Is gold IRA storage at home allowed?
The simple answer is no. For a more detailed answer of what the IRS defines as precious metals, and what may be purchased with a self-directed IRA, see Section 408(m) of the IRS Code. If your gold or other precious metals is in the form of an IRA, then it must be held, that is, "be in the physical possession", with a bank or trustee.
The key to understanding this question is due to the term "IRA". An Individual Retirement Account is completely different to simply holding precious metals bullion or coins. You can have a piece of gold you bought from a collector or gold supplier stored at home, but if that gold is deemed to have been bought within an IRA, then holding it at home is not only illegal (if you don't meet all the qualifications - see list at bottom of post), but can cost you plenty in penalties and/or taxes.
In this post we will investigate what you can and can't do with a gold IRA investment when it comes to storage of the assets. Make sure to read the full post because at the end of the post we outline the qualifications required if you truly wish to store gold IRA assets at home.
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What Gold Can I Store At Home?
You can store any gold or other precious metals, be they bullion or coins at home if it has NOT been bought through a gold IRA investment vehicle. Having said that, do you honestly want to store your precious metals in your house?
There are currently a number of ads running online and elsewhere that promote the benefits or buying a safe and having control over the storage of your precious metals. These ads don't tend to mention the fact that gold IRA investments can't be stored at home and so it's not surprising that some people are confused by the issue, especially when the ad uses "IRA" in the ad copy.
But as good as it may sound to have your own safe, aren't you simply tempting fate by having something as valuable as that in your home? From a security and safety perspective it would be much better to store your precious metals in a bank safety deposit box or storage vault at the very least.
Granted, some people don't like having their assets under "bank control" but there are also private dedicated storage facilities where your assets can be stored, at a cost, which can give you better access and peace of mind. Storing such "hard assets" like gold, silver, platinum or palladium at home is simply a risky proposition.
Penalties and Taxes For Home IRA Storage
The Internal Revenue Service (IRS), sees the home storage of IRA approved precious metals as a violation of its IRA rules and regulations. Therefore, it has the power to pursue you for breaking the rules. In the first instance, you would likely face a distribution penalty.
If IRA gold is kept at home, then it qualifies as a distribution, which is similar to receiving income from your investments. This means you could face a 10% penalty if you’re under age 59.5. The distributions taken from gold IRA's are designed to encourage you to keep your investments for the long-term, therefore the IRS penalises those who take distributions before the 59.5 year threshold. Holding gold IRA assets at home is therefore considered a distribution.
The next issue faced is that your investments are no longer tax-deferred (which is one of the great benefits of a gold IRA), so you’ll owe income taxes on the distribution. Depending on your personal income tax rates, this could be a serious amount of money.
Finally, if the IRS considered what you're doing as "improper account activity", you could face an audit. This could lead to additional fines and penalties. IRS audits can be lengthy, and in-depth, and usually costly. So best avoided.
But Aren't Gold IRA's Self-Directed?
The term "self-directed" refers to the fact that you have control over how you can set up the gold IRA and what you can invest into it, but the rules and regulations governing the actual assets that are approved for IRS investment, and the tax implications that accompany gold IRA's means that you would need to be highly qualified to truly "self-direct" the fund.
This is why gold IRA's are set up through dedicated investment companies who have strong track records with these investment vehicles and know all the appropriate requirements for their operation.
These can include the proper use of custodians, trustees, banks, storage facilities, taxation professionals, investment scenarios and not to mention keeping up with all the changes in the financial markets and the industry itself.
So the term, "self-directed" can be somewhat confusing and this may also explain why some of those ads mentioned earlier can be a bit misleading too. Gold IRA investment should be conducted through professionals who know what they are doing.
How To Qualify For Gold IRA Home Storage
I've left this list until near last because once you read it, you will realise that trying to qualify to have your gold IRA stored at home is truly an exercise is self flagellation. There's more hoops to jump through than a circus. At a minimum, you need:
How Do I Open A Gold IRA Account?
The market for Gold IRA products has exploded in recent years, and as financial markets and world events start to impact people's thinking and investment needs, the number of companies offering gold and other precious metals IRA's will only increase. This is making the decision process harder but is also helping to diversify the market as well.
Some companies are specialising in gold and silver, while others cover the full spectrum of precious metals, and there are even crytocurrency specialists emerging with unique offerings.
To help you analyze some of the top performing companies who have been in the gold IRA investment market for a long time, read our post on best gold ira companies.