Precious metals- gold especially- are popular investment choices in the US and around the world. Home storage gold IRA account ads are showing up more and more- but are they really what they claim to be?
The question mark over home storage gold IRAs- and the debate of physical gold VS gold IRA holdings- is a hot topic. Having the facts about what is and is not allowed is essential for keeping yourself right.
If you are considering a gold investment and are interested in home gold storage, there are some things to consider first. We have the information you need right here.
Prior to reading this article:
We understand that there are many factors that come to mind when making any investment decision. For this reason, we created a page that compares various gold IRA companies and makes recommendations based on many factors.
Or, if you are interested in getting educated straight away, we urge you to get a free informational brochure from our recommended company.
What Will I Learn?
- The Purpose Of This Article
- Is a Home Storage Gold IRA a Valid Option?
- Why Do People Want to Store Gold at Home?
- Why The IRS Has A Stance Against Home Storage Gold IRA
- What Are The Potential Penalties for Home Storage Gold IRAs?
- Issues With Security
- Other Legal Issues
- How Can You Legally Store Gold at Home?
- What Is A Gold IRA?
- Why the Self-Directed IRA With a Custodian is the ONLY Option
- FAQs – Home Storage IRA
The Purpose Of This Article
The purpose of this article is to inform potential investors about the reality of what a home storage gold IRA is- and the issues that come with it.
We also cover the legality of storing gold at home, what potential penalties you could face, and the alternative options.
Additionally, we share our advice for the best ways to invest in gold safely- and answer a few frequently asked questions about the topic in general.
By the end, we hope you feel more informed about home storage gold IRAs and your other options- and ultimately more confident that you are making the correct decision.
ALERT: The IRS has now banned home storage gold IRA’s.
Is a Home Storage Gold IRA a Valid Option?
First things first- is a home storage gold IRA a legitimate option for precious metals investing? The short answer is no- it is not.
Ads for home storage gold IRAs are misleading- insinuating that you can buy gold coins, bullion, and bars and keep them on your property.
That is not exactly true. Yes, in theory, you could open a gold IRA and withdraw the gold- but there are fines, penalties, and potential legal issues- not to mention the lack of security.
Storing gold at home is a violation of the Inland Revenue Services regulations, and they do not approve of home storage gold IRAs.
To summarize, the concept of a home storage gold IRA is not technically a real thing. The internet is filled with misleading information- and some sites suggest this type of account exists. Put simply, it does not.
A gold IRA is a valid option (more on that later), and storing gold at home is an option- but the two do not go together without the likelihood of repercussions.
Why Do People Want to Store Gold at Home?
Buying gold and other physical precious metals is an appealing investment for people who like the idea of diversification- and the draw of keeping it at home is having it there as an emergency source of funds, should you ever need it.
Knowing you have immediate access to your physical gold whenever you need it has an understandable appeal, but what is less appealing is the fines, fees, and penalties that could befall you if you don’t follow IRS rules and regulations.
Why The IRS Has A Stance Against Home Storage Gold IRA
The IRS is not against gold investments- but it is against keeping your gold at home.
Why? In short, the rules and regulations state that any physical gold but be held by a trustee corporation or approved custodian in a certain type of storage facility.
This helps to ensure people are not taking advantage of the tax benefits that come with IRAs- something that is much harder to monitor if gold is kept at home.
If you are found to be storing physical gold and other precious metals at home, you open yourself up to investigation and possible penalties from the IRS.
What Are The Potential Penalties for Home Storage Gold IRAs?
Tax benefits are great, but they come with strict rules. The IRS takes violations seriously and applies fees to anyone found to be attempting to beat the system.
Here are some of the risks you face by storing gold at home instead of in an IRS-approved facility.
To get the gold out of your IRA and into your home, you need to make a withdrawal. Doing so counts as a distribution of funds- something that is not allowed without a fee.
Distribution penalties apply when anyone under the age of 59 and a half years old takes money out of their IRA (there are some exceptions- but this is the general rule that applies to most account holders).
If you remove gold from storage, it is the same as withdrawing money in the eyes of the IRS. As such, withdrawal penalties apply. It is usually 10% of the total amount- which can add up to a significant sum, depending on how much you take.
Furthermore, your withdrawn gold will be eligible for income taxes- so you will have even more to pay on top of your fees.
Audits from the IRS
If penalties and fees are not enough to put you off the idea of storing IRA gold at home, the thought of an IRS audit should do it.
Nobody wants the IRS poking around their finances- and if you are found to have withdrawn gold to store at home, you are far more likely to be audited.
IRS audits of an IRA include an in-depth search of every transaction related to your savings there- and if you have broken any other rules (knowingly or not), you could find yourself in some trouble- and with further penalties to pay.
