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Choosing a Depository is just as Important as Finding a Precious Metals Dealer

Jun 10, 2019

When investing in precious metals with an IRA, it is important to note the IRS does not allow you to manage those precious metals yourself (IRC Sec. 4975(c)(1)). Doing so could trigger a prohibited transaction and may incur hefty penalties. As such, account owners will need to designate an independent third party depository.

 

WHAT IS A DEPOSITORY

A precious metals depository is a third party storage facility that stores and safeguards your precious metals.

Depositories are ideal for investors who have made investments in precious metals and who no longer have the capacity or risk tolerance to store these collections in their homes or on their property. Additionally, a depository is required by the IRS for those individuals that have purchased metals within their IRA.

Depositories are not only equipped to hold large quantities of precious metals, but they have also been built to provide protection for your valuable investments. These institutions typically employ high-level security (both internally and externally) to ensure constant protection, provide periodic reporting completed by their accounting and auditing departments, as well as offer compensatory services for the investor’s valuables.

 

HOW TO CHOOSE A DEPOSITORY

There are many factors when choosing a depository: how important the depository’s location is to you, which depositories work with which metals dealers, as well as how responsive a depository is on receiving  and distributing your metals.

As you perform your research, here are a few additional factors to consider:

Storage Options
There are typically two storage options: Co-mingled and Segregated.  Co-mingled is the preferred and less expensive option.  If you were to decide to sell, exchange or take an “in-kind” distribution, you would receive the product you purchased just not the exact metal you initially deposited. A segregated storage option is more expensive but your metal would be kept in a sealed bin with your name and account number. If you were to decide to sell, exchange or take an “in-kind” distribution, you would receive the exact metal you initially purchased.

Accounting, Auditing, and Reporting Requirements
For many depositories, the primary means of regulating the amount of precious metals they hold is through periodic reporting completed by their accounting and auditing departments. This documentation enables the depository to take stock of their entire inventory. Such financial transparency is essential in building the trust between both the investor and their depository.

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Our Self-Directed IRA allows you to invest in what you want, when you want. The investment possibilities are endless.

Storage & Shipping Fees
The shipping to and from the depository is the customer’s responsibility.  All applicable charges would be billed to the customer.

Insurance Protection
While physical security and storage are important, a depository’s ability to protect your assets from financial risk is equally important. Typically, most depositories are insured.

DEPOSITORY OPTIONS

There are many depository options to choose from. If you are unsure of which depository to select, your precious metals dealer may be able to recommend a depository that meets IRS regulations, as well as your needs.

As always, we recommend individuals research their options when selecting a suitable depository, as each investor’s financial needs are unique. Below are features that investors should look for when conducting their research on depositories for their precious metals IRA:

  • High level of security
  • Cost effective
  • Provide third-party product verifications
  • Full-service logistics
  • Regular accounting and auditing
  • Confidential and private
Please Note: Provident Trust Group and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

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