Here’s another one from Forbes.com –
Over the last several years, several precious-metals dealers recently have been advertising “home storage” as a legal way for storing gold and IRS-approved precious metals owned by an individual retirement account (IRA). These advertisements caused confusion among investors and IRA custodians, as the “home storage” gold IRA approach seemed to contradict with the language in Internal Revenue Code (“Code”) Section 408(m). The language in IRC Section 408(m) clearly stated that IRS approved bullion must be held in the “physical possession” of a financial institution or an IRS-approved non-bank custodian, such as a depository.
In early 2018, the Industry Council for Tangible Assets (“ICTA”), the national trade association for all who have an interest in precious metals, issued a white paper on the topic of gold IRA “home storage” and took the position that IRA owned precious metal assets must be held in the “physical possession” of U.S. financial institution or an IRS-approved non-bank custodian, and not at home or in one owns physical possession.
Internal Revenue Code Section 408(m) lists the type of precious metals and coins that are permitted investments using IRA funds:
- (A) any coin which is –
- a gold coin described in paragraph (7), (8), (9), or (10) of section 5112(a) of title 31, United States Code,
- a silver coin described in section 5112(e) of title 31, United States Code,
- a platinum coin described in section 5112(k) of title 31, United States Code, or
- a coin issued under the laws of any State,
- (A) any coin which is –
- (B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness that a contract market (as described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7)  requires for metals which may be delivered in satisfaction of a regulated futures contract, if such bullion is in the physical possession of a trustee described under subsection (a) of this section.
The language in the Code is quite clear. Code Section 408(m) clearly states that gold, silver, or palladium bullion must be held in the physical possession of a U.S. trustee, otherwise known as a U.S financial institution or IRS-approved non-bank custodian, such as a depository. In addition, the IRS recently issued guidance on the concept of “home storage” gold IRA and stated:
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 non-bank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion.
Any investor seeking to purchase IRS approved bullion or coin with a self-directed IRA should not hold the bullion or coins personally at home or anywhere that is not in the “physical possession” of a U.S financial institution or IRS-approved non-bank custodian, such as a depository. Failing to do so could trigger taxes, penalties, and fees on your entire IRA in the case of an IRS audit.