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Last Updated on: 20th July 2023, 08:39 am
Are you looking to join the nearly 11 percent of Americans who own physical gold assets? If so, you’re likely curious about what IRS-approved storage options are available for IRA investors. Since gold bullion is eligible for IRA inclusion, many investors opt to include them within their retirement accounts to benefit from long-term tax-free or tax-deferred growth.
For those who wish to store their gold assets within their own home, note that home storage is restricted per IRS regulations for IRA investors. All gold assets that are not held by IRS-approved nonbank trustees or custodians are subject to 10% early distribution penalties. To avoid this, gold IRA investors must entrust their assets to approved third-party facilities.
Interested in learning more about what gold storage options are available to gold IRA investors? Below, we will touch on each of the viable storage methods for gold IRAs to help you make an informed decision with your retirement savings.
Table of Contents
1. Gold IRA Bank Safe Deposit Box
Bank safe deposit boxes are secure storage units provided by banks to store valuable items, including gold. This gold storage option allows investors to enjoy the peace of mind that comes with storing their gold in a controlled and secure environment. Bank safe deposit boxes offer protection against theft or damage, as they are typically located within the bank's premises and benefit from the bank's security measures.
At the same time, bank safe deposit boxes have some limitations. Investors have limited access to their gold, as they can only retrieve or deposit items during the bank's operating hours. This may not be ideal for those who require frequent access to their gold. Additionally, annual fees are typically charged for the rental of safe deposit boxes. This method is restricted to precious metals investing and isn’t well suited for a well-diversified investment portfolio.
Bank safe deposit boxes are well-suited for investors with a low to moderate-risk tolerance who prioritize convenience and security over immediate access to their gold. They should also be willing to pay the associated fees for maintaining the safe deposit box.
Costs: $150 to $500 annual fees on average, which vary by institution.
Bank Safe Deposit Box Pros 👍
- Secure storage in a controlled environment
- Protection against theft or damage
- Ultra-high security technology and comprehensive insurance
Bank Safe Deposit Box Cons 👎
- Limited access to gold during bank operating hours
- Reliance on the bank's security measures
- Higher than average fees and premiums
Investors Suitable for Bank Safe Deposit Boxes
- Low to moderate-risk tolerance
- Prefer convenience and security over immediate access
- Willing to pay annual safe deposit box fees
2. Gold IRA Private Vault Storage
Private vault storage offers investors a highly secure and professional solution for storing their precious metals, including gold. These specialized facilities are equipped with advanced security measures, such as state-of-the-art alarm systems, 24/7 surveillance, and controlled access protocols.
One key advantage of private vault storage is the expertise and professionalism provided by the facility. Trained professionals handle the logistics of storing and managing the gold, ensuring proper inventory management and minimizing the risk of loss or damage. This level of care and attention is particularly valuable for investors who prefer a hands-off approach.
Private vault storage is perhaps the best storage for gold option for investors with a moderate to high-risk tolerance who prioritize the utmost security and professionalism for their gold storage. This storage option appeals to individuals who value the convenience of leaving the logistics and safeguarding of their gold to professionals, while ensuring it remains readily available for potential future needs.
Costs: $100 to $300 per month.
Private Storage Vault Pros 👍
- High-level security measures, including alarms and surveillance
- Professional handling and inventory management
- Totally hands-off investing experience
Private Storage Vault Cons 👎
- Additional fees for storage and insurance
- Often more expensive than all other options
- Limited access to gold outside of business hours
Investors Suitable for Private Storage Vaults
- Moderate to high-risk tolerance
- Willing to pay for enhanced security
- Comfortable with limited physical access
3. Precious Metals IRA Custodian
A precious metals custodian is a professional service that specializes in compliant storage and management of precious metals, such as gold, within an IRA account. By utilizing a custodian, investors can rely on their expertise for secure storage, accurate record-keeping, and administrative tasks.
It's important to note that investors using a precious metals custodian will not physically possess the gold, as it will be held by the custodian on their behalf. Additionally, custodian fees and administrative costs are associated with this service.
Precious metals custodians are suitable for investors with a low to moderate-risk tolerance who value compliance and professional management over direct physical possession. This vaults storage option is particularly appealing to those seeking convenience and peace of mind, as the custodian handles all storage-related responsibilities while ensuring adherence to IRS regulations.
Costs: $100 to $400 per year depending on storage and vaulting fees.
Precious Metals IRA Custodian Pros 👍
- Total end-to-end investment experience handled by qualified professionals
- Full compliance with IRS regulations on IRA investing
- Professional storage and record-keeping
- Work with only IRS-approved custodians and vaulting facilities
Precious Metals IRA Custodian Cons 👎
- Lack of physical possession of gold
- Custodian fees and administrative costs can add up
- Higher minimum investments required (e.g., often $10,000 and up)
Investors Suitable for Precious Metals IRA Custodians
- Low to moderate-risk tolerance
- Prefer a hands-off approach to storage and management
- Willing to pay for professional custodial services
4. Gold IRA Offshore Storage
Offshore storage refers to the practice of storing precious metals, such as gold, in a foreign country or jurisdiction outside of one's home country. This storage option offers investors geographical diversification and potential tax benefits.
