Why You Shouldn't Store IRA Precious Metals at Home

Why a Home Storage Gold IRA May Not Be a Good Idea

Brad Chastain Director of Education U.S. Money Reserve

Written by Brad Chastain

Sep 22, 2023

Back in the 2010s, a Rhode Island couple made a smart move when they purchased gold to include in their IRA. However, they overlooked one important guideline regarding storage of precious metals. They kept their IRA gold in home storage instead of at an IRS-approved depository. The IRS does not allow at-home storage of IRA precious metals, something the couple learned the hard way—in court.

A U.S. tax court judge ruled that the couple, Andrew and Donna McNulty, incorrectly stored Gold and Silver American Eagle coins in their home. These coins were claimed as part of a self-directed IRA they had set up. According to The Wall Street Journal, the McNulty’s gold IRA was established through an LLC (limited liability company) and held the coins, along with a condo, as assets.

The McNultys discovered a little too late that coins held in an IRA are supposed to be stored at an IRS-approved depository and not at a home or even in a safe-deposit box. The tax court judge, Joseph Robert Goeke, ordered the couple to pay $270,000 in taxes on about $730,000 in IRA assets, along with penalties that surpassed $50,000.

As The Wall Street Journal explains, the judge faced a decision on two issues:

  1. He had to decide whether Donna McNulty’s storage of about $411,000 of Gold American Eagle coins and Silver American Eagle coins in an at-home safe—when the coins were bought with retirement account funds and meant to be held in an IRS-approved depository—was allowed under the law or not,
  2. and he had to decide whether or not the couple should pay harsh penalties to satisfy their tax burden.

Goeke ruled against the couple on both counts.

IRS Guidelines for Self-Storage of a Gold IRA

The Wall Street Journal reports that Donna McNulty “was careful with her IRA’s coins in some ways.” She opened a bank account in the name of her LLC, documented the purchase of the coins, and labeled the coins as belonging to the LLC when she put them in the couple’s at-home safe. But the McNultys either didn’t properly interpret or understand a provision of federal law that forbids IRA gold home storage such as self-storage of gold IRA assets in a home safe or in a safe-deposit box.

The IRS, says The Wall Street Journal, “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 specifies that you can’t store precious metals (gold, silver, platinum, or palladium) held in a self-directed IRA in your own home or safe-deposit box. If you keep precious metals that are included in a self-directed IRA at home, the IRS likely will treat that as a taxable IRA distribution. Furthermore, if you’re under 59½ years old, you might face a 10% tax penalty for early withdrawal from the IRA.

On top of that, home storage of gold IRA assets might be viewed as “self-dealing.” Self-dealing is “when your self-directed retirement account makes a prohibited transaction with the same person who owns it (you),” explain the alternative asset advocates at Rocket Dollar. The experts at NerdWallet add, “One potential blunder is neglecting the ‘no self-dealing’ rule, which prohibits you from borrowing money from your IRA, selling property to it, and other interactions.”

Anything that falls into the category of self-dealing could be considered by the IRS as a prohibited transaction, the Industry Council for Tangible Assets says. A prohibited transaction refers to the distribution of any assets in an IRA, not just precious metals kept at home.

Avoid Issues Related to Self-Storage of a Gold IRA With the Help of a Custodian

A self-storage gold IRA account doesn’t qualify as an individual retirement account in the eyes of the IRS and therefore doesn’t come with the tax benefits of an IRA. Any gold IRA companies that tell you otherwise may be leading you astray.

In order for precious metals to be included in a gold IRA, the precious metals must be held by a bank or nonbank trustee. These entities are referred to as custodians. A self-directed IRA custodian must be approved by the IRS to procure and hold assets for the IRA account owner. A gold IRA custodian is also able to distribute funds from the account. The custodian is essentially the administrator of the gold IRA that helps create separation between the assets and the account owner so that IRS regulations are followed.

If you are considering a self-directed retirement account, it’s highly recommended that you learn more about gold IRA rules and regulations so you know what can be included as an asset and how to handle the assets properly to avoid penalties. U.S. Money Reserve IRA Account Executives can also help walk individuals through the process of starting a precious metals IRA so that the account follows all IRA guidelines. They can answer questions about which assets legally qualify for inclusion in a gold IRA as well as how those assets should be stored.

When Gold Can Be Stored at Home

What if you already own gold, silver, or another precious metal? Can you legally store gold at home under any circumstance? If you already own precious metals, then it’s perfectly legal to store them at home or in a safe-deposit box as long as the precious metals are not part of a self-directed IRA.

Any precious metals that are intended to be part of a self-directed IRA must be purchased through a custodian and kept at an IRS-approved depository. It may be a good idea to get up to speed on IRS rules before you open a precious metals IRA so that you don’t put any of your hard-earned assets at risk.

Another option is to purchase precious metals as part of your portfolio rather than for inclusion in a self-directed IRA. Non-IRA precious metals can be purchased directly through a firm like U.S. Money Reserve and stored without the assistance of a custodian.

When Can You Store Gold From Your IRA at Home?

Though the physical precious metals in your IRA must be purchased through a custodian and stored at an IRS-approved depository, you can still hold them in your hands—eventually.

When the time comes to receive distributions from your self-directed IRA, you may choose to receive your precious metals as an in-kind distribution. In this instance, the precious metals from your IRA would then be shipped to your home, where you could then store them however you see fit.

The Wealth-Building Potential of Diversifying With a Precious Metals IRA

If you adhere to IRS rules about storage and other elements of a precious metals IRA, this type of asset is perfectly legal and can be a powerful, wealth-building part of your portfolio.

As Equity Trust notes, diversifying your portfolio with precious metals remains a smart move for many people. Some of the benefits they cite include:

  • Gold provides diversification and liquidity with no credit risk and can thus be especially attractive during periods of increased market volatility.
  • Gold and other precious metals may help guard against high inflation.
  • Precious metals can offer liquidity within an account, meaning they can readily be converted into cash if need be.

Have questions about properly setting up a precious metals IRA? Reach out to one of our knowledgeable IRA Account Executives today to request your free Precious Metals IRA Information Kit


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