The Best Way to Store Your Gold, Silver and Other Precious Metals
First, you CAN hold physical gold and silver in your IRA. But the physical metal will need to be stored. There are three ways people store their IRA’s gold and silver:
- Keep it at home in a safe
- Put it in a local bank safe deposit box
- Use a secured storage program
Let’s take a look at the pros and cons of each option.
Storage Option #1: Locked up at Home in Your Safe
Many investors don’t trust the government when it comes to the protection of their gold and silver, and prefer to keep their metals in a safe at home or buried in the backyard. They believe that if
something goes terribly wrong with the economy, the government might freeze all IRA accounts, or worse, seize all physical gold and silver held in IRAs and safe deposit boxes.
However, if you try to buy and store precious metals yourself included in your IRA, you could run into many roadblocks, as well as stiff penalties from the IRS.
Self-Storage IRA arrangements haven’t been approved or recognized by the IRS, either formally or in a no-action letter. In 2016, the IRS updated its IRA FAQs to specify that bullion must be in the possession of the IRA trustee/provider.
Home Storage Problem #1: Creating an LLC for Your IRA’s Gold and Silver
A big issue with private storage is that you will need to start a Limited Liability Company (LLC) which will cost you time and money. Not only do you need to maintain that LLC according to the rules and limitations of your home state, but you also need to pay all the yearly maintenance fees that come with your LLC.
These yearly fees help you preserve the corporate shield and protect your other assets from liability…
But this can create additional stress for you, because filling out this extra paperwork—without any errors—is a challenge for anyone to do on a regular basis.
When storing IRA gold and silver at home, here are a few issues you should consider:
- Providing storage space for LLC assets at your personal residence, in your personal safe, or in your personal backyard, may be prohibited by the IRS.
- The metals still belong to the IRA, and not to you, so you must avoid any prohibited transactions with them or else your IRA is at risk. An example of this would be pledging the metals for a personal loan, or taking personal ownership of the metals directly.
- The IRS may deem the Self-Storage IRA a “distribution” from the IRA, resulting in a tax liability and imposition of a tax penalty.
- Distributions of metals, or other assets owned by the LLC, must first go to the IRA provider so they can be reported to the IRS.
- LLC set up and legal fees are required.
- The LLC must have a separate business bank account which may require monthly fees.
- Annual Federal reporting and state filing fees may be required for the LLC.
- The IRS is notified annually that your IRA owns the LLC.
- If the IRS asserts that a prohibited transaction occurred, the burden of proof will be on you—the taxpayer—to ensure you did not receive a personal benefit.
Metals held personally are subject to a higher level of due diligence from buyers as there is no documented “chain of possession” ensuring the metals have not been tampered with. This may reduce the resale value for some metals.
Home Storage Problem #2: Insuring Your Precious Metals Stored at Home
If you lose your gold or silver at home, it’s gone. Just as if you had cash stored or hidden in your house and someone stole it, precious metals work the same way.
Most home insurance policies don’t cover more than $1,000 worth of gold, so you may need to shop around for a specialist insurance provider.
In addition, once you have insured your gold, you will be on record as a gold owner. If you’re worried about government seizure or a request for tax payments, then insuring your gold might not be in your best interest.
Storage Option #2: Safe Deposit Box at Your Local Bank
Storing gold and silver bullion in a safe deposit box works for many people. However, the safe deposit box option is not without its flaws, especially when the metals are part of an IRA.
Bank Problem #1: Same Self-Storage IRA Risks as Storing at Home
Even though your gold and silver are stored at a bank and not in your own home, this is still considered a Self-Storage IRA arrangement since the metals are not in the possession of the IRA trustee/provider. You run the same tax risks and LLC hassles as detailed above.
Bank Problem #2: Safe Deposit Boxes Can Be Expensive
The smallest boxes (3″ x 5″ x 24″) start at around $50 per year. Mid-size boxes (5″ x 5″) cost around $100, while the largest (10″ x 10″) run about $200 per year.
That may not seem like much—for one box. But keep in mind that Silver Eagles take up much more space per dollar, and fees can quickly add up as you need more boxes.
Bank Problem #3: Limited Banking Hours
Bank hours are limited, as is your opportunity to get your metals.
If there’s a huge increase in gold prices on a Friday afternoon, you may not have time to get over to the bank to get your coins from your safe deposit box. That means it could be Monday before you can get to a dealer who will buy them, and by then the market may have turned around.
And if the banks close down—like we saw on September 11, 2001—it could be days or even a week before you would have access to your metals at all.
Bank Problem #4: Insurance
The bank doesn’t insure the contents of your safe deposit box. Although insurance is available from select vendors, it is expensive and hard to obtain.
You should also consider the security risks going to and from the bank with physical gold or silver in your possession.
Storage Option #3: Secured Storage Program (recommended)
Although the idea of having your IRA’s precious metal sitting on your kitchen table may sound appealing, most of our clients realize that holding their IRA’s metals with a professional administrator is the best option with lower stress, lower hassle, and lower risks.
That’s why West Hills Capital can arrange to store your precious metals at our recommended high-security, exclusive 100% insured and segregated third party storage facility.
There are many benefits to keeping your precious metals IRA in a secure storage facility:
- Your gold and silver is insured with a specific “all risk” custody policy underwritten by Lloyd’s of London that protects your precious metals. Lloyd’s of London is an A+ rated financial insurance company.
- You have the option to receive independent third-party audits, which confirm essential details, and come with unlimited online access.
- You have exceptional liquidity because you can sell your metal 24/7, even when the bank is closed on weekends and holidays. Plus, you can have the proceeds wired the same day to your bank account anywhere in the world.
- You can also take delivery of your metals any time. The precious metals can be delivered by armored car or shipped overnight with express and insured delivery.
And don’t forget—West Hills Capital takes care of all your setup, storage and maintenance fees—100%. That’s right … NO FEES at all for you!
If you have questions about ownership of gold, silver, or other precious metals, contact a West Hills Capital metals strategist today to learn more. Getting started with your gold/silver IRA is easier than you think—call (800) 867-6768 today.