The Home-Stored IRA SCAM

What were first used centuries ago as mere means of exchange have today become apart of one of the most treacherous means of investments. Yes, we have discussedbefore that gold and silver have historically been proven as true stores of value and caneven provide healthy returns – that hasn’t changed, and it won’t change. But thetreachery that sometimes surrounds precious metals has more to do misinformation,misconceptions and scams.Investors generally purchase gold and silver as a form of self-insurance, and the bestway to achieve this is through non-qualified purchases that can be held by theindividual. However, qualified precious metal IRA accounts must be treated differently,and the danger comes into the picture when advisors or clients trust people who tellthem otherwise.I have explained this in great detail with several of our contracted advisors and havegiven counsel to others who are not contracted with National Gold Consultants. Severalprecious metal companies have been endorsing “self-stored” precious metal IRAs andexploiting the desire for independence amongst precious metal investors. BEWARE!Succumbing to this sale could bring you and your client great legal and financial harm.This is where you as a fiduciary need to step in!The scam is easily sold when account holders are told that they do not have to rely onthe contracts of financial institutions, governments or any other third party to ensure thattheir qualified products exist and are properly stored. Instead, these companieseliminate this safeguard and offer a scheme to evade IRS rulings by preying oninvestors’ craving to possess and govern their own precious metals. This proposition isoften enough to outweigh some investors’ good sense.In short, the IRS requires IRA precious metals be stored by a third party. The dangerous“solution” these companies offer is a plan to skirt this requirement by the IRS. Thesecompanies help investors create a limited liability company (LLC), which thesecompanies claim will fill the role of the third party that the IRS demands. The LLC thenbuys and holds the precious metal in the home or in a local safe deposit box and theIRA holder (the client) “manages” the LLC. Therefore, this keeps everything “in-house”for the client – both the precious metal and the risk.The trouble stems from the IRS requirement that assets in your retirement account beheld by a third party. The IRS has already signaled that they view it as a lie to create anLLC to grant control over assets which are supposed to kept by a true third party.Kevin McKean, a Next Avenue contributor, wrote of the IRS’s response to these salespitches in his article, “Think Twice Before Opening a Gold or Silver IRA,” which was alsopublished by Forbes.“Next Avenue asked the agency about these ads they were told, ‘The IRS cannotcomment on claims made by any particular IRA promoter, but the agency warnstaxpayers to be wary of anyone claiming that gold held in your IRA can be storedat home or in a safety deposit box.’”It’s not a matter of “if” but “when” the IRS penalizes and regulates these fraudulentpractices. Your clients will be held accountable for engaging in a prohibited transactionand could easily find their accounts disqualified, with taxes and penalties dueimmediately. They will then be faced with the option of paying the taxes and penalties ordefending the scam in court where I am sure they will not receive assistance from theissuing company. Because though the company took a healthy fee for the accountestablishment and a commission for the sale, they also disclaimed any responsibility inthe fine print.Just days ago, the Industry Council on Tangible Assets issued an article titled, “TheProhibition on Home Storage of Bullion Held in an IRA.” In the article they quoted theIRS’s answer to the question:Can I store my bullion in my home?Gold and other bullion are “collectibles” under the IRA statutes, and the law discouragesthe holding of collectibles in IRAs. There is an exception for certain highly refined bullionprovided it is in the physical possession of a bank or an IRS-approved nonbank trustee.This rule also applies to an indirect acquisition, such as having an IRA-owned LimitedLiability Company (LLC) buy the bullion. IRA investments in other unconventionalassets, such as closely held companies and real estate, run the risk of disqualifying theIRA because of the prohibited transaction rules against self-dealing.To add insult to injury, these same companies are steering investors into collectibleproof type products which is just another rip-off. They market these coins as collectibleand worth substantially more but the truth is that the only thing substantial about them istheir price mark up. They do not perform better and they are exponentially harder toliquidate.The fact of the matter is that these are unregulated companies making the easiest andmost profitable sale possible. This is why we stress that our advisors be proactive inletting their clients know that they have access to a licensed, regulated and fiduciarycompany that can help them invest their hard-earned dollars into precious metals safelyand correctly – National Gold Consultants (NGC). Your clients are looking for otherplaces to invest because markets are screaming all-time highs and are soon to correct;do not let them get hurt because you didn’t tell them you have NGC as an option aswell.NGC handles qualified accounts every day. We place your clients into the one productthat offers the best performance, liquidity and the least premium or mark up: theCanadian Maple Leaf coin. There is no secret sauce when it comes to qualified preciousmetal accounts. NGC strives to get the client the best bang for their buck in a fiduciarymanner. We are always available to establish new accounts as well as liquidate, and weexclusively use GoldStar Trust Company and the Delaware Depository for storagebecause of their inexpensive fees, superior reputations and excellent customer service.There are plenty of great reasons to hold precious metals in an IRA, just be sure to do itright with the right company. Please contact us if you have clients with “home-stored”precious metal IRAs or if you have questions regarding this. We have teams that staycurrent on the rules and regulations surrounding gold and silver investing and are hereto support you and your clients.