One example of when a couple stored IRA gold at home and were audited by the IRS made headlines when they ended up having to pay over $300,000 in fines- close to half of the total value of their gold holdings.
This is only one case- similar things have happened to others, so it is important to be certain you are following the rules!
Issues With Security
Moving on from the potential problems a home storage gold IRA could cause you with the IRS, let’s talk about the security issues that come with keeping your gold at home.
With most IRAs, gold is held in IRS-approved gold depositories and storage facilities with advanced security- reducing the chances of theft to as close to impossible as it gets.
Even an advanced home security system cannot compare. If someone was to break into your house, they could steal your gold- and the average home insurance policy doesn’t come close to covering it.
Most insurances have a limit of around $200 for stolen gold- so you would need to take out a special (most likely expensive) coverage plan.
It is not as easy as you may think to find an insurance company willing to cover large amounts of gold- so it is something you really need to consider.
Gold IRA storage facilities in the US are some of the most secure in the world. It is undeniably the safer route to take.
Other Legal Issues
Let’s be clear about one thing: it is not necessarily illegal to store gold in your home. You can do it- as long as doing so doesn’t break any IRS rules. The problems come if you don’t pay the applicable taxes owed on gold withdrawn from an IRA. When you consult with one of the companies I linked you to above (click here in case you missed it) you’ll find out that the IRS law on owning gold in your retirement is that you need to have a third party agency in between you and that asset.
You could also face problems if you don’t declare your gold correctly. How much gold can you buy without reporting? Well, there is technically no limit.
However, you must report any sales of gold on your tax return, as it could affect how much you need to pay.
How Can You Legally Store Gold at Home?
We have established that you can, in fact, legally store gold at home under certain conditions. As long as you pay the required fees and taxes, you can do it.
If you withdraw from a gold IRA once you pass the age of 59 and a half, you are perfectly entitled to keep it in your house- or anywhere else for that matter.
You can also purchase gold completely separately from your retirement accounts- you just won’t get the same tax benefits.
If you make an independent direct gold purchase using money that is not stored in an IRA of any kind, you can store it wherever you want.
What Is A Gold IRA?
Now, let’s talk about gold IRAs. A gold IRA is a type of retirement savings account that lets you invest in physical precious metals- such as gold and silver coins and bars.
You can open one through a reputable gold IRA company- then appoint a custodian and trustee to be responsible for the storage and physical possession.
Gold IRA companies help with the setup of your account, depositing funds (including a rollover from your 401(k)), custodian appointments, and storage arrangements.
They charge a small fee for their services, but ensure compliance with IRS rules- as well as the security of your assets.
What Are the Benefits of a Precious Metals IRA?
There are many benefits to opening a gold IRA- especially with the help of the best gold IRA companies.
Here are some of the key benefits of this type of account.
- Diversify your savings
Diversification of retirement funds is very important. Keeping all your eggs in one basket is never a good idea- and physical gold is an excellent choice for offsetting some of your wealth.
Unlike traditional IRAs, a gold IRA lets you buy physical gold, silver, and other precious metals- it is the only retirement savings option that does.
- Hedge against inflation
Currency values go up and down- there is no escaping it- and the same applies to the price of gold. However, when one goes down, the other tends to go up, so having money in both forms protects you against inflation and helps you retain your wealth.
- Low-risk investing
Gold is a pretty solid choice as far as investments go. It may not have the short-term gains capacity of some other investments (such as stocks and bonds)- but it also has significantly less risk. A stock’s value can plummet to zero- that cannot happen with physical gold.
- Tax advantages
Investing through a gold IRA comes with several tax benefits that pay off in the long run if you don’t make early withdrawals or break any rules. Gold stored in this type of IRA has certain protection against taxes, so it is worth it if you are planning for your retirement
- Safe, secure storage
The key benefit here is that your physical precious metals are kept safe in highly secure, IRS-approved facilities. You don’t need to worry about burying your gold in the backyard or stuffing it in your mattress- it is protected in a state-of-the-art depository with all the protection it needs.
Why the Self-Directed IRA With a Custodian is the ONLY Option
To some people, the idea of a home storage gold IRA is appealing, and they think having their gold IRA assets close to them in their own home is best- but for several reasons, it is not.
A self-directed gold IRA with an approved custodian and storage facility is the only option for ensuring IRS compliance, long-term protection for your assets, and peace of mind that your investments are safe.
Although you are legally allowed to keep gold at home, there is a fine line between what the IRS deems acceptable and what you cost you dearly in fines- so it is not worth the risk.
Luckily, a self-directed gold IRA opened through a gold IRA company you trust is easy to manage, approved by the IRS, and has many tax benefits and advantages. The idea of a home storage gold IRA may seem appealing, but it could be a lot more trouble than it is worth.
FAQs – Home Storage IRA
Here are a few frequently asked questions relating to the topic of home storage gold IRAs.
