Gold IRA Storage Requirements
Last Updated on 17th June 2022 by Jeffrey Camerda
Gold bought using an IRA must be stored with a bank, financial institution or IRS approved custodial depository. Self-storage is not an option. You cannot personally hold any precious metals bought using an IRA. Internal Revenue Code section 408(m) details the storage requirements for gold bought using an IRA. This guide explains your options.
Gold IRA Storage – The Rules
Gold held in an IRA account must be stored with a US bank or other IRS approved non-bank financial institution. You cannot take physical possession of the gold you own in an IRA. Self-storage is not an option – whether it be at home, an office, or some other personal lock-up.
Section 408(m) of the Internal Revenue Code outlines the storage requirements for gold, (or other precious metals), purchased using a precious metals IRA. The IRC rules clearly state that IRA gold, silver, platinum, and palladium must be held in the “physical possession” of a recognized financial institution or by an IRS approved non-bank such as a depository. The bottom line is you cannot take physical possession of gold you purchase using your IRA.
Gold IRA Storage Options / Gold IRA Storage at Home?
Gold held in a self directed IRA must be stored with an IRS approved financial institution or storage facility. It cannot be held by the account holder. Home storage is not an option. The good news is you will not have to over-concern yourself with choosing an appropriate storage facility for your gold.
Your IRA custodian will do this for you. It is a legal requirement that all IRA accounts be managed by a custodian company. And once you hire a custodian to administer your account they will take care of all the storage and handling requirements for you.
They will also ensure that all legal requirements and paperwork are completed properly. This way you will not have to worry about triggering any penalties or tax fines from the IRS. Always follow the IRS rules governing precious metal IRA assets and do not impinge upon your tax deferred status.
Approved Precious Metal Depositories
The vast majority of custodians store IRA gold in IRS approved depositories. Two of the most popular options are the Delaware Depository and Brink’s Global Services. The Delaware Depository has two locations – one in Wilmington Delaware, and the other in Seal Beach California.
Brinks has many locations but three of the most popular for IRA gold storage are based in New York City, Los Angeles, and Salt Lake City. Other gold depository options include HSBC Bank USA, Chase Bank North America, JPMorgan, CNT Depository, and Scotia Mocatta. All these companies have IRS approval and all have secure facilities based in the USA. Play it safe and avoid home storage of your precious metals.
Using an LLC for IRA Gold Self-Storage
Some people have interpreted the Internal Revenue Code rules to mean that self directed IRA gold can be held using an LLC, (Limited Liability Company). This has lead to some people creating LLCs to bypass the self-storage rules.
In this case, someone will create an LLC to manage their precious metals IRA and ultimately store their gold at the address of the LLC, in an office, or at home. This is not a good idea. It is still self-storage and is not recommended. It does not comply with the gold IRA storage requirements of section 408 of the IRC.
Play It Safe
When it comes to managing your retirement fund it is best to stick to the rules and follow the guidelines as they were intended to be used. This is your retirement fund and you don’t want to be faced with a serious financial headache in your golden years.
It will only cause potential compliance issues and the possibility of significant financial penalties. As a wise man once said: “people think they can do whatever they want until they’re audited”.
Secure Segregated Storage vs Co-Mingled Storage
The best form of storage for your gold is referred to as segregated storage. This is the option you should be looking for. Segregated means your gold or silver is held separate from everyone else’s within a secure depository.
The actual physical gold you purchased using your IRA will not be mixed up with everyone else’s stored at that depository. Co-mingled means gold from multiple accounts is all thrown in together in a large safe room or vault. Some storage firms prefer this method as it is cheaper and easier for them to process.
All they need to do is maintain a balance sheet of how much gold each account holder is entitled to. However, this way there is no way of determining who owns which gold, and tracking individual physical deposits becomes impossible.
Segregated Precious Metal Storage
Segregated storage means that each account holder’s gold is stored separately from all other deposits. Your physical precious metals, whether it be bars or coins, will be placed in an area separate from everyone else’s.
This way the gold you actually purchased will be your gold. If you can, try and get your storage facility to commit in writing to segregated storage.
You can rollover from a 401K, 457b, 403b, TSP, Roth IRA or Traditional IRA to a new self-directed gold IRA. You can rollover all your funds from your existing retirement fund or just a portion of them if you prefer. The process is straight forward. The first step involves setting up a new self-directed precious metals IRA account. To do this you will need to choose an account custodian to act as your trustee.
