Home Storage Gold IRA: Is it a legal (or viable) option?8 min read

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It’s generally believed that home storage gold IRAs are prohibited by the IRS. But why? While investing in gold might be straightforward, the same can’t be said about the dense government regulations that pertain to this category of self-directed IRAs.

Whether relating to financial affairs or otherwise, laws and/or regulations can sometimes be open to interpretation – however, it doesn’t seem like that’s the case for this particular topic.

Nearly every precious metals broker you’ll come across says that it’s illegal to store gold IRA assets at home without incurring a penalty. However, there are a select few reputable companies that appear to say that there could be a viable path forward if you think it’s absolutely necessary to store your gold IRA assets at home.

So what’s the actual answer to this question? 

To understand why home storage of gold in an IRA is mostly advised against, we have to go to the start and examine how gold IRAs operate.

Custodians: the real managers of your gold IRA

While it might seem that the precious metals broker you’re opening an account with is managing your gold IRA, more often than not, this responsibility is actually passed on to another company.

This kind of company is called a custodian: oftentimes, a custodian is a large financial firm that specializes in retirement accounts, however, this is not always the case. For a more thorough discussion on what an IRA custodian’s responsibilities are, see my Gold IRA Rollover Guide.

Among other things, this custodian keeps track of what goes in and out of your IRA, along with making annual reports on things such as returns. While these reports are delivered to you, they’re primarily created in order to comply with IRS regulations.

A lack of proper annual reporting is what causes self directed IRA liquidations more often than not, which is why custody is typically subcontracted out to vendors who specialize in it.

If you’ve heard of gold IRA owners that dabbled in home storage incurring penalties and liquidations, it’s more likely that they also tried to be their own custodian as well. However, this is not the wild west – instead, if you want to become a retirement account custodian, there are a variety of prerequisites that must be met ahead of time.

So as we look through these cases, it seems that it wasn’t home storage itself that caused issues, but rather trying to accept custody of the IRA assets without actually being an approved custodian.

Apart from the custodian, the other important third party to keep in mind when it comes to gold IRAs are bullion depositories. And as we get into how these operate, we get a better understanding of why most advise you not to try and store bullion inside your own IRA at home.

Related: How to Protect Your 401(k) From Inflation with Gold & Silver

Where does the IRS want the bullion in my IRA stored?

Nearly all of the precious metals IRAs you’re come across have the bullion in them stored in a third-party depository. The IRS rules are pretty specific about the kind of depository you can store bullion in an IRA in: so much so, that you’ll hear the term “IRS-approved depository” mentioned frequently.

These depositories are very above-board. They, just like the custodian, file annual reports of what bullion they have, how much and whom it belongs to. Here is where we start to get an idea of why the IRS don’t seem to like home storage IRAs very much.

Misreporting the bullion they manage isn’t something that depositories can afford to do, as this is not a business risk that they’d be willing to accept. On the other hand, it doesn’t seem likely that the IRS would hold a small “mom and pop” depository to the same stringent standards that a large scale reputable depository would need to follow, but that’s always a risk.

From the IRS’s perspective, they have more levers to ensure compliance over reputable depositories than they do over smaller depositories. Certainly, there is more of a risk of an unknown depository selling bullion in a customer’s IRA while simultaneously reporting that it’s still safely locked in a home safe.

This is a well founded concern, and no doubt something that occurred to one or two home storage gold IRA owners throughout history.

Misreporting is probably the main reason why the preferred location for IRS-approved gold bullion is an approved depository if it’s part of a retirement account.

After all, the IRA itself is a government investment vehicle, so the government wants some assurances. On the other hand, they don’t seem to have actually disallowed the home storage of gold and other precious metals in an IRA.

Related: Diversify Your 401(k) with Gold & Silver (Free Guide)

Why do most gold IRA companies insist on depositories?

Storing physical gold can be tricky in general. This is why many gold investors opt to store their gold in a depository even if it’s not part of an IRA. The depository is an important part of the hands-off approach to investment that most of these companies offer as one of their main selling points.

As to why most gold IRA companies insist on depositories, it could be because they are risk averse and want to minimize involvement in litigation down the line (e.g., if the IRS goes after a customer for penalties surrounding a disbursement in US Tax Court).

Telling customers up front that they must keep their gold IRA assets in a nationally recognized depository certainly avoids some of that risk.

It can seem limiting, especially in the absence of any actual regulation against it, but there is a lot of liability for a gold IRA broker if they try to let you store the metals in a home safe. Besides misreporting, there are other considerations to examine, such as the safety of the metals that I’ll cover soon.

By making it seem that a depository is literally only the option available, gold IRA companies  minimize various risks for themselves . And, in fairness, a lot of gold investment boils down to minimizing risk. So it only makes sense to have this rule enforced by most top gold IRA brokers, if not the IRS.

Is it legally possible to have a home storage gold IRA?

Over the past several years, I’ve come across scores of articles that generally conclude that it’s simply “not legal” for an average person to set up their own home storage gold IRAs. Instead, I’d say that it’s probably not feasible for most without running afoul of the IRS Code/Guidelines.

