In the paragraphs below, I will address the question of home storage for Gold and precious metals IRAs. One of the most important questions is if there are solutions out there and which of them are legal? The current IRA rules basically make this impossible, so why take the risk?
Instead, you can take advantage of a secure gold IRA with storage included. Such an option is provided by Goldbroker.com, Regal Assets & Goldco, among others. I shall also look at some home storage options like Noble Gold’s survival packs.
Private Storage of Precious Metals
The private storage of precious metals is a legally grey area, meaning that the IRS can approve or rule out certain private storage options at any time. Experts like Monetary Gold do not recommend the private storage of precious metals.
They advise in favor of adding precious metals like gold, silver, and platinum to your IRA. precious metals must be stored with a bank, credit union, or a trusted company. The IRS has stipulated that a precious metals broker-dealer may not store precious metals owned by an IRA unless the legal entity has been registered as a trust company. IRA-owned LLCs must also store their precious metal assets with a bank.
Metals held personally make buyers suspicious because the so-called chain of possession is not recorded. Consequently, the metals might have been tampered with. These resale difficulties make experts recommend specialized secured storage programs instead of self-storage.
Setting Up An LLC to Store Your Precious Metals
Now that you’ve read that LLCs registered as trust companies are allowed to store IRA gold, you may want to explore this option. Before you go ahead, consider the following cons.
First, starting a Limited Liability Company (LLC) which will cost you time and money, and you’ll have to keep it in good standing with the state via a registered agent service. Second, providing storage space for LLC assets at your personal residence is prohibited by the IRS because the metals still belong to the IRA and not to you.
Beware Deceptive Ads
If you have been Googling “home storage for gold,” you have probably come across ads showing happy people smiling beside a strongbox full of gold bars. There’s only one problem: you don’t live in 18th century Venice, neither are you one of the city’s Doges.
While you can stash investment gold and other precious metals in your safe deposit box, it isn’t worth the risk, I think. You’ll have to have an elaborate security system installed and sign an expensive contract with a close protection & home security company.
Noble Gold’s Survival Packs
While you may not wish to risk the kinds of sums of money involved in a self directed IRA in home stored gold, many investors like the peace of mind of having some physical gold in their home in case of financial collapse.
Noble Gold offers “survival packs” for home storage as well as separate self directed precious metals IRA options for gold and silver in its secure Texas storage facility.
They draw a dark picture of a financial apocalypse when financial institutions and precious metals custodians cease to operate. So, people will have to rely on the physical gold that they have stashed. In Noble Gold’s own words, their survival packs are “to be used on the black market – to barter with – to exchange for goods and services when paper money becomes worthless.”
How Does a Gold IRA Work?
An Individual Retirement Account (IRA) is a type of investment account that offers certain tax advantages to its holder. Self-directed IRA account holders can diversify their portfolio with silver, platinum, or palladium, in addition to gold.
Traditional Gold IRAs
These are the most common type of gold IRA accounts. The money that you invest in your retirement plan qualifies as a deductible. When you withdraw from your IRA, you must pay an income tax.
Roth Gold IRAs
Roth IRAs are the opposite of traditional IRAs because you pay taxes when you contribute money to your account. You don’t have to pay taxes when you make a withdrawal, and there are no restrictions on when and how much you can withdraw from your IRA account.
SEP Gold IRAs
SEP Gold IRAS is the perfect retirement investment option for small businesses or self-employed individuals because of the large amount of contributions business owners can make. You may contribute as much as 25% percent of your annual earnings to your account. It is legal to own gold in your SEP IRA, as well as silver, platinum, and palladium.
Where To Open a Gold IRA Account?
Regal Assets was founded by Tyler Gallagher, an entrepreneur, and investor. Gallagher started Regal Assets with a vision to rejuvenate, innovate, and simplify the alternative assets investment world.
Regal Assets started out as a gold IRA company in 2009 and expanded their services to include crypto IRA in 2017. The company started in Texas and has expanded to Europe and Asia after enjoying a huge amount of success. The main office is still in Texas, where it all began.
Today, Regal Assets has established a stellar reputation and is recognized by the likes of Forbes, the Huffington Post, Smart Money, and many others as one of the highest-rated alternative assets firms in the USA.
GoldCo Precious Metals
Goldco Precious Metals has been a leader in the gold IRA industry for more than 10 years. They work tirelessly to educate customers on all of their investment options and go that extra mile with superior customer support – which is why they’re our choice as the gold IRA company with best customer service!
Goldco offers its customers the “white-glove service” with 24/7 customer support, a blog that covers investing topics and video tutorials to help clients learn more about their investments. Customers can set up an account or make transactions any time of day through Goldco’s website, which also features educational resources like ebooks and videos for investors at all levels.
Noble Gold is a relative newcomer to the gold IRA space, but its low minimum investment requirement and extensive educational resource has made it one of the best companies for new investors. So far they have been accredited by Consumer Affairs with 5 stars, BBB an A- rating, BCA zero complaints in 3 years!
Oxford Gold Group
This partnership-owned precious metals dealer is located in Los Angeles, California. The company can open a gold IRA account for you and sell you the precious metals you’d like to add. I like them for their An education-focused approach and friendly customer service.
Orion Metal Exchange
Orion Metal Exchange has been tagged “the best full-service precious metals company for 2020” by Retirement Living. This LA-based precious metals IRA specialist focuses on investment opportunities in platinum. This precious metal’s current production cost per ounce is higher than its market value, hence its higher upside potential.
