Over the years, this has been a much-discussed and frequently debated topic for those individuals who wish to hold precious metals in their IRA LLC or 401(k) plan. Must you only use a depository? Can you use a bank? Can I have them at my home?
Historically, it depends on who you ask? Here’s the typical lines:
Coin Depository — You will either hear that you can only place permissible coin/bullion investments through the holding and care of an approved depository. Typically, these companies will be very explicit that to do otherwise will jeopardize your IRA’s standing and risk a taxable (with penalties, if applicable) occurrence. Obviously, as a person trying to save money, you may not want to use a depository due to the additional costs.
IRA Custodians — I’ve heard the gamut of: 1) “we don’t provide tax advice”, 2) “you must place all such coins/bullion into a depository account…the LLC cannot hold such assets”, 3) “you can store these at home in the care of your LLC” (very scary comment), and 4) “you can hold such assets at a bank (e.g., safety deposit box) for safe holding for the coins purchased in the name of the LLC.”
IRA LLC Facilitators (the companies that establish your IRA LLC) — Again, you will hear the gamut as noted above. Same lines, same drills.
IRS? — Up until recently, the IRS really did not address this topic on point, leaving people to use their best judgement.
Yes, in late 2016, the IRS came out with more clarification on this subject matter. And, believe it or not, it is pretty on point. Here are the guts of the IRS’ position on this matter:
“If my IRA invests in gold or other bullion, can I store the bullion in my home?
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 nonbank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion.”
Pretty much addresses it on point, right? Very much so…but, one may say it does not specifically address storage at home. Should one infer that since only a bank or IRS-approved nonbank trustee are referenced, that means it would preclude holding the metals at one’s home? I would take the position as YES.
While there are individuals/companies who in the past have said you can store metals at your home in the name of the LLC, I have never seen any evidence that IRS rules, at any level, would permit this. However, the good news with this IRS FAQ is that it certainly appears to address and resolve any questions related to whether an IRA LLC or 401(k) plan (with or without a 401(k) LLC) can store such approved metals/coins at a banking institution.
Without naming names….and, I am certainly NOT saying they are doing anything incorrectly or one shouldn’t purchase precious metals from them…one only has to Google the subject matter of storing precious metals at one’s home. Here is an almost verbatim conversation I recently had with a company who promotes/suggests the storage of precious metals at home.
PGI — I understand you sell previous metals. I know the IRS has recently addressed the use of an IRA LLC to purchase precious metals and store such metals at a banking institution (e.g., safety deposit box).
Company — That is correct.
PGI — On your site, you seem to reference one’s ability to store precious metals at one’s home. Is this correct?
Company — Well, yes, but the vast majority of clients we work with will store their precious metals at a bank.
PGI — Understand, but you give the impression that people can store at their homes? Do you have anything from the IRS that specifically states one can keep precious metals at their home?
Company — Well, keep in mind that the majority of our clients will store the metals at a bank.
I will stop the conversation there…you get the point. But, suffice it to say, that even when directly asked about the ability to keep precious metals at one’s home, the question was never answered…even though their website certainly seems to suggest one’s ability to do so.
Word to the wise….of course, always review such questions with your tax professional (you knew I was going to say that), but I would heavily caution and dissuade anyone from ever storing metals at home. Why risk this?!
As always, the information provided is intended to be educational in nature. It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice. One must always review such issues with their appropriate professional.