IRAs (Individual Retirement Accounts) are essential for navigating your life after your career. An IRA allows you to save money over time and have less to worry about when retirement finally comes around.
In recent years, home storage gold IRAs have become increasingly popular. Many individuals wonder whether the process is legal or acceptable to the IRS.
The bottom line? Gold IRAs are legal sometimes, but some laws prohibit them in certain circumstances.
Read on for more information on home storage gold IRAs, their legality, and navigating the IRS regulations.
What is a Home Storage Gold IRA & is it Legal?
A home storage gold IRA involves purchasing gold or precious metals with your IRA funds and keeping them in your home – customarily in a deposit box or safe.
However, the process is not as simple as it sounds. The IRS has not approved all precious metals for home storage. Furthermore, they have announced that dealing with your own IRA gold goes against IRA regulations.
If the gold resides in a bank or other IRS-trusted institution, it becomes lawful. But you cannot keep IRA gold in your home legally. These rules also apply to LLCs.
Laws
Of course, as with most legal issues, there are exceptions to these regulations. Below are the exceptions in the IRS code regarding home storage gold IRAs.
| Coin Type | Measurement | Weight | Amount of Gold |
|---|---|---|---|
| $50 gold coin | 32.7 millimeters | 33.931 grams | 1 Troy ounce |
| $25 gold coin | 27 millimeters | 16.966 grams | 0.5 Troy ounce |
| $10 gold coin | 22 millimeters | 8.483 grams | 0.25 Troy ounce |
| $5 gold coin | 16.5 millimeters | 3.393 grams | 0.10 Troy ounce |
A Troy ounce is a unit of measurement first established in the middle ages. It is slightly heavier than the standard ounce in use today.
Other precious metals exempt from the IRS rule are certain silver coins and some platinum. While these metals may be exempt, you still have to keep them in a trustee location or bank.
You cannot keep them in your home as an IRA.
Reasoning
If you’re wondering why you cannot keep your gold in your home as your IRA, the IRS states that gold is a collectible item. Their regulations prohibit using collectibles as currency in IRA accounts.
The reason this rule exists? People may not report their funds or gold storage supply and therefore evade taxes.
If you have gold that falls under the coins listed above and want to use them in an IRA, take it to a bank ASAP!
Penalties
We don’t want to scare you, but there are penalties associated with home gold storage IRAs.
A few include:
- 10% penalty for people under age 59.5
- You will owe income tax on all of the gold in your possession
- Auditing
Yes, storing gold in your home for an IRA may lead to the dreaded audit. If you get audited by the IRS, you will most likely endure multiple fines and fees – depending on how much they find.
How Does a Gold Home Storage IRA Account Work?
If you still want to invest in gold for your IRA (legally), the process is relatively complex but doable. The IRS calls it a Gold IRA – notice the home storage aspect no longer exists.
Next, fund the Gold IRA account with cash or roll over all or some of an existing 401k account into your new IRA account. Note that the maximum contribution to a gold storage IRA is $7,000 per year.
After you have funds in your account, you can use that cash to purchase precious metals. The bank will control all disbursements and IRS reports, so you do not need to worry about legality.
A Gold IRA follows the same tax rules as other IRAs. You cannot withdraw funds from your IRA account until age 59.5 (the IRS calls it retirement age).
If you attempt to extract money before that, the 10% fee ensues.
Final Thoughts
Home storage gold IRAs are legal, but come with many rules and regulations. Remember to always deposit gold or other precious metals into an IRA account at a bank and never at your home.
Investing in your future is never a bad idea – ensure you do it the right way to reap the benefits when retirement comes around!
FAQs
Should I invest in a home storage gold IRA?
The short answer is no. While it is legal to buy gold and have it in your home, it is not permissible to fund an IRA from your residence.
How can I find more information about these types of IRAs?
Your best bet is to check the IRS. They have tons of resources and answers to complicated financial questions, so you can be 100% sure a Gold IRA is right for you.