In order to set up a home storage gold IRA, a prerequisite is to become a trustee under the IRS Code [Section 408(m)]. As you can imagine, applying to become a trustee is no easy task – instead, an applicant must vault over several thresholds, including (but not limited to):

– Ability to demonstrate how long the applicant has been in business for and articulate a business location that is accessible to the public each business day;

– Articulate experience and competence in carrying out the typical fiduciary duties required in acting as a trustee;

– Prove the existence of a written document for the rules of conduct to be used in administering retirement plans;

– Insuring that any/all employees performing fiduciary duties under the trust are adequately bonded (the minimum bond amount must be at least $250,000);

– Having an initial net worth of $250,000 (and continuously satisfying the adequacy net worth requirements);

– Employ/retain legal counsel who can readily advise on fiduciary matters;

– Ability to maintain a separate trust division responsible for matters arising under the trust;

– Insure that a qualified public accountant performs a detailed audit of the fiduciary books and records at least once every 12 months (unless the applicant is regulated, supervised, and subject to periodic examination by a state or federal agency, in which case that audit system would suffice);

– Keep fiduciary records separate and distinct from other records; and

– Payment of the relevant user fee [based on the schedule in Revenue Procedure 2023-4, Appendix A. section (A)(3)(c)(ii)].

I’ve never had the pleasure of meeting anyone that wanted to travel down the trustee path outlined above, but I have no doubt that those that decide to take this trek only do so alongside their tax and legal professionals!

However, you must keep in mind that receiving coins/bullions directly will act as a distribution; instead, coins/bullion purchased for inclusion within your self-directed IRA must always stay in the physical possession of a trustee [as described in Sub-Section 408(a)] in order to prevent a distribution.

Related: How to Diversify Your Retirement Savings with Physical Gold (Tax-Free)

What are some other considerations for home storage gold IRAs?

Where and how the gold will be stored is the first thing that comes to mind. Gold IRAs can vary in size quite a bit in a literal sense. A gold IRA can be worth $10,000, $50,000 or upwards of $100,000.

The owner of a gold IRA account that’s worth more than $100,000 might have opted for 1-kilo gold bars, or they might choose proof American Eagle silver coins instead. In the case of the latter, the amount of storage space increases exponentially.

These are just some broad examples of why home storage isn’t ideal even if you’re talking gold outside of an IRA. As a bare minimum, a house safe is required. You might want to go a step further and have some kind of vault, especially if talking about a larger mass of precious metals owned.

House safes are expensive enough on their own, and the better the quality, the higher the price. If you’re thinking about opening any kind of vault, the expenses can shoot up very quickly.

There are other security considerations to make. Is the home safe in a nice neighborhood? Where is the vault? Do you have 24/7 video surveillance of the area? Alarms? All of this becomes a factor when talking about gold storage, and the greater the value of the precious metals in your IRA, the more important these points become.

Just thinking about all of this might have you befuddled. Now, compare this to the $150 to $250 annual fee that depositories charge. Is it a lot for the peace of mind you get in return?

In a lot of cases, gold IRA companies offer to waive these fees for one or more years depending on your initial investment, but this isn’t even that important.

The truth is that the annual storage fee is almost negligible compared to what you get in return. And when it comes to storing any kind of larger gold stockpile, your expenses are almost certainly going to end up being greater down the line.

How’s your insurance?

The big depositories all have very inclusive insurance policies that go up to $1 billion. That means that even if something was to happen to the bullion in their facility, you’d be compensated in full. This not only covers internal and external breaches, but also things like environmental damage.

If you’re storing gold by yourself, you probably want to take out an insurance policy for it. In the absence of it, it’s finders, keepers. And that introduces yet another form of hassle.

You have to familiarize yourself with insurance policies, then get one that suits you best, and then make sure you don’t do anything that could violate this insurance. And, sure enough, there’s no shortage of actions that could bring that on.

Even if you have a good familiarity of how insurance works, getting a policy just to be able to store bullion on top of having to make some sort of vault is already turning into a lot of effort. As you can see, there are quite a few cons associated with taking the path less traveled over simply storing the IRA assets in an approved depository. This brings me to my verdict on the matter…

Home storage gold IRAs – Great in theory, not in practice

Those who want a home storage gold IRA want it for obvious reasons – they want their physical gold bullion close to home, or even inside it. They want to be able to inspect it often. And they want leeway to sell it whenever they choose.

Here’s the thing, though: all of this is possible with third-party depositories. Most, though not all, top depositories that facilitate IRA bullion storage can arrange for visits where you inspect your bullion. These depositories have facilities in many different locations to cater precisely to the aforementioned desire of wanting to have one’s bullion closer to home.

And when it comes to selling the bullion, you are no less at liberty to do it in a third-party depository than you would be in a home storage IRA. It’s called IRA liquidation: whether you want to take possession of the bullion or simply sell it for whatever the market price is at the time, you’ll probably incur a penalty by the IRS and that’ll be that.

So the perceived freedom that home storage gold IRAs offer is exaggerated to the point of being questionable to begin with. When it comes to this subject in general, I would say that this should only be a consideration for those who already have some kind of insured vault in place.

If you happen to be in this group, having a home storage precious metals IRA might indeed be more convenient for you, and you might want to look into the companies that facilitate this.

But if you aren’t, and this applies to the overwhelming majority of gold IRA investors, you’ll actually inconvenience yourself in quite a few ways by choosing to go with home storage, as opposed to working with a third-party depository.

For all the reasons outlined above, working with a depository is nearly always the better choice when it comes to storing bullion inside an IRA.

The companies in this sector steer clear from home storage gold IRAs for a reason, for the most part, and unless there is a highly specific reason that sets you apart from the majority of Americans, it’s probably a better idea that you do the same.