As you consider acquiring precious metals for your savings, you’ve probably looked into acquiring gold and other precious metals such as platinum, palladium, and silver. You’ve probably also noticed ads for something called a “home storage” Gold IRA.
Perhaps you are considering storing your precious metals in your home, but it’s always best to err on the side of caution with ads like these — and you need to follow the IRS code. There are cases where so-called “home storage Gold IRAs” could violate IRS rules, and if not done properly, they could even be illegal.
On this page:
- What a deceptive ad could look like
- Is the IRS okay with home storage Gold IRAs?
- What are the penalties for incorrectly opening a home storage Gold IRA?
- Why are home storage Gold IRAs confusing?
- What is a gold IRA?
- How to open a Gold IRA?
Example of a deceptive ad for home storage Gold IRAs
If you’ve seen ads for home storage Gold IRA, you might have had some questions on what makes them legitimate or deceptive. Luckily, there are ways of telling.
If a home storage Gold IRA ad has a vague image like a safe full of gold, it’s not being clear on how you’ll really store your gold in your home. It definitely isn’t telling you all you need to know about home storage Gold IRAs.
Unfortunately, deceptive ads do exist. However, there are clear IRS guidelines for holding IRA-purchased precious metals; They must be held in IRS-approved banks and depositories. So, what does the IRS say about home storage Gold IRAs?
What the IRS says about home storage Gold IRAs
You can purchase and hold physical gold in a home safe, but the IRS has strict guidelines for IRA-purchased gold and other precious metals. As defined in Section 408(m) of the IRS code, you can only purchase certain types of precious metals for a self-directed IRA such as a Gold IRA. The code also states that these specific types of precious metals must be in the possession of a trustee.
There is a further explanation of this on the IRS FAQ page, which goes on to explain that gold is considered a collectible under IRA statutes, and the law discourages collectibles in IRAs. However, there is an exception for some highly refined bullion that is in the possession of either a bank or an IRS-approved trustee.
In short, home storage is not allowed when you’re holding physical precious metals in a Gold IRA.
What are the penalties or additional taxes for incorrectly opening a home storage Gold IRA?
If you don’t comply with IRS rules for proper storage of your IRA precious metals, you may face consequences. According to precious metals expert Jeffrey M. Christian:
“This is a big risk to individual investors. You may face taxes, penalties, and fees on your entire IRA should the IRS decide to call you on your self-storage of precious metals…They know it is a violation that they can pursue whenever they want to.”
Those who break IRS rules for storing IRA precious metals and choose to keep their IRA-purchased gold at home without following the proper steps could face distribution penalties because having your gold at home is considered a distribution, and, if taken too soon, you could face a 10% penalty.
Your contributions could also risk loss in that they will no longer be tax-deferred. This means that you’ll owe income taxes on the “distribution,” which can be a large amount of money if you aren’t storing your metals correctly.
But it doesn’t end there. Holding your IRA gold in your home could also lead to an invasive IRS audit. If the findings of the audit show improper account activity, you may even face additional fines and penalties.
Why are so many people confused about home storage Gold IRAs?
The main reason we see so much confusion about home storage Gold IRAs is the deceptive ads that pop up, showing people that they can hold their gold in a safe at their house. This misinformation can get those seeking gold in trouble with the IRS, and it can harm their retirement savings accounts.
These deceptive “Home Storage” ads add even more confusion to the mix because they show visuals of people keeping gold bars in safes that fit in their homes.
It’s important to note that having your gold buried in the backyard or kept in a safe in your basement is technically considered a distribution, and if you’re under 59.5 years old, that will be considered an early withdrawal, which could come with a 10% penalty.
So, if you don’t store your gold at home, how does a Gold IRA really work?
How does a Gold IRA work?
A Gold IRA is a self-directed IRA, and you can use it to buy IRS-approved gold bullion and other IRS-approved precious metals.
In order to open a Gold IRA, you’ll need to contact a company that specializes in Gold IRAs and work with an IRS-approved custodian. They will handle all of your distributions, record keeping for your IRA account, and IRS reporting.
Once you open your self-directed IRA, you will fund your account. You can fund your Gold IRA by rolling over a portion of an existing qualified retirement account such as an IRA or 401(k), or you can use a check or wire transfer.
Is there a maximum annual contribution for a Gold IRA? Yes. The maximum annual contribution for a Gold IRA is $7,000, if you’re 50 years old or older.
As soon as your Gold IRA account is funded, you can choose the metals that you’d like to store in your account. Once purchased, the gold will need to be stored in an IRS-approved depository.
>> Read More: Learn the basics of a Gold IRA
Where can I open a Gold IRA account without taxes and penalties taken?
Your money is important, and it’s essential that when you choose to open a Gold IRA, you avoid scams and deceptive advertising. Make sure you do your research, and find a gold supplier that is reliable, reputable, and experienced before moving forward.
Of course, we hope that you choose Gold Alliance for your Gold IRA needs. That’s why we’d like to invite you to look at our stunning reviews on the Better Business Bureau website, as well as our Google reviews.
If you’re ready to move forward, you can also get your FREE Gold Information Kit here.
