Whether you own stocks or bonds, or have a home safe packed full of gold and silver coins, the IRS takes special notice of your assets.
This is especially true when it comes to retirement accounts. If you don’t understand the law, or if you make a mistake, you’re likely to end up with big tax and penalty bills.
The McNultys
The McNultys were a family of entertainers who sang songs that appealed to the masses. Their catchy tunes told tales of courtship, of patriotism and of a deep nostalgia for Ireland.
The couple stored their ira gold at home, which was an unwise decision. Fortunately, they learned the hard way that this violated IRS regulations.
They also learned that they would have to pay hefty taxes and penalties on their entire $730,000 IRA balance.
This case shows that IRA owners should not store their precious metals at home, even if they do have total control over their funds. It’s a warning that should be taken seriously by savers.
The IRS
The IRS is a federal agency that collects taxes and enforces the tax laws Congress passes. It is also responsible for processing tax returns, performing audits and offering taxpayer services.
The agency is also in charge of many other taxes, including Social Security, estate and excise taxes. In 2020, the IRS collected more than $3.5 trillion in tax revenue, and it is still one of the most important organizations in American society.
The agency has been shrinking its budget and workforce, but it is struggling to adapt to the changes in the economy and in the tax law. As a result, the IRS is under pressure to process more tax returns, perform more audits and administer more refunds.
Taxes
Taxes can be a major source of worry when you’re looking for ways to save money. Fortunately, there are plenty of options available for those who want to put their money to work.
IRAs are an excellent way to make savings for retirement. These accounts allow you to deduct contributions and withdraw them in retirement, without paying any taxes.
A gold IRA is no different, but it has a few additional hurdles to overcome.
One of the most important requirements for this type of IRA is that you must have the gold physically stored by an IRS-approved depository. There are several facilities that offer this service, and many custodians have special agreements with them.
Penalties
There are many reasons why people might choose to store their gold in a safe at home. They could be worried about the state of the economy or simply want to protect their assets in case of an emergency.
But the IRS doesn’t allow this, and you can face severe penalties if you do it. In fact, a couple in Rhode Island recently learned this the hard way.
The Tax Court ruled that they were violating IRS regulations and will pay $270,000 in penalties on about $730,000 of IRA assets. But there are ways to avoid these pitfalls.
Mistakes
A couple in Rhode Island recently made some significant mistakes while storing their IRA gold at home. It cost them a $300,000 fine.
The McNultys learned the hard way that IRA-purchased gold and silver coins cannot be stored at home. Instead, these investments must be stored with an IRS-approved depository or bank.
This is a major mistake that could easily have been avoided had they known this rule in the first place.
In addition to the potential tax and penalty issues that can come from improperly storing your IRA gold at home, there are also other risks associated with this type of investment. These risks include liquidity concerns and the possibility of large losses if market conditions turn negative over time.
