IRS Announces Risks Involved with At-Home Storage of Gold IRAs

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IRS warns to be wary of promoters who claim IRA-owned gold and silver can be stored at home or in a safe-deposit box.

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Banks are not the trustees of assets in safe deposit boxes, nor are they responsible for the loss of items in the boxes nor do they provide insurance on the contents.

You may have noticed advertisements by gold and silver dealers touting “home storage” gold investments for your IRA on the radio, TV, websites, and more. The IRS has noticed these advertisements, and made a recent revision to their FAQ page concerning these dealers. In addition to revising their FAQ page, Wall Street Journal writer Laura Sanders quotes the IRS in a September 2016 article and podcast as saying the IRS “warns taxpayers to be wary of anyone claiming that precious metals held in your IRA can be stored at home or in a safe-deposit box.”

On September 30th, the IRS added this new FAQ to its IRA investment site:

“If my IRA invests in gold or other bullion, can I store the bullion in my home?”

“Gold and other bullion are ‘collectibles’ under the IRA statutes, and the law discourages the holding of collectibles in IRAs. There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved non-bank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion. IRA investments in other unconventional assets, such as closely held companies and real estate, run the risk of disqualifying the IRA because of the prohibited transaction rules against self-dealing.”

Why do these promoters have the IRS on high alert? The IRS alert is based on IRA tax law, which requires IRA-owned bullion to be in the physical possession of the IRA trustee or provider, not the account holder. The home storage plan can violate this requirement.

The home-storage plan includes two investments: first, the IRA invests in a new company, usually a Limited Liability Company (LLC). Then, the LLC invests in bullion. In almost every case the company promoting the home storage plan sells the investor the bullion, then delivers the bullion wherever the account holder directs it. The promoter usually encourages the bullion to be sent to the account holder’s home or to a safe deposit box.

Some promoters tell investors to store bullion at a bank-offered safe deposit box, under their theory that the bank is an IRA provider. By this line of thinking, the bullion would be in the physical possession of an IRA trustee/provider, as required. However, banks are not the trustees of assets in safe deposit boxes, nor are they responsible for the loss of items in the boxes nor do they provide insurance on the contents. LLC-owned bullion is under the control of the LLC, regardless of where it is stored.

As Wall Street Journal’s Laura Sanders points out, it’s important to note that the promoters of home storage plans are careful to include fine print on their materials that state they don’t take any responsibility for the idea or the legality of the plan. Financial professionals recommend that IRA owners carefully research any investment for their IRA prior to making investment decisions.

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Clay Malcolm
New Direction IRA
+1 303-546-7930 Ext: 113
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Allison Hughes
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