Home Storage Gold IRA: Legit or Scam?

The home storage gold IRA combines the tax advantages of an Individual Retirement Account (IRA) combined with the convenience of having your precious metals stored in your home safe. If this sounds too good to be true, that's because it probably is.

In recent years, gold IRA companies have started advertising this investment option to customers across the U.S. At first glance, the home storage gold IRA appears like some sort of tax-savvy loophole to buy and hold IRA assets at home. After further inspection, you may be reluctant to go for it. 

You Can't Fool the IRS

The IRS makes it very clear that you cannot take personal possession of any investments that are tied to your retirement account. The physical gold, silver, platinum, or palladium in your IRA must be held with a bank or IRS-approved IRA custodian/trustee that handles such accounts.

The Industry Council for Tangible Assets (an industry watchdog group) even published a white paper on the subject in 2018 to address the confusion around this topic. The Prohibition on Home Storage of Bullion in an IRA makes it clear what the ICTA thinks of precious metals companies offering such investments. Here are two snippets from the document linked above.

Failing to comply with the IRS rules on your Individual Retirement Account could disqualify the IRA, resulting in penalties, hefty tax bills, and possibly an IRS audit.

Remember that traditional and Roth IRA rules were designed so that Americans cannot have direct access to retirement investments. So how does this "home storage gold IRA" work exactly?

Related: Gold IRA Tax Rules - What Precious Metals are Allowed in an IRA?

Home Storage Gold IRA - the Sales Pitch

The irony is that legitimately opening a precious metals IRA in accordance to the IRS tax rules is a simple and stress-free process. There are a number of reputable companies that would be more than happy to assist in setting this up.

The scheme behind the home storage gold IRA is complicated with a bunch of hoops for you to jump through. And even after doing jumping through all these hoops, could prove illegal. Opening a home storage gold IRA account involves:

• Setting up a Limited Liability Company (LLC)
• Using this LLC to control your IRA purchases (acting as a custodian)
• You then must still hold the actual precious metals in a bank vault or depository (held under the LLC's name)

Now, yes in theory it is possible to open an LLC and act as a corporate trustee - but understand that you must meet strict IRS requirements to perform the duties of a trustee or custodian. There is a detailed questionnaire to fill out. Just some of the qualifications needed:

• Do you have verifiable experience as a fiduciary?
• Do you have a financial background or any experience handling retirement funds?
• Do you have corporate legal council available for your LLC on retainer?

Do you really believe that you can trick the IRS into believing your LLC (in your name) is a disinterested third-party capable of fulfilling fiduciary duties? Because ultimately, this is what you're trying to do...

Related: Top 5 Gold IRA Companies for 2022 (Ranked and Reviewed)

Don't Believe the Hype...

In the end, you still need to hold your precious metals in a depository - and not in a home safe. After jumping through hoops, it's not really a "home storage" gold IRA. You've wasted time setting up your LLC, only to possibly set off red flags for an IRS-audit. 

At first glance, an ad for the home storage gold IRA may seem like an interesting idea, and the salesman may sound assuring, but I wouldn't risk it.

This is my opinion. I'm not a fiduciary or a financial advisor. If this is something you're interested in considering, run it by your trusted advisors. 

But if the ICTA industry watchdog took the time to address the flimsy claims of these gold IRA dealers, I think it's safe to say you should avoid it!

Related: Investor Kit - How to Buy Physical Gold and Silver (Tax-Free)

Opening a Precious Metals IRA the Right Way

If you want to roll over or transfer a portion of your 401(k) or IRA into physical precious metals, it's really a simple and painless process. Most gold IRA companies have worked out deals with reputable self-directed IRA custodians where you can have your IRA maintained for under $100 annually.

While you cannot hold your IRA metals in your own home, you can work with your gold IRA company to find the closest storage facility that meets the IRS requirements. Some of the larger precious metals IRA companies have relationships with vault storage facilities all over the U.S. Some can even store internationally (if that's what you want). 

In other words, there are options that may not be as sexy as "home storage," but can meet the requirements of a gold IRA while still being held within reasonable driving distance if that helps you feel secure. Contact a reputable gold IRA company, request more information, and consult with your trusted advisors. A gold IRA could be a smart investment for you. Just do the research to ensure you're doing it right. If a gold advertisement sounds too good to be true, it probably is.