Why You Can’t Have a Self Directed Gold IRA with Home Storage (and What to Do Instead)

You may have seen ads for “self directed” and “home storage” gold IRAs.

In reality, these are two totally different things—one of which is illegal.

Gold IRAs are often called self-directed IRAs, but you can use them to purchase IRS-approved gold bullion, precious metals, and other assets. This is the correct way to set up a gold IRA.

Gold IRA home storage, on the other hand, is impossible under IRS rules and can have hefty consequences.

We’ll go over why home storage gold IRAs are not permissible, the IRS regulations surrounding gold IRAs, and our highest-rated gold IRA companies—ones that are dedicated to keeping the power in your hands while providing safe, legitimate ways to store your precious metals.

So, can I store any gold or precious metals at home?

Yes, you can purchase and hold physical gold or precious metals in a home safe, but this simply cannot be part of an IRA.

The IRS prohibits the home storage of IRA-purchased gold and other precious metals.

Our expert’s recommendation for home gold storage

Erin Kinkade

CFP®

If you’re adamant about maintaining gold at home, I recommend holding it outside of an IRA to quell concerns about legality, the potential 10% penalty tax if under age 59½, and being taxed on the full amount. I also recommend researching and being aware of your options to invest in and store non-IRA gold investments.If you want exposure to a gold investment but don’t want physical gold, you have an option to buy gold exchange-traded funds (ETFs) within an investment account or an IRA (traditional or Roth) without the concern of IRS regulations that accompany physical gold in an IRA. 

What does the IRS say about home storage gold IRAs?

The IRS states that IRA-purchased precious metals must be held with IRS-approved banks and trustees.

Section 408(m) of the IRS code defines what types of precious metals may be purchased with a self-directed IRA. The code also says these items must be “in the physical possession of a trustee.”

The IRS issued a further explanation on the subject on this FAQ page. It reads: “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.”

The Industry Council for Tangible Assets (ICTA), an industry watchdog, issued a whitepaper in 2018 titled “The Prohibition on Home Storage of Bullion Held in an IRA” for further reading on the subject.

You can set up an IRA-owned limited liability company (LLC) and direct the IRA purchases as long as you meet stringent IRS requirements, but you still can’t store the gold at your house. It must be in a secure depository location under the LLC’s name—a safe deposit box at a bank, for example.

How to avoid home storage gold IRA scams

Confusion surrounds the concept of the “self-directed” gold IRA because of deceptive “home storage” IRA ads. 

Now that you’ve got a good understanding of home storage and IRA versus non-IRA gold, you will be able to spot these immediately and avoid gold IRA scams.

Here’s an example. The home storage gold IRA ad below is deceptive. It shows dozens of gold bars in a safe at home and includes a promotional offer for a free safe with a home storage purchase. This ad is either misleading or encouraging illegal activity.

The risks of a home storage gold IRA

Investors who break the rules and keep IRA-purchased gold at home could face several serious consequences: 

• Distribution penalties: Keeping your gold at home is considered a distribution, and if you’re under age 59½, you’ll be penalized 10%, and the full amount is taxed as ordinary income.
• Loss of tax-deferred status: The investments will no longer be tax-deferred, meaning you’ll owe income taxes on the distribution, which could be substantial.
• IRS audits: Improper account activity could trigger an IRA audit, leading to additional fines and penalties.

This is a big risk to individual investors. You may face taxes, penalties, and fees on your entire IRA should the IRS decide to call you on your self-storage of precious metals. And the IRS has the ability to pursue investors doing this at any time. They know it is a violation they can pursue whenever they want.

Jeffrey M. Christian

Precious metal investing expert

How does a self-directed IRA really work?

As mentioned earlier, gold IRAs are often called self-directed IRAs, but you can use them to purchase IRS-approved gold bullion, precious metals, and other assets.

To open a gold IRA, follow these steps: 

1. Select a custodian and open the account. You must work with an IRS-approved custodian—often a bank or other financial institution. The custodian handles the disbursements, keeps records for the account, and does the required IRS reporting.
2. Move funds into the account. Once opened, you can fund the IRA using a rollover or transfer from another retirement account or contribute via check or wire payment. If you’re younger than 50, the 2024 maximum annual contribution is $7,000.
3. Buy IRS-approved gold or precious metals. After funding your account, you can direct your IRA custodian on what IRS-approved gold to buy and how much. The gold must be stored in an approved depository once purchased.

Gold IRAs can diversify your retirement portfolio by investing in IRS-approved precious metals. You can securely and legally manage your gold investments by following the necessary steps and adhering to IRS guidelines.

Where can I open a gold IRA account the right way?

With so many scams and misleading advertisements, it’s essential to do your research before opening a gold IRA account. Compare several options, check reviews and ratings, and ensure the company is reputable and experienced before moving forward.

Two of our top recommendations include:

Need help getting started? Check out our guide to the best gold IRA companies.