Today we shall look at home storage gold IRA scams. As you may already know, gold is quite a valuable precious metal, and those who own it have to come up with ways to securely store it lest they lose it to thieves and cons. What can be said about the storage of IRA gold, however? Does the IRS allow gold IRA owners to store IRA gold in the safes in their homes, or is doing so against the law? Are companies that claim to offer home storage gold IRAs genuine? You are about to find out about that and more in today’s article, so read on to see what I have in store for you.
The first thing that we can get out of the way as we get started is that in the present-day world, there are good gold dealers and bad gold dealers. Distinguishing between the two will be the difference-maker and the reason you either thrive or fail in this industry.
Bad dealers are those who have no problem with coming up with a scheme that will defraud you and other customers. In recent times, we have seen an increase in the number of fraudulent firms, including one that was charged by the Federal Trade Commission for selling precious metal products to customers, accepting their payment, but never making any attempt to deliver the products as agreed.
It is sad to know that individual customers made losses ranging from $1000 to $300,000.
The even sadder thing to know is that that company had the audacity to run its ads on globally recognized media outlets such as CNN and Fox, where they lured customers with:
- Zero fees
- Zero commissions
- and, zero expenses.
When the deal is too good, think twice, and when the dealer is too good, well…you know what to do.
The point to note here is that bad dealers will tell you anything and make lofty promises just to get that money from you. Are home storage gold IRAs a good example of the dealers to avoid? Well. let’s take a deeper look at the matter.
What is a gold IRA?
Most investors only know of retirement investment accounts such as Roth IRAs and Traditional IRAs, which allow individuals to invest in a variety of paper assets such as stocks, bonds, and funds. Unfortunately, however, these assets may not always be the best options to hold on to when the global economy is experiencing hiccups. In such times, holding on to non-traditional assets has proven to be a good idea.
But I cannot hold non-traditional assets in a regular IRA, right? Right! The IRS only allows you to hold paper assets in such IRAs. Those who want to save and invest for their retirement years by putting their money into assets such as precious metals, real estate, cryptocurrencies, etc. must open a self-directed IRA.
A gold IRA is a type of self-directed IRA that allows investors to add IRA-approved gold to their accounts. In this arrangement, a custodian and a precious metal dealer provide their services to see to it that the investor has an easy time adding the precious metals to their account. A gold IRA company’s involvement may also help with putting together the right combination of parties to ensure that the investment process is successful.
The gold IRA companies also offer customer education, in a bid to enable the customers to know what they are getting themselves into. At times, however, they may mislead their customers by recommending that they go about the investment process in a manner that the IRS would question. One perfect example of this scenario is when they suggest that investors can store their IRA-owned gold in their homes.
Home Storage Gold IRAs
Companies that promote the idea of investors owning and holding their IRA-approved gold (& silver)usually also request the investors to open a limited liability company. The investor should then proceed to declare themselves the owner and trustee of the IRA. And just like that, the investor’s LLC can make decisions such as where the gold should be stored.
According to the IRS, however, an investor can only make such decisions if they have received approval. They as such, have to fill out an application that is meant to prove:
- Their experience and capability as a fiduciary
- A record of their accounting capacity
- How well-placed they are to handle assets that are earmarked for retirement.
- Whether or not they are or have ever been bonded
- Their ability to run audits, as well as how they respond to government audits.
- Their net worth
Looking at the above qualification requirements, I can tell you that not many people stand a chance of becoming the trustees for their IRAs so that they can run them as home storage gold IRAs. The time and money you will spend in trying to make this happen may, in most cases, not be worthwhile.
The big lie home storage gold IRA advocates tell
If you come across gold IRA advocates today, they will quickly convince you that they have clever solutions to help you distract the IRS so that it does not come hunting for you. You may, for instance, hear them talk about your LLC having to rent a safe deposit box. Such tricks are according to these companies, supposed to fool the IRS into perceiving the LLC as just another legitimate by disinterested third party. Since you are in control of the LLC, however, you can proceed to buy, store, or sell precious metal assets as you please.
This, unfortunately, does not pass the IRS radar undetected, and if you are not careful, you may end up getting audited (this does not always end well for most people, and may only be the beginning of your financial woes).
Frequently asked questions on home storage gold IRA
1. Are there penalties for opening a home storage gold IRA?
Yes. Regardless of what you may have been advised, if the IRS comes sniffing and finds out that you have some IRA gold stored at your home, it will hit you will have to pay taxes, penalties, and extra fees. This could actually lead to an IRA audit (even at a personal level). If the IRS comes across anything that warrants fines and penalties, then it will not hesitate to make the demand that you pay up or get locked up.
2. What is an IRS-approved depository?
Gold IRA owners are required to store their precious metal assets in an IRS-approved depository. This is a storage facility that is designed to specifically hold physical precious metal assets such as gold and silver. Previously, the IRS only allowed investors to hold their assets in depositories within the U.S. borders. With time, however, things have changed, and investors are allowed to hold their gold IRA assets outside the U.S. in approved depositories in different parts of the world.
3. Which precious metals can I hold in an IRS-approved depository?
IRA-approved gold meets the fineness standards that are set by the IRS, as illustrated below:
- Gold assets must be 0.995 pure
- Silver assets must be 0.999 pure
- Platinum and palladium assets must be 0.9995 pure
Note that you cannot hold collectible coins and numismatics within this retirement vehicle. If you come across any precious metal IRA company that recommends collectibles as an investment option then you should run as fast as you can.
4. I want to open a gold IRA the right way, how can I do that?
With the many misleading ads there are out there, it is necessary for you to do sufficient background research before creating a gold IRA. If you have, however, opened a home storage gold IRA, already, I would recommend that you close it right away, then contact a reliable gold IRA custodian to get you started in the right way. Check out our top-recommended options below.
That will be all for today’s article on home storage gold IRA scams. I hope you found it insightful, and that it will help you determine whether it is time to open a new gold IRA the right way. Let me know if you have more questions on this subject, by dropping them in the comments section so that I can respond to them ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired!