The Risks of At-Home Storage for Gold and Silver IRAs

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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 as well. 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.”
 
The IRS also posted an update to their IRA Investment FAQ to focus on concerns with home storage of IRA Bullion. 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 nonbank 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.”
 
 As promoted, the “home storage” plan includes two investments. First, your IRA invests in a new company; usually a Limited Liability Company (LLC). Then, the LLC invests in the 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. 
 
 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. LLC-owned bullion is under the control of the LLC, regardless of where it is stored. 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.
 
 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 states 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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