Can I keep IRA gold at home? What happened to the McNultys

Can I keep IRA gold at home?

No. If your IRA owns gold, you can't keep it at home, and an LLC doesn't change that. In McNulty v. Commissioner (2021), the U.S. Tax Court said a woman who kept her IRA's coins in her home safe took a taxable distribution, which means money out of her IRA.

The pitch sounds great. Your IRA, your gold, your closet. We're Mountain West IRA, a self-directed IRA Administrator in Boise, Idaho, and we'd hate for you to learn this one in Tax Court.

What happened to the McNultys?

Donna McNulty set up a home storage plan, kept the coins in her safe, and lost the fight in Tax Court. Here is how it went, one step at a time.

Public Tax Court case. Not an MWIRA client. Not a recommendation.

1. She bought the plan. In August 2015, Donna paid a company that sold a home storage setup online.
2. She built the setup. Her self-directed IRA opened on August 19, 2015. Five days later, an LLC was formed with her IRA as its only member. Donna and her husband, Andrew, ran the LLC. Its address was their house.
3. The money moved in. Her IRA took in $378,487 from an annuity in 2015 and $48,375 from a 401(k) in 2016. The IRA then put that money into the LLC.
4. The LLC bought coins. In 2015 it paid $374,000 for 320 one-ounce gold coins. In 2016 it paid $37,380 for 2,000 silver coins.
5. The coins came home. They shipped to the house and went into the couple's safe, next to coins they owned outside the IRA. The couple said they labeled which coins were which.
6. The IRS wrote. In 2018, it said the cost of the coins was taxable: $374,000 for 2015 and $37,380 for 2016. It proposed $250,558 and $18,094 in added tax.
7. The court ruled. On November 18, 2021, the Tax Court sided with the IRS. It also upheld an accuracy penalty.

Why didn't the LLC fix it?

The LLC didn't fix it because Donna still held the coins. The court said an IRA can own an LLC with one member. That part is allowed. The trouble was who had the gold.

The court put it this way: "Personal control over the IRA assets by the IRA owner is against the very nature of an IRA." In plain words, an IRA owner picks what the IRA does. The owner doesn't get to keep the stuff at home.

The coins sat in Donna's safe, so she was free to use them any way she chose. That was enough. Labels didn't save the day either. The court didn't rule on them, but it doubted that a sticker keeps IRA coins apart from your own.

The penalty stung for a plain reason. The court said a website is marketing, not advice. The couple also never told their tax preparer the coins were at home.

Who can hold IRA gold?

A bank or another qualified trustee holds it, often at a depository that meets IRS rules. The IRS says the exception for refined bullion works only when the metal is in the "physical possession" of that bank or trustee.

The metal has to pass a test too. Gold must be .995 fine, and certain U.S. coins are an exception set by law. Other coins and bars count as collectibles, and the IRS treats the cost of a collectible as money out of the IRA.

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Is a "home storage IRA" legal if the seller says it's "IRS approved"?

No, and that phrase is a red flag. The IRS approves nothing like this. It doesn't sign off on a seller's plan, a dealer, or a storage setup. McNulty shows what can happen when a home storage plan lands in Tax Court.

What if I want gold in my own closet?

You can own gold outside your IRA and keep it wherever you like. The rules only bite when the IRA owns it. You can also take coins out of your IRA, but that is a distribution. It can be taxed, and a 10% additional tax may apply if you are under age 59½.

Sound like a lot of ways to trip? Our post on prohibited transactions covers more of them, and weird things a self-directed IRA can own shows how wide the options are. Our job is process. We can't give tax advice, and we don't pick assets for you.

Want to see how IRA metals move and who holds them? Book a free consultation.

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Not investment, tax, or legal advice. Check with your own financial advisor about your specific situation.

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