Gold IRA Storage Options
In the United States, investors are always looking for ways to make more money. When it comes to saving for retirement, gold has become a popular investment option for many, thanks to its low volatility rate and guarantee for better returns in the long term.
In 1997, the United States government officially allowed investors to include precious metals in their Individual Retirement Accounts (IRAs).
However, for an investor to include precious metals into their retirement plan, they must store them with a regulated and authorized depository. Due to the high possibility of precious metal theft or fraud, only a few approved depository institutions are allowed by the IRS to hold and guard precious metals inventory. You can choose to have your gold stored in with other people’s investments or separately, and you can choose an approved depository in the U.S. or overseas.
How Does Investing in Precious Metals Work?
When you decide to use a Gold IRA to invest your retirement, you will be investing in the physical product, meaning you will own a physical precious metal investment. This investment is different from holding mutual funds, where you make money from spot price increments.
Precious metals include bars, coins, and bullion, and the four main types allowed include palladium, platinum, gold, and silver. Because an ounce of gold costs approximately $1800, owning even a tiny portion of this precious metal can be a valuable investment over time.
So, what do you do with your gold products once you have purchased them? You require a Gold IRA depository to store your precious metals safely.
Gold IRA Depositories
If you purchase precious metals as part of your IRA, you are legally required to store the metals in a Gold IRA depository. A Gold IRA depository is an IRS-approved company with highly secure vaults to protect these assets. You can think of it as a high-level security safe house for your precious metals.
These depositories are in place to give investors peace of mind, knowing that their gold investment is safe, and a company is responsible for this. These depositories ensure constant monitoring of the assets, offer armed security, and insurance for the invested metals.
Here is everything you need to know about Gold IRA storage.
Recommended Gold IRA Depositors in the United States
While there are many depositories in the market, only a few are IRS-approved. Working with an IRS-approved depository gives you two main benefits:
Fulfilling IRS requirements – depositing your Gold IRA with an IRS-approved depository will fulfill your tax requirements. It also shows the taxman that you followed the most established route, and you abided by every law required to own precious metals.
Security – depositing your gold with an IRS-approved depository is the best way to protect your investment against loss. IRA-approved depositories are responsible for countless people’s investments and have significant measures in place to keep your precious metals safe.
Local Storage Options
The IRS has implemented a law that only permits holders to store their precious investments with the six approved vault services within the USA.
The 6 IRS-approved Gold IRA depositories in America are:
- HSBC Bank USA
- Delaware Depository
- Brinks Security
- Scotia Mocatta
- JP Morgan Chase Bank North America
- CNT Depository
Some of these institutions offer offshore or international precious metal storage options globally in various gold trading centers, including London, Dubai in the UAE, Zurich in Switzerland, Singapore, Hong Kong, and Toronto in Canada.
Offshore Gold IRA Storage
The approval of offshore Gold IRA storage gives investors options for where to locate their investment. Investors can choose to have their precious metals stored in any of the six options within the U.S. or choose from the offshore/international options highlighted above. It is important to note that these international options are backed by the local counterparts and thus do not operate as individual entities.
For international or offshore storage, the choices include:
- Brinks Security with its London vault
- Regal Assets offshore storage in Singapore and Dubai, and other international locations
- JP Morgan Chase offshore vaults in London and Singapore
- HSBC storage options in Zurich, London, Hong Kong, and Singapore
- Scotia Mocatta international storage options in Toronto, Canada
While Regal Assets offers an array of international vaults, it primarily recommends its vaults in Singapore and Dubai because these are safer and more stable than vaults in the U.S. There is a very low risk of government confiscation in Dubai and Singapore, making them more appealing to investors than U.S.-based storage options for precious metals.
Offshore precious metal storage and vaulting are ideal options today, as in the United States, the federal government has confiscated non-collectible and non-rare gold holdings in the past.
Co-mingled Storage Options
Another option you have for storing your precious metals in Gold IRA is co-mingled storage. This type of vault storage involves a vaulting service provider holding precious metals from multiple clients in one large room. Co-mingled storage presents a more affordable storage option and is more straightforward for the service provider.
With co-mingled storage, the service provider only needs to keep a copy of an updated inventory sheet that stipulates quality holdings for different clients. Co-mingled storage is the most common storage method used by most vaulting companies.
You might be concerned about having your investment stored with others’, in which case, you can request a contract to have segregated storage. This option gives you access to a safe deposit box service where your precious metals are separate from others’ investments.
The main benefit of segregated storage is the security that comes with having your own safety deposit vault. You can be assured that your gold will not mysteriously disappear in case of bankruptcy or compromised security. However, you can expect to pay a higher rate for a personal safe deposit box.
Regardless of the type of vaulting option you go for, every vaulting company is required by law to stipulate in contract the kind of storage service you are getting and the cost of this. You will need to read and confirm that you understand by signing an agreement with the company.
Home storage is a highly controversial precious metal storage option; it simply refers to storing precious metals at home in a safe under a personal, limited liability company. Home storage is an appealing option for conservative investors who value accessing and seeing their precious metal investments. There are no middlemen involved with this option, giving you complete control and access to your investment.
While this is slowly becoming a publicized and recommended option by IRA account administrators and custodians, the IRS is yet to rule conclusively on the issue. Giving the power to store precious metals at home goes against the ideals of the IRS that seek to rid holders of the temptations of selling or spending their IRA precious metals investment.
With the disapproval of the IRS, holding an IRA investment at home may incur penalties or taxes in the future. Based on the current IRS-IRA guidelines, the IRS is likely to rule against the practice, so this is not a recommended method of holding your investment at the moment.