IRS Approved Depositories ExplainedHome / Precious Metals /
Please note, none of the information on this website is financial advice. Always seek advice from a financial professional since all information provided on this website is for educational purposes only.
If you are investing in precious metals, you need to take storage seriously. We know all investments have a certain amount of risk sourced from the markets. No investor can afford to take extra risks sourced from theft or disasters.
Most people invest thousands of dollars if not millions in precious metals. It would make the perfect sense of owning a secure storage space to avoid costly mistakes.
This is exactly why precious metal depositories exist. To protect our hard-earned assets from the most unexpected surprises, and give us peace of mind. I have earlier published another post discussing if you should store your assets in a depository. I would highly recommend checking out that post if you haven’t done so yet.
What is a depository?
A depository is a company that owns highly-secured buildings in order to store and protect investors’ assets.
The entire idea is storing your metal and not releasing it until you demand it from the depository. To give an example, Fort Knox stores the assets of the Federal Reserve Bank while a depository stores individuals’ precious metals.
Depositories achieve this level of security thanks to a few major factors. They have constant monitoring, disaster-proof structures, and armed security personnel. It is not even all yet. Depositories are fully insured that guarantees investors’ assets to a large extent.
Understanding the necessity of precious metal depositories, not all depositories are created equal. You should ideally be looking for a depository approved by the IRS. More specifically a depository aligned with the government regulations.
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Why to choose an IRS approved depository?
You may be thinking why the government even cares about where you should put your metals.
Let me explain why it is the case. There is a lot of money in precious metal IRA accounts.
Assume for a second all investors storing their lifetime earnings in random depositories. Everyone is depositing their metals to random depositories that claim themselves as being “safe”.
There would probably be so many problems. Most investors’ assets would get lost, damaged, or be the victim of shady businesses that are not around for long. This could create big social problems. Therefore the government wants to somehow secure investor assets, more specifically precious metal IRAs.
Whether you are buying physical bullion inside or outside a retirement account, you do have a few storage options to choose from.
The Internal Revenue Service regulates self-directed or precious metals individual retirement accounts when it comes to how they should store investors’ precious metal assets.
You may be thinking why would you need an IRS approved depository but not any depository?
An IRS approved depository is necessary for two reasons.
1. IRS mandates working with an approved depository.
These depositories are regulated by strict rules pushed by the IRS. You don’t have any other options especially when you deal with 401k or retirement accounts. All requirements for precious metal assets should be stored in an authorized depository.
The moment that you touch on your gold, it’s called a taxable distribution. As such, the gold that you purchase will be delivered straight from your dealer to a third party depository that is approved by your IRA custodian.
2. An IRS approved depository is more secure.
Not all depositories are aligned with the stringent requirements of the IRS. Working with an IRS approved depository gives investors a feeling of safety. They will know their assets are stored with an organization at least goes through some sort of secure auditing process.
Types of storages
As an investor, you have a few storage options to choose from. But most probably you will be offered to choose one of the following two we will mention. They are segregated and unsegregated storages.
Segregated storage store investor assets separate from other investors. You shouldn’t be surprised by that since that is what its name exactly suggests. This option is considered by many investors as the most secure since it offers a private storage area.
Segregated vault depository with a private, self-insured third-party custodian is the safest gold and silver bullion storage option available.
With segregated vaulting, your metals are kept in clearly marked, separate space as individual coins or bars. The purchased original metals are the exact same that was sold upon liquidation or physical delivery.
Another storage option is unsegregated storage. In this option investor assets hold together with other investors’ assets next to each other. It may be in the same room or next to each other. It wouldn’t make much sense to discuss how close or far they are located from each other.
The thing matters are they are treated as a “commingled asset”. Let me explain what I mean more specifically.
Let’s say you have one ounce of American Gold Eagle from 2008. When you want to withdraw your coin you will get back a 2008 American Gold Eagle. However, it is not guaranteed the coin you get is the original one you have deposited. That is why segregated storage is more expensive.
Some investors find unsegregated storage safer. They feel if their assets are stored with the other investor assets they could be better maintained. In my opinion, there is no right or wrong option here. Both segregated and unsegregated storage options are extremely safe and fully insured as well.
How are IRS approved depositories insured?
Physical security is not the only reason to work with IRS approved depositories. The other reasons are better insurance and legal separation. Most depositories are fully insured. They are capable of recouping 100% of investors’ assets in case of an unexpected situation.
When you deposit your precious metals under a depository, you don’t give them under the depository’s possession. You still keep the ownership of your assets even if they are not stored by you.
Even If a lawsuit against the depository starts, your assets are protected because they are yours but not the depositories’ assets.
IRA custodians have the habit of working with certain depositories more often. They may ask you to prefer a specific depository over another. The goal by doing that is expediting their internal processing. Although you can do as they have recommended, it is not a legal obligation.
Remember, what is best for the IRA custodian is not always the best for you. Therefore, It is always a better idea to work with your favorite IRA custodian in conjunction with a reliable depository.
All offered storage options for the segregated vault storage are third-party insured for a total account worth.
Compare this with banks supplying safe deposit boxes. As bank deposits are, they really aren’t insured by the FDIC from losses nor do most provide any kind of affordably priced insurance plan. IRS approved depositories are insured by FDIC that secures investors’ assets dollar-for-dollar.
Working with an FDIC insured depository you don’t need to do anything as a depositor. All assets under such a depository go under the insurance coverage automatically. You should simply verify with your depository that your deposit doesn’t exceed the insurance limit for the category of ownership.
Reduced Theft Risk
While we strongly advocate having some physical silver and gold close to hand in the event of a crisis, just like keeping cash at home versus at a bank, there are limits to how much bullion is safe to store at home.
Once you have passed a certain amount, you should look for a professional storage facility/partner and the safety box of your local bank will probably not cut it for reasons that we will cover later in this article.
Take this one example story, for example, which was widely circulated on the web of a man who lost $750,000 worth of precious metals to the robbers who raided his home.
Need a reliable IRS approved depository storage?
Here is an IRS approved depository storage we have chosen for you. The company Regal Assets offer highly reliable depository storage. Here are a few reasons why you may want to work with Regal Assets.
- You should be able to store your metals under your name (or a joint account, trust, LLC, or any other alternative you select).
- The coins and bars you buy are kept separate, fully audited, and monitored. No pooling or shared ownership with other investors.
- Your account is entirely insured for complete account value. Compare that to secure deposit boxes provided by banks, typically not insured by FDIC. This exposes investors’ assets vulnerable to theft, natural disasters, and possible unpleasant surprises.
- Irrespective of the client account size, all clients receive custody certificates regularly showing their portfolios and account inventory.
- You can get your metals shipped almost anywhere in the world via a secure phone call or online order. You can also sell your metals straight from your storage.
- Pay only a small flat rate on an annual basis! Unlike other competitors who charge you a percentage portion of your investment (which becomes more unsustainable as your account rises in value), Regal Assets charge a flat rate for your account ‘s existence with them.
- They make sending metals to storage space very easy for their clients. There are no separate accounts to sign up for, no laborious forms to fill, safe storage with Regal Assets is as easy as delivery shopping.
- Upon buying your metals, you can get the metals shipped straight to any eligible vault place. The company will automatically establish an account at the client’s desired depository.
It is very intuitive, therefore expect no surprises. Your metals will be shipped to the vault you’ve selected, with all the normal tracking and verification you’d want.
Once metals are in your vault account, you can take delivery whenever you need it, or move it to another vault area, or you can collect your metals personally!
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