A glance at Home Storage Gold IRA advertisements may convince you of the advantages of storing your gold reserves right in your home. While the concept may seem attractive, keeping gold at home might contradict IRS regulations, leading to severe penalties and the potential loss of your IRA’s tax benefits. This article uncovers the truth about home storage Gold IRAs, the fines involved, and how you can legitimately store your IRA gold.
Gold IRAs: Can They Hold Physical Gold?
Using a specific self-directed IRA account, you can hold tangible gold in an IRA. This unique account lets you invest in actual gold coins while enjoying the same tax benefits as conventional IRAs. To do this, you need to open a gold IRA account with a specialized gold IRA provider. Once you’ve done that, you can acquire gold coins for retirement. But where can you keep your precious gold? We delve into this next.
Home Storage Gold IRA: Is it Possible?
The straight answer is no. As per IRS guidelines, neither your home nor a bank deposit box can be a storage option for your IRA gold. Your physical gold assets must be securely stored in an IRS-approved depository per Section 408(m) of the IRS code. This code allows only certain types of precious metals to be held in an IRA, which must be stored “in the physical possession of a trustee,” meaning an IRS-approved depository.
If a company promises a Home Storage Gold IRA, be wary! It’s likely deceptive advertising. However, you can open a physical Gold IRA or store your gold at home, but outside of an IRA. Here’s how you can do it.
Storing IRA Gold: The Approved Way
Emphasizing enough on storing your IRA gold in an IRS-approved depository is impossible. Such an arrangement ensures you comply with gold IRA rules and keeps your gold safe. These depositories have insurance policies in place that safeguard your investment. You can opt for either non-segregated or segregated storage, with the latter offering the additional peace of mind that your gold is stored separately from others.
Gold IRA companies usually collaborate with approved depositories like Delaware Depository, Brinks Global Services, and International Depository Services. You typically have the choice of selecting your preferred repository. As a trade-off for security and compliance with IRS rules, you will incur a depository storage fee, ranging between $100 and $300 annually.
Home Storage Gold IRA: The Penalties
What if you attempt to store your IRA gold at home? Here are the potential consequences:
Withdrawal Penalties
If you get your IRA gold transferred to you for home storage, the IRS will interpret that as a distribution, attracting taxes and penalties linked with withdrawals. When you withdraw from your IRA account before you turn 59, a 10% tax penalty is applicable as per IRA regulations. You will also incur income taxes on your distributions, which can accumulate significantly based on your withdrawal size and income tax bracket.
Investing in a Gold IRA: The Correct Approach
Now that we have demystified what not to do when investing in a gold IRA let’s focus on the right way to do it. Here are the steps to remain compliant with IRS rules while investing in gold for your retirement:
- Open a Gold IRA Account:Â Work with a reliable provider like Augusta Precious Metals, Goldco, or American Hartford Gold Group. These gold IRA providers are reputed for high-quality customer service and support. They will guide you through opening a legit gold IRA account.
- Fund Your Account: The most straightforward way to fund your gold IRA account is by transferring funds from an existing retirement account, from a 401(k) or IRA, with no tax penalties for direct transfers.
- Buy Gold Coins: You can buy gold once your account is funded. Your gold IRA company will provide a list of IRS-compliant coins.
- Store in Depository: Your gold IRA company handles the transportation of your gold to the depository, making the process hassle-free.
Legitimate Ways to Store Gold at Home
While you can’t store IRA gold at home, here are two ways to legally keep gold at home:
- Make a withdrawal: You can withdraw coins from your Gold IRA and have the physical gold delivered to your home. There’s no tax penalty if you’re over 59-1/2.
- Buy gold outside of an IRA: You can purchase gold usually outside of a retirement account. There won’t be any tax advantages, but you can buy as much as you want and store it wherever you want.
Misinformation and Home Storage Gold IRAs
The internet is teeming with misleading information about home storage gold IRAs. Some investors are drawn to keeping their investments within arm’s reach. However, it’s essential to understand that a home storage IRA is a myth.
The Bottom Line
In the eyes of the IRS, Home Storage Gold IRAs are not valid, and attempting to store your IRA gold at home could lead to penalties. You can either open a Gold IRA with a trustworthy provider and keep your gold in an IRS-approved depository or invest in gold outside of an IRA without any restrictions on storage.