Gold is a reliable investment. When looking at gold IRAs, there are several alternatives to choose from.
One of these alternatives is the home storage gold IRA, which lets you keep your gold bullion inside your house.
Is it even possible to hold gold inside your home? It can be with a home storage gold IRA.
This guide will cover everything you want to know about these accounts, including what they are and how they work.
What is a Gold Home Storage Gold IRA?
A home storage gold IRA is an individual retirement account that enables you to invest in gold and other precious metals.
Unlike a regular IRA, which invests in paper assets like bonds, equities, etc., a home storage gold IRA lets you invest in actual gold and silver bullion.
There are numerous benefits of storing gold at home. It is less costly and provides easy accessibility if you wish to resell.
Besides, this strategy protects your gold from government confiscation. Unfortunately, home storage gold IRA is subject to various penalties, often brought about by misleading advertising.
You may incur IRA penalties and fines if you don’t follow the IRA requirements for keeping gold. Furthermore, keeping gold at home is unsafe.
You risk fires and burglary. Also, when reselling your gold, you’ll need an appraisal to assess your metal’s value.
How Does a Home Storage Gold IRA Work?
Gold IRAs, also known as self-directed IRAs, can be used to buy gold bullion and other precious metals authorized by the IRS.
Also, you can use them to buy enterprises, real estate, and other valuable retirement assets. To start one, you must engage with an IRS-approved custodian, often a bank or reliable financial institution.
They’ll oversee home delivery gold, maintain account records, and file the relevant IRS forms. Most established gold IRA providers have ties with renowned custodians.
As such, they often include these services in their packages. Once you create your gold IRA, you can fund this account through indirect rollovers or transfers from an established retirement fund or through a wire or check transfer.
The maximum yearly contribution (if you’re 50 years and above) is $7,000. After financing your account, you could instruct your IRA custodian to purchase the gold bullion of your choice (and for how much).
Once acquired, the gold must be kept in an authorized depository facility.
What Are the Rules When Owning a Gold IRA?
The regulations for investing in Gold IRA are like those for investing in other assets with a self-directed IRA.
If you pay attention to all regulations, storing gold at home is fairly easy.
Setup a self-directed IRA
You’ll need to create a self-directed IRA to add gold to your IRA. Self-directed IRA contributions are tax-deductible.
If you withdraw before maturity, you’ll incur withdrawal tax charges.
You must purchase IRA-eligible gold
The IRS sets specific restrictions on the gold bullion and coins that a gold IRA can store. Your gold IRA dealer should guide you on buying bullion, coins, and bars.
Generally, gold qualifying for IRAs must fulfill the following criteria:
- Have a 99.5% purity or fineness
- Be stored in a safe depository by an IRA trustee
- Be manufactured by a national government mint or an authorized manufacturer
Purchase gold through a custodian
Even if you currently hold IRA-purchased precious metals or intend to acquire them, you cannot add gold to your IRA yourself.
You’ll need a custodian, a financial organization tasked with safeguarding the funds in your gold IRA.
Store your gold in a depository certified by the IRS
The IRS prohibits you from storing bars and coins at home or in a safe. The IRS may deem even a one-day possession of your gold as a distribution.
In some cases, this might result in severe fines and taxes. Your gold IRA custodian should facilitate the transfer of your metals to a depository, a safe storage facility.
You’re free to pick your desired depository or use the one recommended by your custodian.
Either way, the facility should be IRS-Approved.
Contribute a percentage of your portfolio
There’s a cap on the annual contributions to your gold IRA. Currently, the yearly contribution limit is $6,000 or $7,000 if you’re 50 and above.
Keep your gold until you’re 59 ½ years old
Like traditional investments, your gold IRA should act as a nest egg for your retirement plan. Therefore, the IRA limits restriction to your gold unless you’ve reached 59 ½ years.
Otherwise, you’ll incur some taxes, such as the 10% early withdrawal penalty.
How is Gold Taxed in an IRA?
Your contributions and any gains are not subject to taxation. Besides, in most situations, contributions are tax deductible.
You cannot access the gold in your IRA unless you’ve reached the minimum age requirement (59 ½ years). If not, you’ll incur a 10% early withdrawal penalty and a 28% capital gains tax for any profits.
However, there are some situations where you’re not required to pay the 10% early withdrawal penalty. For instance, if you become handicapped or are purchasing your first property.
Also, you can avoid this penalty by establishing annuity payments depending on your life expectancy. At 72 years, you must take required distributions from your gold IRA.
Failure to do subjects you to a 50% excise tax every year if you fail to remove the required amount.
How Much Are Gold IRA Fees?
Because of the tax-deferred structure of an IRA account, you’ll want to keep your gold with an authorized IRA custodian.
If you do not store your gold in an IRS-approved precious metals facility, you may incur several additional charges.
Your custodian can impose an initial cost to open your account, typically ranging from $50 to several hundred dollars.
Annual custodian maintenance fee
Typically, the custodian will charge a yearly maintenance fee to cover the administrative costs associated with managing your account and paperwork.
This could range from $75 to $300 annually. Some businesses charge more for larger accounts, such as $175 for accounts under $100,000 and $225 for accounts over $100,000.
When purchasing physical gold for your IRA, the vendor may impose a markup, suggesting you’ll pay more than the gold’s spot market price.
This charge varies according to market conditions and the type of real gold you intend to purchase. In addition, sellers may charge commissions and transaction fees: The standard fee per transaction is $40.
The gold held within a gold IRA should be kept in a secure area. The storage price increases proportionally to the amount of gold a person possesses.
This may be a flat fee or a percentage of your account’s worth. If you want home delivery, gold storage services might also charge a fee for that.
Custodians can combine gold insurance costs with storage fees into a single, flat rate or charge insurance separately.
Based on the amount of gold you possess, storage and insurance will cost between $100 and $300 per year.
If you send or receive funds through wire transfer for your transactions, the custodian may charge a fee of roughly $25 per wire to cover costs.
If you ever want to close your account and cash out the deposits you’ve made, you may have to pay additional costs to do so.
The custodian could also levy a last cash-out fee of roughly $250 if you cancel your account.
If you’re a new customer with a greater account balance, the custodian could be ready to waive some costs for the first 2-3 years.
However, even with larger accounts, you could be subject to additional fees you would not incur if you store your funds in a conventional IRA.
Can I Set Up a Home Storage Gold IRA?
Gold IRAs provide an outstanding blend of investment flexibility and improved after-tax returns than gold IRAs.
Technically, you can form an LLC and control your IRA purchases (so long as you meet rigorous criteria), but you cannot hold gold at your residence.
You should store it in a secure depository. One example of this is a safe deposit box under the LLC’s name.
Arguably, placing the gold under the bed or in a safe would constitute a distribution. If you take them before age 59.5, payouts are considered early withdrawals and are subject to a 10% distribution penalty.
Also, only make transactions through a custodian. Check the fees levied by different companies and their reviews to find one that’s best for you.
Your custodian should then guide you on purchasing IRS-approved gold for your IRA.
Have more questions about home storage Gold IRAs? Here are a few frequently asked questions by other curious investors.