There is no doubt that a substantial amount of wealth is today kept in the various precious metals IRAs within the U.S. Because of the potential for IRA fraud or theft, the IRS determined that only certain approved depository facilities would be allowed to inventory and guard such large amounts of physical bullion treasure. So it was that only six depository vaults in the entire United States of America were approved to hold the valuable contents of these extremely resource-rich retirement accounts.
These six IRS-sanctioned vaults are responsible for nearly all of the gold, silver, platinum, and palladium contained in the precious metals retirement accounts around the country. Yet in just the last year, the IRS has amended this rule to allow for Gold IRA physical offshore storage in approved international vaults and countries. In this page, we look at the various options for your gold IRA storage.
Where The IRA Precious Metals are Usually Physically Held
IRA precious metals are still usually held in one of six IRS approved depository company vaults. These companies include the following well-known and imminently trusted institutions:
- Delaware Depository
- Brinks Security
- HSBC Bank USA
- JPMorgan Chase Bank North America
- Scotia Mocatta
- CNT Depository
All of these storage vaulting firms have U.S. based locations which the IRS formerly required for all storage of precious metals that are a component of a precious metals IRA. Some of them also offer international, or “offshore” storage in various gold trading and market centers around the world such as London, Singapore, Dubai (United Arab Emirates), Zurich (Switzerland), Toronto (Canada), or Hong Kong.
Offshore Storage Versus Local Storage Options
Once again some of the companies which the IRS approves to house your Gold IRA treasure holdings offer offshore storage. Offshore storage only needs to be that which is located outside of the United States in order to qualify for this designation. Naturally this includes the likes of
- Brinks Security with its London vault
- Regal Assets with its storage offshore in Dubai and Singapore, among other international locations
- HSBC with storage offered in London, Zurich, Singapore, and Hong Kong
- JP Morgan Chase with vaults offshore in London and Singapore
- Scotia Mocatta with international storage options in Toronto, Canada
Best ranked IRA administrator company Regal Assets recommends to its clients Dubai or Singapore vaulting storage in what amounts to a much safer and more financially stable legal jurisdiction than any vault location found within the United States. The risk of government confiscation in either Dubai or Singapore is minimal as well, giving them a significant appeal over American-based precious metals storage.
Offshore vaulting and storage is a terrific option and imminently sensible idea in the world in which we live today. Remember that the United States Federal government has actually confiscated all non-rare and non-collectible gold holdings once already back in the early 1930s under then-President Franklin D. Roosevelt. The problem today is that the IRS has pondered this issue of not having access to and jurisdiction over its American citizens' and residents' gold holdings years ago as the 1997 legislation permitting physical precious metals to be held within IRA accounts was enacted into law.
Once it became clear that the IRA retirement accounts would now contain physical gold, silver, platinum, and palladium holdings within them, the Internal Revenue Service effectively nipped that thorny problem of storage jurisdiction in the bud by simply requiring that all American held, Self Directed Precious Metals IRAs be stored in an approved vault found within the United States. Yet enough important people must have complained in the interim, as today the IRS does allow foreign offshore vaulting of IRA precious metal accounts in many international locations and vaults, such as Dubai.
The IRS' former rule does still explain why two of the six IRS approved United States' depositories do not even bother to maintain overseas offshore vaulting options (Delaware Depository with its primary facility in Wilmington and CNT Depository vaults located in Massachusetts). Since they are primarily after precious metals IRA clients who had to keep their entire precious metals IRA assets within the United States, what was the point for them to open expensive to set up, operate, maintain, and guard foreign vaults? For the primarily U.S.-based vaults, there was previously no compelling reason, thanks to this long-lasting sneaky, little-known IRS rule.
Co-mingled Storage Versus Segregated Storage
Co-mingled storage is another trick you should watch out for when you are selecting a depository and vaulting storage options for your precious metals holdings within the Gold IRA. Co-mingled storage refers to the concept of a giant main room vault in which the depository firm simply lumps all of its clients precious metals bullion holdings together. This is both simpler and less expensive for the depository of course. It requires only an inventory sheet to keep straight which metals belong to what client. For the vaulting companies, it is the standard operating procedure for and preferred method of storing clients' precious metals assets.
Unfortunately, it also means that you do not have any fully allocated precious metals inventory with such depositories. The way around this troubling fact is to insist on a contract where the depository firm gives you allocated, segregated precious metals storage in writing. This way there will be a small room or safe deposit box where your particular precious metals are individually inventoried and segregated away from the general clientele's precious metals hoard.
This is the only way to keep your metals safe from potential disappearance in the event of a bankruptcy or other tragic event at the depository which could compromise the safety and security of your individual precious metals holdings just lying around mixed with everyone else's assets in the general vault. You should be prepared for the depository to attempt to charge you a higher storage percentage fee when you request this proper form of keeping your bullion. In any event, they are required by law to plainly disclose exactly what form of storage you are receiving and at what storage price in the IRA account opening documents you fill out and sign before opening up the account.
Home Storage As A “Grey Area”
It is worth addressing the highly controversial new storage method suggested by the Gold IRA Home Storage set of administrators. Home storage refers to this idea that you can simply install a safe at home, create a Limited Liability Company of your own to become a third party depository, then stow away your precious metals assets within your home storage depository vault. This sounds very appealing to those many conservative investors who believe the point of owning physical gold or silver bullion is to have it where they can both actually physically see and touch it on demand, with no “middleman” standing in between them and their treasure.
The problem with this idea which a number of IRA account custodians and administrators are actively promoting is that the IRS has not yet ruled conclusively on the issue. In fact, at best this is a “grey area” of the precious metals IRA storage rules. Clearly it violates the spirit of what the IRS is attempting to do, which is to put the temptation of quietly and anonymously accessing, selling, and borrowing or outright spending your IRA account precious metals out of your possible reach. Until the IRS issues a clear and conclusive ruling most likely against this practice, we do not recommend pursuing it. You should follow the IRS' IRA guidelines as closely as you possibly can to avoid any unfortunate consequences which will probably include taxes and penalties at some point in the not too distant future otherwise.