You may be considering getting a self-directed IRA so that you can invest in physical gold. You’ve seen adverts claiming that you can store the gold at home. But now you’d like to know: can you legally keep your gold IRA at home?
According to federal law, you may not store physical gold owned by an IRA at home. You may keep physical gold at home. You may own gold of specific purity in an IRA, provided it is stored by an IRS-approved trustee in a secure storage facility. These laws prevent self-dealing and tax evasion.
Various advertisements on the internet and radio stations have claimed that people can use their IRAs to invest in gold and store it at home in a safe they control.
The idea was to use IRA funds to invest in gold coins and bullion and store the metals in a home safe or in a safe-deposit box, safely protected from government interference and stock market collapses.
However, the IRS has issued a stern warning that this is illegal. So, what are your options?
Can I Legally Store IRA-owned Gold at Home?
If you have an IRA, you don’t have to invest in securities such as mutual funds, stocks, and exchange-traded funds.
You can invest in anything provided it is not a collectible, and retirement accounts have therefore held investments in real estate, deeds of trust, and cryptocurrency.
You cannot own alternative assets in a regular IRA, although you can invest in assets with exposure to gold, such as gold exchange-traded funds or stocks of gold mining companies.
Opening a self-directed IRA allows you to invest in alternative assets. These follow the same general rules regarding tax benefits, contribution limits, and withdrawals.
However, due to the more complex nature of the assets they hold, the IRS has imposed additional requirements. You may be interested in having a self-directed IRA investing in physical gold as a hedge against inflation and stock market volatility.
But you’ve heard that such a ‘gold IRA’ comes with higher fees than a traditional or a Roth IRA investing solely in bonds, stocks, and mutual funds.
In short, you’d like to know whether you can look after the gold yourself.
You know that you may store as much gold as you like at your home, provided your IRA or other retirement account does not own it.
You’ve also read that it is also completely legal to own gold of the required purity standard within your IRA or other retirement accounts, provided you do not take physical possession of the assets.
The short answer is that you may invest in gold, provided that you follow the strict rules against prohibited transactions meant to prevent self-dealing.
What Forms of Gold May You Own in a Gold IRA?
The IRS stipulates that you may only own certain types of physical gold in a gold IRA.
Gold bars must be a minimum of 99.5% purity (.995 percent). The same rule applies to coins, with the sole exception of the American Gold Eagle.
The following coins are allowed:
- 1 oz American Gold Eagle Coins
- 1/2 oz American Gold Eagle Coins
- 1/4 oz American Gold Eagle Coins
- 1/10 oz American Gold Eagle Coins
- 1 oz American Gold Buffalo Coins
- 1 oz Canadian Gold Maple Leaf Coins
- 1 oz Australian Gold Kangaroo Coins
- 1 oz Austrian Gold Philharmonic Coins
The following coins, among others, are not allowed:
- South African Krugerrand
- United Kingdom Sovereign
Numismatic, certified or slabbed, and proof coins are not eligible for inclusion in a gold IRA. With a gold IRA, you may not invest in gold collectibles, such as gold jewelry.
Check with your custodian about what is allowed and what is not before transferring gold into your IRA.
The IRS will disallow an improper transaction and count it as a withdrawal, triggering a requirement to pay income tax, as well as an additional 10% early withdrawal penalty if you are younger than 59 1/2.
Conclusion
You may well wish to consider holding gold in a self-directed IRA, as this provides a good hedge against inflation and protection against stock market volatility.
However, if you were to hold the physical gold yourself, you would be violating laws meant to prohibit self-dealing and tax evasion and could face stiff penalties.
It is better to stay on the right side of the law and let an IRS-approved trustee hold your gold for you.
