Physical precious metals are one of the best items you can keep in your retirement portfolio. By opening a precious metals IRA, you protect your savings until you reach a certain age, allowing you to take tax-free withdrawals and enjoy your money.
If you've been researching gold IRA companies, you may have noticed that some of them offer a service called "Home-Storage Gold IRA." This service claims it can allow you to store your gold and silver coins at home, but is it too good to be true?
Unfortunately, it is. This article covers everything to know about a home storage IRA, including why you should avoid it and instead go for a gold IRA company that complies with IRS rules.
Can You Store Your IRA Gold at Home?
Your gold IRAs (also called precious metals IRAs) are bound to the IRS and its regulations, so there's a set of rules you must follow if you want the tax benefits that come with them.
The Internal Revenue Service prohibits everyone from having a home-storage gold IRA, which basically means you can't store your IRA assets at home.
You'll be allowed to have your gold and other precious metals at home once you reach 59.5 years of age and are allowed to take distributions.
According to Section 408(m) of the IRS code, all your IRA retirement funds must be kept in the possession of a "trustee." The trustee, most of the time, will be a bank or approved depository.
Even though you can't have home-storage IRAs, you can buy physical gold outside your retirement account and store it anywhere you want. However, this also comes with the risk of getting robbed.
In any case, a home-storage gold IRA is never a good idea. You're exposed to many risks and penalties, so it's not worth it.
There's one way you could "technically" own a home-storage gold IRA, and that's by opening an LLC. I'll talk more about that further into the page.
What Happens If You Get a "Home-Storage" Gold IRA?
If you open a self-directed IRA and store all your bought assets at home, the IRS could penalize you differently. Depending on the case, you could lose a lot of money, which will affect your retirement funds. If you're planning on saving as much money as possible through your gold IRAs, avoid storing your items at home.
Let's look at the two main consequences you'll face if you have a home-storage gold IRA:
Common IRS Consequences of Having Home-Storage Gold IRAs
Penalties
The first problem you must consider is that shipping your precious metals to your home will be seen as a distribution. This means that you'll be subject to regular taxes and penalties from the IRS.
According to the IRS, you have to wait until you're 59.5 years old to make tax-free withdrawals. Otherwise, you'll have to pay a 10% tax penalty. Depending on the case, you'll also have to pay considerable income taxes.
Even if you only shipped a single gold coin, you would lose a ton of money, as precious metals are known for having a high value.
Audits
It's not worth it to have home-storage gold IRAs even if you're willing to pay all the penalties, and that's because you could also face audits.
If the IRS suspects you have a home-storage gold IRA, it may conduct an audit to see if you did break any other rules. You may get heavily fined for storing your gold IRA items at home, and if you add the penalties on top of that, you end up with a lot of money lost.
Where Can You Keep Your Precious Metals?
When it comes to a precious metals IRA, home storage isn't a viable option. Not only is it not safe, but it can also bring you a lot of problems with the IRS. In short, you can keep your precious metals in approved gold IRA depositories.
How do you know which depositories are safe, though? Your gold IRA company/custodian can help with that. These professionals often have contacts or partnerships with the most reputable depositories on the market, so if you're looking for a safe place to store your IRA gold, they may offer an option.
As long as your IRA gold is kept in an IRS-approved storage facility, you'll be good to go.
What About Setting Up an LLC?
Those wondering: "Can I store my gold IRA at home?" may have come across the option to open an LLC as an "alternative." However, there are a few requirements you must keep in mind:
- You must create an LLC in your name, as well as a specially written operating agreement.
- Your minimum net worth should be $250,000 after audits and incorporation.
- Your trustees and employees must have a $250,000 fidelity bond for corporate insurance.
- You must divide the ownership of your corporation between several people.
- You must have verifiable fiduciary experience and a solid financial background. In other words, you must prove you have experience handling retirement funds.
- Your corporation must have a public business location.
- You must have corporate legal counsel available.
- You must hire a qualified public accountant to draft annual audits.
Even if you were able to comply with all of those rules, you can't store your assets at home. You still must save everything in a storage facility related to your corporation.
If you don't already have an LLC, it's not worth it to undergo all of that just to avoid storing your assets yourself.
How to Avoid Scammers
The main reason why we keep seeing advertisements for home-storage gold IRAs is that there are many scammers around.
These people claim you can "legally" open a home-storage IRA and store everything in a safe at your place. Some of these companies even offer a "free safe" if you buy your gold with them. Others claim they can help you with the process of opening an LLC.
Regardless of the case, you shouldn't trust these people with your hard-earned money. Companies that promote home-storage IRAs are also promoting illegal activity and showing misleading information. Trusting them will only cause you more problems in the long run.
If you want to open a gold IRA account, follow the rules established by the IRS, and you'll have a worry-free experience.
How Can You Open a Gold IRA Account Safely?
To open your gold IRA, you must find a professional and transparent provider. This company is responsible for handling your retirement funds until you retire, so you shouldn't take this decision lightly.
The right companies will be transparent with their rules, guidelines, and fees. Moreover, some of them have partnerships with secure depositories approved by the IRS, which will take the stress off your head.
Once you talk to your preferred company, you must fund your account, either by depositing money directly, doing a rollover, or processing a transfer.
Finally, work with your custodian to buy IRS-approved coins and bullion; these will get shipped to a depository, and they'll be safe until you're ready to withdraw them.
Bottom Line - Should You Avoid Home Storage of Your Gold IRA?
To summarize, you shouldn't store your gold IRA at home unless you already meet the withdrawal guidelines set by the IRS.
I recommend you not to trust companies that promote home storage of your IRA gold, as that will bring you more problems than solutions.
As long as you work with the best gold IRA companies and custodians, you'll have no issues managing your precious metals and getting them once you reach 59.5 years of age.
About Tim Schmidt
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started IRA Investing to share his expertise in using his Self-Directed IRA for alternative investments. His views on retirement investing have been highlighted in USA Today, Business Insider, Tech Times, and more. He invested with Goldco.
