Investors looking to save for retirement by buying precious metals should be looking at self-directed IRAs. In contrast to traditional IRAs, which allow investment in stocks, bonds, ETFs, and mutual funds, self-directed IRAs allow investment in a broader range of assets, including gold and silver coins and bars. Consulting with a knowledgeable advisor about your retirement investment strategy is an insightful way of ensuring you adhere to tax regulations.
Preventing Direct Possession of IRA assets
When you are buying gold and silver bullion products to be put in self-directed IRAs, there are a few essential factors to consider concerning the regulations of approved safe storage. One of the factors that have drawn widespread media attention due to regulation ambiguity is the idea that gold and silver bought for IRAs can be stored at home in a security box or safe.
The uncertainty circulating this topic is primarily due to misleading advertisements. Multiple media platforms imply that IRA gold and silver can be stored at the owner’s discretion in their own homes. According to the IRS code, investors cannot legally store precious metals for IRAs in their homes.
IRS Explicitly Bans Home Storage
The National Coin and Bullion Association (NCBA) released an article about a recent case where the court ruled the physical storage of gold and silver in a home safe constituted “unfettered control” of the investment. The accused couple argued that a separate bank account had been opened in the name of a Limited Liability Company holding the gold and silver coins. They assumed they could use an LLC to avoid direct possession of the IRA assets and thus circumvent tax obligations. Unfortunately, taking investment decisions into their own hands without consulting professional advisors has proved to be a costly violation of the law.
We encourage all investors to be aware of the restrictions in place with self-directed IRAs, including understanding the Internal Revenue code stipulating the need for a custodian to hold and manage precious metal assets on behalf of the IRA owner. A third-party custodian, such as a bank or alternative financial institution, not only manages disbursements but is also responsible for IRS adherence, reporting, and keeping account records. Speaking with a reputable dealer, CPA, or tax advisor about your investment strategies is an advisable way to invest assets accordingly and prevent paying costly penalties in the situation of a tax audit.
For more information on the advantages of holding gold & silver in your IRA check out our gold & silver IRA resources or give us a call today at 602-234-2300.