The Latest Warning from the IRS on Home Storage Gold IRA


For over a year now, a number of companies have been busily advertising the idea of home gold IRA storage. By this they promoted the possibility of you setting up a custodian company in order to manage and vault your retirement holdings precious metals that you bought for your Self Directed IRA at home. This has been a questionable practice and grey area of the law since Home Storage Gold IRA companies first suggested it. As the Wall Street Journal has warned earlier this month, the IRS is taking an unfavorable view of this method now. Read on to learn what the controversy is surrounding the Home Gold IRA storage and if it is worth the risk for your own gold holdings.

What the Ads and the IRS Say About Home Gold Storage

This past summer, the advertisements have been particularly prolific on IRA Home Gold Storage. They have insisted that you are able to use the funds from your tax deferred retirement vehicles to purchase gold and other precious metals. The promotions from firms like Augusta Gold and Hartford Gold Group say that you can then store them wherever you would like, including at home or in a bank safe deposit box. Other companies sell packages that set you up an LLC company to be custodian for the gold.

This has not yet been tested by the courts or the Internal Revenue Service directly, but the IRS issued a set of guidelines that apply to the storage of Self Directed Gold IRA holdings. Most recently, earlier this month the IRS has issued a stern warning against the home gold storage concept and on following the rules that they have laid out. This comes in response to the multiplication of ads promoting the concept both online and on the radio. The Wall Street Journal wrote a significant piece about it several weeks ago. In this they stated that “the Internal Revenue Service is not too keen on the recent advertisements suggesting retirement savers store their tax-free individual retirement account funds in gold at their house or in safety deposit boxes.”

Home Gold Storage Might Be Legal if Done Correctly

The biggest problem regarding storing IRA gold yourself is that the law is mirky on this point. Self Directed IRAs are not allowed to hold collectibles of any kind. This includes art, gems, wine, or antiques. They are permitted to hold funds in the form of bullion coins and bars in precious metals that include gold, platinum, silver, and palladium.

 With most of the major IRA providers, such as Charles Schwab and Vanguard, you are not able to put your IRA funds into physical metals. Others will allow it but charge exorbitant fees for the possibility. Fidelity permits its clients’ IRAs to be invested in approved bullion and coins. They charge a hefty 2.9% fee to purchase these metals and 2% more to sell them. Storage fees per quarter amount to .125% as the Wall Street Journal points out. For this, Fidelity will not even allow you to hold your gold at home or in your local safe deposit box. They require all physical precious metals to remain in an IRS approved facility. Their IRA holders are not allowed to withdraw the gold or even to see it unless they obtain a notification from the IRA custodian.

Home Gold Storage Is Not Cheap

Costs for keeping the metals close to home might work out to be even higher. This likely influences the IRS thinking on how costly and difficult it could be for the average retirement savers to invest their funds in physical precious metals. The promoters of gold storage at or near home argue that investors can own and manage a limited liability company which directs the IRA funds to purchase the gold. Some attorneys that have considered the IRS law say that such an arrangement would permit the IRA investors to store the LLC owned coins in a safe at home. Bullion would have to be maintained in a safe deposit box which the LLC owns at a bank.
The expenses for this option are not inconsiderable. The Wall Street Journal points out that professional companies which offer LLC paperwork to store IRA gold close to home charge anywhere from $400 to $1,200 to set these entities up in the first place. Since IRA assets can not be co-mingled with other types of assets, a dedicated safe deposit box would be required to keep any bullion at the bank. This means that storage costs would amount to hundreds of dollars per year even for keeping bullion in the investor’s local bank vault.

Other Reasons to Be Cautious About Home Gold Storage

These are not the only reasons to be careful about LLC IRA Home Gold Storage. The structure does not have clarity on which coins and bars can be held in such an entity. This could be an issue for investors even if the IRS gives the LLC concept a pass when it finally rules on the matter. These rules on controlling and third party managing IRA assets are complex. You could easily make a mistake and be in violation of them by accident.

Besides the costs of setting up these LLCs, there is also additional work and expense in keeping up the entity’s operating agreements and filings with the state. The fees involved with the LLC would mount if you wisely consulted with a CPA or attorney on all transactions and filings with the account. This is the cost of preparing your LLC IRA to hopefully withstand any challenge that the IRS makes to it in the future.

The Safest Way to Hold Gold in Your IRA

The safe and proper way to have gold in your IRA is to follow the IRS guidelines exactly. This means that you should pick out a third party administrator and custodian like Regal Assets. They will buy the approved coins or bullion on your behalf from a dealer which is reputable and dependable. Finally, a custodian like this will store your gold and other precious metals in a third party vault that is IRS approved. Some of these are likely located close to where you live. This way you will not accidentally run afoul of the IRS in the future and potentially suffer from both penalties and taxes on your IRA purchases of precious metals.

W. D. Crowder

W. D. Crowder is an American published author with decades of experience in financial writing. He specializes in many areas, including: investment, economics, international relations and more.