This is a legal requirement and this company will manage your IRA and take care of all the legal requirements. Once you contact a custodian and begin the process of creating a new account it is usually set up and ready to go in 24-48 hours.
Rolling Over Funds
Once the new account is set up, it’s time to rollover funds from your old IRA to the new account. You can rollover the whole lot if you wish or just a portion if you prefer. Depending on the custodian you have chosen the steps of the process may vary but your custodian will guide you through the process and ensure everything runs smoothly.
When rolling over funds you mustn’t infringe on the tax-deferred status of your investment. To ensure you do not trigger any penalties it is advisable to perform what is called a ‘direct rollover’. This means the funds move directly from your old IRA to the new one without you ever laying hands on them.
An indirect rollover involves a check being sent to you in the post. It is then your responsibility to lodge the funds into the new account within 60 days. Any delay beyond the 60-day limit will lead to some stiff financial penalties from the IRS. For more information read our guide on 401k Gold IRA Rollover.
How to Purchase Gold with Your IRA
Once the funds are rolled over you are in a position to begin buying physical precious metals. Again, this is a process your custodian will guide you through.
Just make sure you have chosen a custodian with excellent knowledge and experience in the Gold IRA market. Here’s a guide to choosing the right custodian for you.
Direction of Investment
Most companies will provide you with an expert who can advise on how best to invest and where to strike a deal. Once you have agreed on a suitable investment you will complete a form, (Direction of Investment), instructing your custodian to purchase precious metals.
Funds will leave your account and a gold broker will have physical gold shipped to a depository where it will be stored securely in your name.
Why Buy Gold with Your IRA
The key reason for investing in precious metals is to diversify your retirement portfolio. Gold is the best asset when it comes to diversification. It acts as a kind of financial safety blanket against the traditional paper assets of stocks, bonds, and mutual funds.
The global economy is creaking and when the house of cards comes tumbling down you don’t want your retirement fund disappearing with it. Traditional assets collapse in value in the event of a financial crisis, while the value of precious metals moves in the opposite direction.
Wise investors are hedging their bets and using precious metals to protect their retirement account. Here are three key reasons to consider when investing your hard-earned funds in gold:
- Gold Protects Wealth: Gold has been used for centuries to protect wealth. It is the go-to asset for providing financial insurance against a global economic or political crisis. It is a non-speculative long term investment option. It has a proven track record for protecting wealth throughout history.
- Diversification: We are on the eve of another global financial crisis. There has never been a more critical time to ensure your retirement funds are properly diversified. National debt is spiraling out of control across the globe with the US government one of the worst offenders. The US dollar is in decline and the Wall Street Journal has reported that the US national debt will hit a staggering 98% of GDP by 2030. The true value of traditional paper assets is highly questionable.
- Inverse Relationship to the US Dollar: When the value of the dollar falls the value of gold rises. It’s a good place to be when the economy hits freefall. If the economy is stuttering and a financial crisis looks imminent you are going to want to have a significant percentage of your portfolio invested in precious metals. Additionally, gold, silver, and platinum is traded across the world in US Dollars. This reinforces the inverse relationship experienced between the precious metal and the dollar. As the dollar weakens, precious metals become more valuable as it takes more dollars to purchase an ounce of gold. A gold IRA is an excellent hedge against inflation.
For more information on precious metal IRAs, visit our homepage, the wealth builder club.
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Dr. Jeffery Camerda, PhD, is a financial planner who specializes in wealth management and retirement planning.
With a PhD in Economics and Financial Planning, Jeffery represents the highest level of financial planning expertise and achievement in the USA
In addition to preparing you for a career in financial planning, a PhD in economics and finance also prepares you for academic pursuits, such as becoming a university professor in teaching or doing research.
Here at the Wealth Builder, our financial advisory company was founded in 2007 and services all across the USA with over 16 years of expertise.
In order to provide the finest advice and services, we pay close attention to the specific financial circumstances and requirements of each client.
In order to guarantee that our clients don't get a sales pitch for insurance or investments, as well as a lack of conflict of interest from a prospective commission-bearing corporations, Jeffery focuses on fee-based services. Financial planning for wealth managers, financial well-being workshops, and personal financial planning packages are all part of the company's offering.
Jeffrey Camarda, PhD, CFA, EA is also the founder of the Family Wealth Education Institute, is a member of the Financial Planning Association and serves as the Chairman of Camarda Wealth Advisory Group