Investing in precious metals can be a smart way to hedge against inflation or economic downturn. But before you invest, it's important to do the research. One thing that many people hear about is "home storage" IRA accounts. Can you really Store your Gold IRA at Home?
Is A Home Storage Gold IRA Legal?
A google search on home storage gold IRAs will throw up results from both ends of the spectrum. For instance, some say it is illegal, while others go in blindly.
Obviously, there are many reasons why you should steer clear, and most importantly, just with anything that has to do with finance and wealth, it is controlled by certain regulations.
You might hear about home storage gold IRAs and think they are great for storing your investments.
Reminder: Home storage gold IRAs tend to have serious costs and risks, so while they are legal if the regulations are followed, it's best to evaluate whether or not these benefits outweigh the high costs.
- It is necessary to establish a Limited Liability Corporation or LLC and fill out the appropriate agreement.
- Gold and silver IRAs require detailed yearly audits by a certified public accountant
- You need a public place of business to keep your gold IRA.
- You need to have a net worth of $250,000 or more.
- You should have a lawyer on retainer.
- You should have a financial background to prove you are capable of managing your own IRA.
- For each additional employee, there should be a minimum fidelity bond of $250,000.
The first step to owning a home storage gold IRA is consulting with the IRS website. This will give you all of the comprehensive guidelines and rules that govern setting up an account, as well as some general ideas for what types of property are eligible.
4 Facts About Gold IRA Storage
Your retirement prospects will be in your own hands when you get the right kind of education. Learn how to store physical gold inside an IRA and make sure everything is done correctly from the first day so that you don't end up dealing with IRS trouble or having a less-than-optimal portfolio opportunity.
Start with a Trusted Custodian
You cannot move or add gold that you already have into a Self-Directed IRA without first buying it for the account. The custodian purchases the gold on your behalf and arranges delivery to a security center that stores precious metals.
When investing in gold or silver, you need to carefully investigate what kind of IRA you want. For example, home storage IRAs require a large initial investment and have high costs that can reduce the return on your investment.
U.S. Money Reserve is an American company that can help you take care of the gold IRA process, from setting up an account with a vetted custodian to arranging the gold transfer and storage depositories through provisions in the IRS code.
Don't Keep the Gold in your Home
The IRS insists that no one should store gold from a Self-Directed IRA at their home or in their own safe deposit box. The agency outlines the importance of following its guidelines on storing gold.
Try to store gold in a Self-Directed IRA that's supposed to be stored at home. The IRS likely will view it as an IRA distribution subject to taxation and, if you are under 59½ years old, an additional 10% penalty for early withdrawal.
Furthermore, storing IRA assets at home might be considered a "self-deal" by the IRS and is therefore prohibited. A self-deal refers to distributing all of an account's assets - not just those in gold bullion that is stored in your home. The bottom line: if something is "prohibited," avoid it.
Make sure that you do not buy any gold as part of an IRA. You can store your physical gold at home in some cases, but any gold that's used within a fund that is classified as an IRA cannot be stored with the rest of your regular valuables.
Avoid Anyone that Promotes "Home Storage."
A new ruling says that some gold and silver dealers have promoted "home storage" schemes to skirt the IRS's ban on holding precious metals in your IRA at home. In order to do this, investors are buying a "checkbook LLC" (a self-managed business created by an IRA owner) to buy and hold bullion.
Some precious metal dealers misinterpret a type of business organization called "checkbook LLC" as enabling physical gold to be stored in an individual's home.
The council warns that the 'home storage' concept may conflict with the law, and purchasing IRA investment is a great way to do it. Banks or IRS-qualified custodians must hold these in order for you to keep your tax benefits since this would not continuously occur otherwise.
Let U.S. Money Reserve Be Your Guide
At U.S. Money Reserve, they assist you in opening a Self-Directed IRA account, as well as order the gold or silver bullions to be safeguarded in your IRAs. They work with an IRS-approved depository to safeguard precious metals.
Owning gold in a Self-Directed IRA can be one of the smartest financial moves you make. When it comes to keeping your precious metals, there are many options at your disposal. You could store them with other assets or keep them separate and safe from harm - whatever suits best for you!
What Does the IRS Say About Home Storage Gold IRAs?
Though investors can be assured of purchasing the physical gold, they desire a self-directed IRA. The IRS strictly prohibits this with IRA-purchased metal. Section 408(m) of the IRS code defines what types of precious metals may be purchased for an IRA account and also clarifies that they must be in possession of a trustee—which is not the case when owning physical gold at home.
The IRS does not recommend holding gold or other bullion as a collectible in an IRA due to the costs and risk. Further proof that you cannot store gold in your home if you are using an IRA to buy it is a white paper issued by the Industry Council for Tangible Assets.
Are There Any Penalties or Taxes for Incorrectly Opening a Home Storage Gold IRA?
If your home storage gold IRA is not compliant with IRS rules, you will face serious consequences. Jeffrey M. Christian, a gold expert, says that this is a big risk for individual investors. If the IRS finds out about it, you may have to pay taxes and fees on your whole IRA account if they decide to punish you for storing your gold in self-storage. The IRS can come after you whenever they want because the IRS has no statutory limits on when they can audit your account.
With all of these risks and potential penalties, why would an investor want to store their gold in a home storage IRA? The answer is that there are very few benefits to this type of investment.
You might hear about "home storage" gold IRAs. But most investors will find a home storage strategy to be prohibitively expensive in the long run by facing excessive distribution penalties and income taxes due on non-deferred distributions, and it could also cause unforeseen legal consequences.
Where the IRA Precious Metals are Usually Physically Held?
When you buy precious metal, it will be kept in one of six IRS-approved vault companies. These companies are well-known and trusted. They include:
- Delaware Depository
- HSBC Bank USA
- Brinks Security
- JPMorgan Chase Bank North America
- CNT Depository
- Scotia Mocatta
All storage firms for precious metals subject to the IRS requirements of gold and silver IRAs are U.S.-based businesses, which the IRS formerly required for all storage of such metals within a precious metals IRA. Some of these companies also offer international storage for gold in different countries. These countries are London, Singapore, Dubai (United Arab Emirates), Zurich (Switzerland), and Hong Kong.
What to Do If You Have Already Set Up a Home Storage Gold IRA?
For those who have already set up a Home Storage Gold IRA, I would recommend shutting it down as quickly as possible and transferring the funds back into your traditional custodian.
There are many reasons to do this, including being illegal in addition to other factors such as high fees or unattractive investment options for you that may be better with another company.
Investing in precious metals like gold is one way to protect your money from global economic uncertainty. However, you can't just give any gold dealer your money and expect things to turn out well. You also can't fall for tall tales about storing IRAs at home.
For most investors, home storage IRAs will not bring any significant benefits while introducing serious costs and risks.