UPDATE: July 2022
Our recommendation has changed based on the November 2021 IRS Tax court case McNulty v. Comm’r of Internal Revenue. Current best practice is now to only hold physical precious metals owned by a retirement account in a bank safety deposit box (in the name of the 401k trust) or to use a Qualified Custodian such as the Texas Depository or Delaware Depository.
Always open the account in the name of the 401k trust (never in your personal name). Always disclose your entire Solo 401k holdings (including all precious metals) to your CPA or tax advisor. Always keep clear records of all Solo 401k assets (including all precious metals) as investments of the 401k plan. Always include all assets (including all precious metals) in your aggregate totals for any IRS filings, such as IRS Form 5500-EZ.
Gold and silver are a favorite asset among self-directed investors. Solo 401k investors especially love gold and silver investing for several reasons:
- Precious metals have a 5,000 year history as sound money
- Insulate yourself from the drastic effects of global events outside your control
- Hedge against fiat currency movements
Buying gold and silver in your Solo 401k is easy.
Sharon’s Story (Please see important update above as to why we no longer recommend storing metals at home)
Let’s hear from one of our clients, Sharon, on her experience buying and holding precious metals in the Solo 401k plan.
I setup my Solo 401k plan with Nabers Group knowing I wanted to buy some gold and silver. I had done some research on the different types of coins available. Part of my goal was to be able to hold the metals in my safe at home, so my CPA said the coins needed to be American Eagles.
After I setup the Solo 401k, the Nabers Group team helped me open a bank account and roll over funds from an IRA and an old employer 401k. Once the funds were in the Solo 401k bank, I used the Solo 401k funds to buy metals from an online retailer. They shipped the metals to me in about a week. Once the metals arrived (gold and silver American Eagles), I stored them in my safe. The entire process was very straightforward.
Types of Coins Allowed
Even though you have a great deal of flexibility in which coins you can buy, it’s important to follow the rules of what types of gold and silver you can buy in the Solo 401k plan.
The requirements for holding physical precious metals inside your Solo 401k are:
- It must have at least 0.9950% fineness. That means it must be a true bullion coin or bar.
- It must come from a NYMEX-approved or COMEX-approved refiner. Any NYMEX/COMEX approved refiner can sell you precious metals to hold inside your Solo 401k.
- Many government manufactured coins (like the US, Australia, Canada and Austria) are approved refiners so purchasing bullion coins from those refineries is generally fine.
Collectible coins such as numismatics and junk silver are not allowed in a retirement plan. Always follow IRS regulations on what investments you can make with the Solo 401k.
Advantages Over SDIRA
All IRAs require the use of a custodian to hold the assets. This means even if you are purchasing the “right” gold and silver coins, you cannot hold onto them personally. The purchased metals must be stored with the custodian or in an approved depository account.
With the Solo 401k, you are your own custodian and trustee. This means that you can buy and store the metals yourself. As long as your Solo 401k sticks to approved metals, such as gold and silver American Eagles, you can store the coins in your own home, or preferred safety deposit box.
Note: While some attorneys believe self-custody of American Eagles is acceptable within the Solo 401k trust, another contingent believes all metals should be held with a qualified custodian, such as a trust company or a bank. For the highest compliance, it is generally recommended you keep metals owned by the Solo 401k trust in a qualified custodian’s care, such as a safety deposit box at your bank. Make sure to open the safety deposit box in the name of your 401k trust and use your 401k trust tax ID number if required to open the safety deposit box.
One Response
1. Is it the opinion of Nabers Group that Solo 401K Retirement accounts may have there own Trust with a Custodian and/or Trustee who is administered by the Committee of the Solo 401K and the Grantor?
2. Is it the understanding of Nabers Group that the Custodian and/or Trustee of the Trust may purchase and hold assets (gold and silver bullion and coins, acceptable to the IRS) of the Trust? Shall the holding or possession of the assets be in a safe at the location of the Trust or in a Bank Safety Deposit Box where the Trust Checkbook account is resident?
3. Is it the Opinion of Nabers Group, that a Solo 401K may continue for the participant, past age 72 without the continuation of making contributions?