How do I store gold in my IRA?
Storing gold in an IRA is the best option- but how does it work? Can I hold precious metals in my IRA? Yes! You can!
The process is fairly straightforward.
First, you need to open a gold IRA through a reliable provider. The company you choose is responsible for several elements of your account- so it is important to take the time to find a company you trust.
Next, you need to fund the account. There are a few ways to do this- one of the most popular being a 401(k) rollover. This is when you move funds from your 401(k) account into your gold IRA- either directly or indirectly.
A direct rollover is the safest option- it goes straight from trustee to trustee- bypassing any requirements from you to transfer and deposit funds. If you choose an indirect rollover, the funds will be sent to your account- you then have 60 days to deposit them in your gold IRA, or you will face heavy fines.
Once the funds have cleared, you can use them to buy gold. Again, you can do this through your gold IRA providers- who should have a list of available products that comply with IRS regulations.
After the gold is purchased, your provider handles the transfer and storage of the gold in the selected depository. It is pretty hassle-free on your part- since your appointed custodian is responsible for this part of the process. Your gold is then safely stored, and the transaction is complete!
How do you store gold at home?
You can legally store gold at home by buying it outside your IRA, withdrawing it from an IRA and paying the fines and penalties, or waiting until you are 59 and a half years old before removing it from your account.
As to the practical question of how and where you store it- that is really up to you. It is highly advisable to invest in a premium-grade safe big enough to hold it (gold takes up quite a lot of space, remember)- or put it somewhere you feel confident it can’t be found or stolen.
People store their gold in all kinds of ways- but none are without some level of risk- other than a secure storage facility with the necessary setup to protect high-value assets.
How much gold is a US citizen allowed to own?
There is no legal limit to how much gold a US citizen can own- the only limit is how much you can afford. The IRS has some specifications about the types of gold purchases that are legal if you are buying through a gold IRA, but for private purchases, you can buy whatever you want.
Is a gold IRA tax-free?
A gold IRA affords you several tax advantages.
First, you do not pay any taxes on the funds deposited into the account- regardless of what age you are when you deposit them.
The contributions are also tax-deductible- so you can take them off your total taxable income that year.
Your savings then grow over time tax-free- and you won’t have to pay taxes on the deductions if you wait until retirement.
If, however, you withdraw funds before retirement, you will pay income taxes according to your current tax bracket.
Withdrawals before the age of 59 and a half also incur a 10% penalty.
Are gold IRAs worth it?
Yes, they are- as long as you take the advice of your financial advisor as to how much of your retirement funds to convert to physical gold. Anybody interested in investing in gold should do it through a gold IRA- it is the best option for safety, IRS compliance, and long-term tax advantages.
What is the minimum to open a gold IRA?
The IRS does not impose any minimum requirements for how much you need to deposit to open a gold IRA. How much you need to open an account depends on the gold IRA company you use to do it.
Some companies ask as little as $500- with others requiring $50,000 or more- so it is important to do your research to find one that works for you.
Which IRS-approved coins can you hold in a gold IRA?
You can hold a variety of gold, silver, platinum, and palladium coins in a gold IRA.
The IRS requires any gold coins for IRA purchases to be at least 99.5% pure- the only exception being the American Gold Eagle coin, which should be 91.67% pure.
Silver coins must be 99.9% pure, and platinum and palladium should both be 99.95% to qualify for your gold IRA.
Another requirement is the coins be in mint condition- as well as sealed in their original packaging with a certificate of authenticity.
Your gold IRA company should have a list of coins you can buy- and what ones are not allowed. They should also explain your options for IRS-approved gold bullion and bars.
If you are wondering, ‘Can I store my gold IRA at home?’, the simple answer is no- not without losing out through IRS fines.
Home storage IRAs are not a real thing- you have precious metals IRAs that use approved storage facilities, or you can withdraw gold and keep it at home.
To sum everything up, gold is a popular retirement investment- but it is much better to store it in an approved facility through your gold IRA custodian. If you want to keep it at home, you must be prepared to pay fines and penalties- and open yourself up to investigation from the IRS.
Storing gold at home may seem appealing, but the logistics are not straightforward. It is bulky, hard to insure, and attractive to would-be thieves.
The IRS may come knocking- and you could lose out on a lot of money if things are not handled correctly.
Instead, keep your precious metals in a gold IRA- stored in a top-end facility with a custodian to take care of the transactions. Save yourself the hassle- and avoid costly errors that could destroy your investment.
The top way to safeguard your retirement is to open a precious metals IRA. Check out the below providers and request a free kit.
Best Overall Rating (Where I Invested)
#2 American Hartford Gold
Best Buyback Program
#3 Augusta Precious Metals
Most Educational ($50,000 Minimum)
#4 Noble Gold
Best Metals Selection