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Gold Individual Retirement Accounts (IRAs) are popular investment accounts that allow you to save for retirement. A gold IRA works by letting you purchase gold and store it in an account. Gold is an incredibly valuable asset and a hedge against inflation, making it ideal for retirement savings.
You might think that once you buy gold to place in your gold IRA, you can do with it as you please. You might have wondered, “Can I take physical possession of gold in my IRA? And how do I do so if it’s possible?”
Unfortunately, it’s often inadvisable to take physical possession of gold in your IRA account. That said, there are some ways to do so if you believe it’s the best option. In this guide, Oxford Gold Group breaks down the risks, explains why you need a custodian for your IRA, and talks about exemptions to normal withdrawal procedures.
Is It Possible to Take Physical Possession of Gold in an IRA?
If you’re wondering, “Can I take physical possession of gold in my IRA?” the answer is often, “No.”
The Internal Revenue Service (IRS) encourages people to use IRA accounts so they don’t have to rely on Social Security or other programs during retirement. For an IRA account to be effective, it needs to have a clear market value. As long as gold and other assets remain in the IRA, their value remains stable.
This changes if you withdraw gold from your IRA. Gold coins — and other gold that you have outside of your IRA — are considered collectibles, not investments. Unlike the gold in an IRA, a collectible doesn’t have a stable market value; one year, it may be worth an incredible sum of money, and the next, its price may have dropped. This means that you can’t use it as a solid investment for a retirement account.
That said, it isn’t impossible to withdraw gold from an IRA. You can choose to request early distribution if you’d like to take possession of your gold. However, you may be subject to early withdrawal fees and penalties if you don’t complete this process correctly.
Risks of Storing Gold at Home
If you’re new to gold IRAs, then the fact that you can’t hold your own gold may seem surprising. In your research, you may have heard of something called a home storage gold IRA — which, as the name implies, allows you to store gold within your own home. However, these types of IRAs are often inadvisable.
According to IRS regulations, an approved custodian must hold all bullion in an IRA. When you store gold at home, you are at risk of violating IRS rules for gold IRA storage, so it’s best to choose a reputable gold IRA custodian to store your gold instead.
In addition, storing gold at home comes with significant risks, some of which include:
- Someone may steal your gold. Even if you purchase a sturdy safe, you likely won’t have as much security as an approved custodian would. Thieves may break into your house and steal your gold, leaving you without your investment.
- You could face distribution penalties. The IRS has regulations you have to follow if you want to withdraw your assets early. If you don’t follow these procedures or store your assets incorrectly, then you could face potential fines.
- You might be subject to an IRS audit. Should the IRS suspect something’s amiss, they may decide to audit you. If they discover improper account activity, you could face potential fines.
IRS Rules on Storing Gold IRA Assets
According to the IRS, you cannot “self-deal” — that is, you can’t do business with yourself and store your IRA gold with other gold assets that aren’t part of your IRA. Because of this, they require a custodian — that is, a third party who can ensure the safety of your assets — to hold onto your assets.
Safe Ways To Store Gold
The best way to safely store gold in an IRA is through a third-party storage facility. Third-party storage facilities offer many security advantages. These locations generally have advanced security and around-the-clock surveillance, giving you peace of mind. In addition, some may offer private insurance to protect you should anything happen to your assets.
Picking the Right Custodian
Choosing the correct custodian is vital if you want to keep your assets safe. When considering your options, you should:
- Do your research. Look up reviews online and see what you can find about the custodian’s reputation.
- Ask where they store their physical gold. Your custodian should be able to provide you with the name of a reputable facility; if they hesitate to answer, you may want to consider another option.
- Ask about security. Some custodians may offer extensive security and keep your gold separate from the gold of other clients, while others may not. It’s important to explore your options to determine who has enough security to protect your assets.
Custodial fees vary depending on who you choose to hold your assets. Your custodian will typically bill you annually and may ask for $75 or more, according to Annuity.org. In addition, you will have to pay storage fees, which are a percentage of your gold’s value. It’s important to discuss fees with your potential custodian before choosing to work with them.
When Can You Physically Hold Your Gold?
If you have gold in a gold IRA, you might be wondering, “When can I take physical possession of gold in my IRA?” Once you reach the age of 59 and a half, you can start withdrawing your assets from your IRA, tax-free. After you turn 72, however, you’ll likely have minimum distribution requirements, so make sure that you discuss those with your custodian.
You can also physically hold your gold if it’s separate from your IRA assets. That said, you won’t be able to enjoy the tax benefits of an IRA, like paying taxes when you contribute to your IRA and making tax-free withdrawals.
In addition, you can physically hold your gold if you choose to distribute your assets early.
Early Withdrawal in Gold IRA
Early withdrawal is possible for gold IRAs, though it comes with a 10% penalty if you withdraw your assets before age 59 and a half. If you choose to withdraw your assets early, you can either sell them or ship the gold to your home.
Inherited Gold IRAs
Inherited gold IRAs follow different early withdrawal rules. If a loved one died and left their gold IRA to you, that is an inherited gold IRA.
Typically, you’ll need to withdraw any assets within 10 years of inheriting the account. You may have minimum distribution requirements or need to pay taxes on the account.
Are There Tax Exemptions on Early Distributions?
Most early distributions result in penalties. However, you may avoid penalties if the owner of the IRA account passes away or becomes permanently disabled, or if you use the withdrawn funds to:
- Purchase a home (if you’re a qualified first-time homebuyer)
- Pay for qualified higher education expense
“Can I take physical possession of gold in my IRA?” While it isn’t advisable, it is possible. Oxford Gold Group can answer more questions on this topic. Call 833-600-GOLD to learn how to invest in gold or request more information.