By opting for offshore storage, investors can potentially mitigate risks associated with their domestic economy and take advantage of favorable tax regulations in the chosen jurisdiction. Even central banks opt for offshore gold storage with, for example, the Banque de France storing 70% of its 2,435 tons of reserve gold in offshore locations.
However, it's important to consider a few factors when it comes to offshore storage. Firstly, the costs involved in international storage and transportation can be higher compared to domestic options. Additionally, navigating international regulations and potential logistical complexities may require extra effort and understanding.
Offshore vaulted storage is most suitable for investors with a high-risk tolerance who have considerable investment capital and are willing to navigate the intricacies of international regulations. This storage option appeals to those seeking geographical diversification, potential tax advantages, and enhanced privacy and confidentiality for their gold holdings.
Costs: $500 to $1,000+ depending on investment size.
Offshore Storage Pros 👍
- Geographical diversification and potential tax benefits
- Enhanced privacy and confidentiality
- Often result in a lower tax burden and overall lower fees and associated costs
Offshore Storage Cons 👎
- Sometimes can incur higher costs due to international storage and transportation
- Regulatory and logistical complexities can occur
Investors Suitable for Gold IRA Offshore Storage
- High-risk tolerance
- Considerable investment capital
- Willing to navigate international regulations
(Looking for an offshore gold IRA custodian to safeguard your gold in a tax-advantaged location? Check out this updated list of the top offshore gold storage companies.)
5. Gold Home Storage (Warning: IRS Penalties Apply for IRA Investors)
Home storage refers to the practice of keeping physical gold within the secure confines of your own residence. With this option, investors have direct control over their gold holdings and can access them quickly in case of emergencies. Some investors choose home storage because it provides a sense of autonomy and the ability to physically possess and protect their assets.
However, we strictly caution against this option. Per Section 408(m) of the IRS Code, home storage is prohibited for gold IRA investors. This option is only available to non-IRA gold investors. As such, IRA investors who attempt home storage (within an LLC or not) may be subject to a variety of negative outcomes, including:
- Early distribution penalties if under the age of 59.5 (10%)
- Full IRA audit
- Fines and additional fees
Per the Wall Street Journal, one married couple residing in Rhode Island was fined $300,000 by the IRS for keeping their gold IRA assets stored at home. While it was once considered a legal grey area, this is no longer the case. Home storage for gold IRA assets will incur significant fines and penalties.
Plus, home storage for gold comes with a higher risk of theft or loss. Investors who opt for home storage must invest in additional security measures such as safes or vaults to safeguard their gold. This storage option is best suited for individuals with a moderate to high-risk tolerance who are comfortable managing their own physical assets. Additionally, investors should have a budget available to invest in reliable security equipment to ensure the safety of their gold.
Costs: $300 to $3,000 for gold safe purchase, depending on size and materials. Additional early distribution penalties can range into tens of thousands of dollars.
Home Storage Pros 👍
- Direct control over your gold holdings
- Quick access to your gold during emergencies
- Less vulnerable to confiscation by authorities
Home Storage Cons 👎
- Higher risk of theft or loss
- Requires additional security measures, such as safes or vaults
- Subject to a 10% distribution penalty
- Against Section 408(m) of the IRS Code
- Requires a hefty budget to invest in gold safes and associated equipment
- Could result in additional penalties, fines, and a full IRA audit
Investors Suitable for Home Storage
- NOT a gold IRA investor (only suitable for non-IRA gold investors)
- Moderate to high-risk tolerance
- Budget for secure storage equipment
- Comfortable with managing and securing physical assets
- Those who fear asset confiscation, including “preppers”
Risk Averse? Choose a Trusted IRS-Approved Custodian
When it comes to gold IRA storage options, it's important to consider your risk tolerance, budget, and personal preferences. Home storage and bank safe deposit boxes provide direct control and convenience but require additional security measures or limited access.
Private vault storage offers enhanced security but at an added cost. Precious metals IRA custodians are suitable for investors seeking convenience, compliance and professional management at a fair cost. Offshore storage can provide diversification and potential tax benefits but requires more substantial capital and consideration of international factors.
The all-around best option for gold IRA investors, in our opinion, is to invest with an offshore gold storage company or a trusted gold IRA service provider. These options provide a seamless all-in-one solution that is fully IRS-compliant while keeping costs and security risks low.
Ultimately, pursue the gold storage option that best aligns with your investment goals and risk tolerance according to your financial advisor.