Storing Precious Metals Owned by Your Self-Directed IRA
In an effort to lower costs and add convenience many investors consider storing precious metals owned by a self-directed IRA at home. There can be real consequences for not following the rules surrounding precious metal storage, and understanding the risks is crucial to remaining compliant.
The Risk of Home Storage for IRA-Owned Precious Metals
The greatest challenge for self-directed IRA owners who own precious metals is ensuring they’re following all of the IRS rules governing precious metal ownership. One of the requirements for IRA-owned self-directed investments is that qualifying metals must be stored according to IRS rules.
Precious metals in particular, must be stored in a “bank.†In fact, personal storage of IRA-owned precious metals is prohibited. In order to qualify for bank status, the storage facility must be a licensed bank, credit union, or trust company. If the self-directed IRA owns the storage facility for the precious metals, it still must be a licensed bank, credit union, or trust company to comply with the regulation.
What Happens if you Choose Home Storage?
Unfortunately, for those attempting to skirt IRA regulations there’s a hefty cost to choosing home storage of precious metals. If IRA-owned precious metals don’t meet the requirements, the precious metals no longer qualify as an investment with tax benefits and will instead be legally considered collectible items.
For this reason they are considered “distributed†from the IRA when they are purchased. When an investment is distributed from an IRA, it is subject to applicable taxes and the early withdrawal penalty, the same way an early 401(k) or other retirement account withdrawal would be treated.
Home storage of IRA-owned precious metals makes little sense when you consider the high cost and low reward associated with this option. While it may seem like a cost-saving tactic, you will likely pay more in taxes and fees than you would if you’d paid for safe, secure, and approved storage at a bank, credit union, or trust company.
What You Need to Know about Investing in Precious Metals
Before you decide to invest in any precious metals, consider researching the applicable rules and fitness requirements to make sure your new investment qualifies for the tax benefits you’re seeking.
Under Internal Revenue Code Section 408 you’ll find the rules pertaining to IRS-approved coins. This includes the gold American Eagle, as well as the fitness requirements for bullion and bar gold, silver, platinum, and palladium. Failing to adhere to the requirements is a surefire way to miss out on the tax benefits associated with IRA-owned precious metals and could result in additional penalties.
Get Started Today with iPlanGroup
Is investing in precious metals part of your self-directed IRA investment strategy? Precious metal investments, when done correctly, can yield high long-term ROI and offer some much-needed portfolio diversification.
Ready to get started? Contact the team at iPlanGroup to move forward with your self-directed IRA and secure your financial future today.
