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Personal Finance Gold

Can I Set up a Home Storage Gold IRA?

If you’ve been considering investments in gold and other precious metals such as silver, platinum, and palladium, you might have seen ads for “home storage” gold individual retirement accounts (IRAs).

The claims may be tempting, but it’s important to proceed with caution before interacting with these dealers. In many cases, these accounts violate IRS rules and could even be illegal. Home storage for gold in an IRA is impossible.

Example of a deceptive ad

The home storage gold IRA ad below is deceptive. It shows dozens of gold bars in what looks to be a man’s personal safe, and account holders even get their own free safe. But the IRS will not allow you to store gold for your IRA at home.

Home Storage Gold IRA Ad

This ad is either misleading or encouraging illegal activity. The IRS states that IRA-purchased precious metals must be held with IRS-approved banks and trustees. Keep reading for more details.

What does the IRS say about home storage gold IRAs?

Investors can purchase and hold physical gold in a home safe, but the IRS prohibits this with IRA-purchased gold and other precious metals. 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.”

In further proof that home storage is not allowed when using an IRA to purchase gold, 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.”

Penalties or taxes for a home storage gold IRA

Investors who break the rules and keep the IRA-purchased gold at home could first face distribution penalties. Keeping your gold at home will qualify as a distribution, which means a 10% penalty if you’re under age 59 and a half. And the investments will no longer be tax-deferred, so you’ll owe income taxes on the distribution. In many cases, it’s a hefty amount of cash.

“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 that they can pursue whenever they want to.”

Jeffrey M. Christian

Precious metal investing expert

The move could also lead to an IRA audit if the IRS finds out about your improper account activity. An audit could mean additional fines and penalties.

Why are home storage gold IRAs so confusing?

Confusion surrounds gold IRAs because of “home storage” IRA ads. Yes, you can set up a limited liability company (LLC) and control your IRA purchases yourself 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, for example.

Putting the gold in a safe or under the mattress at home would qualify as a distribution. If you’re under 59 and a half years of age, distributions are viewed as an early withdrawal and come with a 10% penalty.

How does a gold IRA really work?

Gold IRAs are called self-directed IRAs, but you can use them to purchase particular IRS-approved gold bullion and precious metals, as well as real estate, businesses, and other assets.

To open a gold IRA, you’ll need to work with an IRS-approved custodian—usually a bank or other financial institution. It handles the disbursements, keeps records for the account, and does the required IRS reporting.

Once opened, you can fund your account using a rollover or transfer from another retirement account, or you can contribute via check or wire payment. The maximum annual contribution is $7,000 if you’re at least 50 years old.

After funding your account, you can direct your IRA custodian on what gold bullion to buy and how much. The gold will need to be stored in an approved depository location once purchased.

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 out reviews and ratings, and make sure the company is reputable and experienced before moving forward.

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