Lear Capital has been a household name in precious metals IRAs for over two decades. I recommend this company for its smooth transactions guarantee, no-fee buy-back program, and personalized customer support. On the downside, Lear Capital cannot guarantee they will buy back the coins.
Home Storage of IRA-purchased Gold Is Illegal
The IRS strictly prohibits the home storage of IRA-purchased gold and other precious metals. Section 408(m) of the IRS code lists the precious metals that can be purchased with a self-directed IRA. The code also stipulates that these items must be “in the physical possession of a custodian.”
While the IRS Code discourages the holding of collectibles in IRAs, certain highly refined bullion items qualify for an exemption, provided they are kept in the physical possession of a bank or an IRS-approved trustee.
Taxes and Penalties Associated With Home Storage Gold IRA
The Industry Council for Tangible Assets (ICTA) confirmed in 2018 the prohibition of bullion held in self-directed IRAs. According to their leading investment expert and precious metals connoisseur Jeffrey M. Christian, individual investors who store a precious metals IRA at home risk severe penalties and hefty fees imposed by the IRS.
Individuals under 60 who keep IRA gold at home are liable to a 10-percent penalty under the IRS distribution regulations. This is so because distributions are viewed as an early withdrawal. Also, their precious metals investments will no longer be tax-deferred, meaning that they will have to pay distribution taxes.
If the IRS notices any suspicious activity in your IRA account, they may immediately launch an audit and impose additional penalties and fines.
Precious Metals Held in Gold IRAs
Having discussed the legal risks associated with the home storage of gold, let us now look at the precious metals you can add to your IRA account via cash contributions, IRA transfers, or a full rollover. There are four precious metals that you can legally keep in your gold IRA: gold, silver, platinum, and palladium.
IRA-eligible Coins and Bullion
The IRS has strictly specified the types of coins and bullion that investors can purchase and hold in their gold IRAs. Investors are encouraged to purchase high-quality metals with long-lasting value. Gold IRAs can only hold gold that is 99.5% pure in one of the following forms:
- American Buffalo coins
- Chinese Panda coins
- Credit Suisse bars produced at an approved facility.
An exception to this rule is American Eagle coins that are 91.67% pure, but can still be included in gold IRAs because of their historical significance.
Silver Coins and Bars
Silver coins and bars must be 99.9% pure to qualify for a gold IRA account, while Platinum and Palladium coins and bars must be 99.95% pure. Gold IRA companies usually have their own requirements regarding the coins, bars, and f bullion that their clients can hold in their gold IRAs.
Resist The Urge to Bury Your Investment Gold in The Backyard
If, despite everything you’ve just read above, you still want to go ahead with self-storage of gold and silver, use only a certified safe deposit box, and buy an adequate insurance policy for your assets.
Rather than squirreling your gold away in the attic, experts advise that you lock it in a safe deposit box at a bank, albeit banks seldom insure the contents of these boxes. The safest option for storing investment gold and silver is in an approved depository or vault.
These facilities will keep and insure your precious metals for less money than what you would have to pay for individual precious metals insurance.
Where Is IRA Gold Stored?
Having busted the myth of home storage IRAs, let’s now look at where your IRA gold is stored. As IRS regulations prevent individuals from taking possession of precious metals in their IRAs, you can’t just keep the metals in a safe deposit box at home.
Instead, it would be best if you choose a custodian to store your gold. These are specialized companies that safe-keep your precious metals. There are two primary types of custodians, depending on the storage they provide.
Segregated storage for your precious metals means that the custodian will store and keep them separate from other customers’ coins and bars. When you put coins and bars in the depository, you not only remain in possession of your metals, but you’ll get the same coins and bars when you take them out of the depository for sale or barter.
Commingled storage means that the dealer or the custodian stores your metals alongside other customers’ valuables. Whenever you add coins or bullion gold or silver to the storage, the depository writes down the type, quality, and amount of the metal added. When you take out the metal for sale, you may not receive the same coins or bars. The custodian only guarantees that you’ll receive an equivalent amount of metal of the same purity.
Although Both types of storage provide similar protection levels, I’d recommend choosing a storage facility that offers segregated safe-keeping, even though the fees are usually higher due to the increased space requirements.
Gold IRAs Withdrawal Restrictions
Gold IRAs are primarily for retirement savings, so certain restrictions apply if you’d like to take money out of your account and put it in real estate, for example.
When you put money in an IRA, the government gives you tax alleviations, but the IRS has certain restrictions in place as to how you can use the funds in your gold IRA account.
Traditional Gold IRA
You cannot withdraw funds from your traditional Gold IRA until you turn 59 ½. Once you’ve reached retirement age, all withdrawals are taxed as income. If you have to make a withdrawal earlier, you have to pay a 10% penalty on the withdrawn funds.
Traditional IRAs have minimum annual withdrawal requirements for individuals over 70 ½. These regulations oblige account holders to withdraw a minimum amount from their IRAs each year based on an individual formula. Account-holders who fail to make the specified withdrawals may be penalized.
Roth IRA holders can withdraw money that they’ve contributed to their IRA at any time without penalty once they turn 59½ without paying any taxes on the withdrawals. However, early withdrawals are subject to a 10% plus income tax. However, you may make penalty-free early withdrawals for a first-time real estate purchase or qualified medical or educational expenses.
Final Thoughts on The Self-storage of Precious Metals IRA
At this point, we have firmly established that it is illegal to store IRA-eligible bars, coins, or bullion silver or gold in your home and enjoy the benefits of IRA status. This does not mean that you cannot stash some investment gold or silver away for a rainy day. However, you will never be able to add these tangible assets to your retirement plan.