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April 26, 2016

IRS Asked to confirm IRA assets must be held by IRA custodian-trustee


The Department of Treasury and Internal Revenue Service (Service) invite public comment on recommendations for items that should be included on the 2016-2017 Priority Guidance Plan.  See Notice 2016-26

One of the comments, submitted by an anonymous party, is to “… clarify that taxpayers may not use so-called self-storage or checkbook LLCs to take possession of physical precious metals.”

Text of comment

“The IRS should clarify that taxpayers may not use so-called self-storage or checkbook LLCs to take possession of physical precious metals. Currently, unscrupulous companies are telling taxpayers they can create their own LLCs and hold gold and silver in their home or a bank safety deposit box. The Internal Revenue Code permits IRA funds to be invested in certain physical precious metals only if these metals are placed in the physical possession of a “trustee” which Code defines as either (1) a traditional bank or an insured credit union or another financial institution subject to regulation by state or federal bank regulators; or (2) “Such other person who demonstrates to the satisfaction of the Secretary [of the U.S. Treasury] that the manner in which such other person will administer the [IRA] will be consistent with the requirements of this section.”

Any entity seeking to qualify under this second provision must demonstrate to the IRS of its fiduciary ability, fiduciary experience, capacity to account, fitness to handle retirement assets, bonding, audits, and net worth. Even then, the entity may only act as a trustee with the written approval from the Service.

When precious metals are not held by an appropriate trustee, the purchase is treated as a taxable distribution from the retirement account. This means the IRA assets lose their tax-deferred status and are subject to taxation and potential penalties for an early withdrawal.”


Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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