How your precious metals backed IRA could get you Audited

April 08, 2018

It’s that time of year again. The birds are chirping, flowers are in bloom, everything is lovely and warm… and we’re all stuck inside doing our taxes.

In going through tax season and getting your finances in order, you may be considering rolling a non-performing IRA into a precious metals backed IRA, or starting a new one altogether. There are many services out there that will help you with this. Lear Capital is a leading service provider for precious metals backed IRAs. But one service we do not offer and strongly recommend against is HOME STORAGE for your gold backed IRA.

Why? Audit bait.

Home storage for your precious metals IRA is asking for trouble!

We understand the appeal completely. We are the biggest proponents of the idea of holding your actual assets in your hand versus paper promises. And, what is a warehouse receipt from a custodian, really, other than a paper promise?

The one key exception to this rule is your tax advantaged Gold IRA account. You MUST store it with a custodian, NOT at home, IF you want to reap the tax benefits.

Not only is home storage a huge red flag for an audit, but should the audit not go your way (and it likely won’t – keep reading) the fines and penalties you’ll be assessed with could equal the entire account value itself – OR MORE.

While a precious metals backed IRA is one of THE most important steps you can take to hedge your retirement against the withering inflation storms to come, you MUST follow IRS rules to avoid stiff penalties. 

The spirit of the law surrounding retirement accounts means you must store your assets with a reliable IRS approved custodian, such as our partner Delaware Depository, whom we recommend for all our clients.

Can you get around the law, as some companies are claiming? We don’t think so. There are companies out there that will help you set yourself up as a custodian, based on a perceived loophole in the IRS wording. But all that is needed is clarification of the wording and those holding that kind of account setup could find themselves in deep trouble.

Adam Bergman, contributor at Forbes believes we got that needed clarification earlier this year from a precious metals trade organization, the Industry Council for Tangible Assets (ICTA) when they basically reconfirmed the spirit of the law, which is that retirement assets need to be kept at arms’ length from the account owner until disbursement. The temptation to raid your IRA in your basement safe to get that new car or boat is just too great. Retirement accounts should be for retirement, end of story.

If you do not like that deal, don’t take it! Just buy your precious metals the simple old-fashioned way, own them outright, keep them in a safe at home and don’t worry about the IRS. We will gladly help you with that as well!

But for the tax advantages of a retirement account, Forbes concludes –

“Any investor seeking to purchase IRS approved bullion or coin with a self-directed IRA should not hold the bullion or coins personally at home or anywhere that is not in the “physical possession” of a U.S financial institution or IRS-approved nonbank custodian, such as a depository.  Failing to do so could trigger taxes, penalties, and fees on your entire IRA in the case of an IRS audit.”

Either way, Lear Capital is here to help you safely meet your precious metals ownership and retirement savings goals.


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