Jeff Dixon, MBA, CISP, SDIP
You’re at home watching late-night television and you see a commercial. There’s a man sitting in an easy chair caressing the gold bullion he is storing in his home. This commercial tells you it is okay for you to store IRA gold at home.
The question about “Gold At Home” (personally storing precious metals purchased with retirement funds) is one we receive quite often. We are asked, “Can I take physical possession of gold in my IRA?” The IRS is very clear on this issue. The answer is, no gold at home—and for a very good reason.
The IRS recently reconfirmed this with a court ruling on the case (ANDREW MCNULTY AND DONNA MCNULTY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent). As a result, the court confirmed holding precious metals personally is disallowed.
What happened:
The McNultys purchased gold using an IRA-owned LLC, often called a “Checkbook IRA”. They stored the metal at their personal residence in a safe. In that safe were metals they purchased with retirement funds and metals they purchased individually. Their IRA custodian told them they could do this since they were purchasing the gold with the IRA-owned LLC. Turns out that was bad advice.
The IRS requires metals be stored with an IRS-approved depository institution within what’s known as a precious metal IRA. A quality gold IRA company will only work with thoroughly vetted reputable third-party storage firms or secured depositories. uDirect account holders’ metals are stored at Delaware Depository within gold investment accounts.
For guidance on IRS metals storing requirements see IRS Private Letter Ruling 200217059. If buying through an IRA owned LLC, a safe deposit box at a bank may be acceptable, although that is a grey area. The safe deposit would need to be opened for the LLC.
How the court ruled:
The Court ruled that holding the coins at home violates the Internal Revenue Code. They confirmed that holding coins purchased with retirement funds at home clearly violates IRC 408(m).
As stated in the court decision:
“Independent oversight by a third-party fiduciary to track and monitor investment activities is one of the key aspects of the statutory scheme. When coins or bullion are in the physical possession of the IRA owner (in whatever capacity the owner may be acting), there is no independent oversight that could prevent the owner from invading her retirement funds. This lack of oversight is clearly inconsistent with the statutory scheme. Personal control over the IRA assets by the IRA owner is against the very nature of an IRA”
Gold is often considered an excellent hedge against inflation because its price tends to rise when the cost of living increases. This makes for an investment where you’re always earning at least a small amount back. You can move your IRA or 401(k) into gold backed IRAs without penalty. If buying gold (or other precious metals) in your IRA/401 (k) interests you, you will find information on IRA-allowable metals. Click HERE
If you want additional information on gold IRAs or any Self-Directed IRA issue, please contact us at 866-663-4134 or email us at info@uDirectira.com.
For legal or tax questions, please reach out to your own attorney or tax advisor. No information in this article should be considered financial, tax, or legal advice and may not be relied upon as such.
