ 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
- ^ Internal Revenue Service. Application Procedures for Nonbank Trustees and Custodians, Retrieved 4/10/2023
- ^ FDIC. Financial Products That Are Not Insured by the FDIC, Retrieved 7/23/2023
- ^ Internal Revenue Service. IRA FAQs - Distributions (Withdrawals), Retrieved 7/13/2022
- ^ Internal Revenue Service. IRA FAQs - Distributions (Withdrawals), Retrieved 7/23/2023
Jeremy Harshman is a creative assistant at CreditDonkey, a credit card comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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