With gold trading above $5,000 an ounce in 2026 and retail interest in gold IRAs continuing to climb, a growing number of promoters are marketing so-called "home storage" or "checkbook control" gold IRAs. The pitch is appealing: hold physical metal in a safe at home while still enjoying the tax benefits of a retirement account. A 2021 U.S. Tax Court decision made clear that the pitch does not survive contact with the Internal Revenue Code—and the price of getting it wrong can wipe out a meaningful portion of a retirement nest egg.
What Happened in McNulty v. Commissioner
In McNulty v. Commissioner, 157 T.C. No. 10 (November 18, 2021), the U.S. Tax Court considered the case of Donna McNulty, who set up a self-directed IRA, used it to fund an LLC that she personally managed, then had the LLC purchase roughly $411,000 in American Eagle gold and silver coins. The coins were shipped to her home and placed in a personal safe.
Judge Robert Goeke ruled that Mrs. McNulty's "unfettered control" over the coins constituted a taxable distribution from the IRA in the year the coins were acquired. The court held that Internal Revenue Code §408(m) requires precious metals owned by an IRA to be held by a bank or an IRS-approved trustee or custodian—not by the IRA owner, and not by an LLC that the owner controls.
The financial consequences were severe. According to case coverage, the McNultys owed roughly $270,000 in federal income tax on approximately $730,000 of deemed distributions across the years at issue, plus accuracy-related penalties reported to exceed $50,000.
Why the LLC Structure Did Not Help
Home storage gold IRA marketing frequently relies on a "checkbook LLC" structure, in which the IRA owns an LLC and the account holder serves as manager. The theory promoted by some sellers is that the LLC—not the individual—technically holds the metals, so the physical possession rule is satisfied.
The Tax Court rejected that reasoning. The judge distinguished the IRA-owned LLC structure from cases involving genuine third-party custody. When the IRA owner has the practical ability to open the safe and take out the coins, the court concluded, the statutory requirement of independent custody has not been met.
What the Rules Actually Require
For a precious metals IRA to preserve its tax-advantaged status, IRS rules require:
- An IRS-approved custodian or trustee to administer the account—typically a bank, federally insured credit union, or a non-bank trustee that has received IRS approval.
- Storage in an IRS-approved depository. The metals must be held by that qualified third party, not by the IRA owner, a family member, or an entity the owner controls.
- IRC §408(m) eligible metals. Only specific bullion products meeting stated fineness standards (and certain government-issued coins) qualify.
If those conditions are broken, the IRS may treat the entire holding as a distribution. For an account owner under age 59½, that distribution is generally subject to ordinary income tax plus a 10 percent early withdrawal penalty.
Practical Takeaways for Retirees
Retirees considering a gold IRA can protect themselves with a few disciplined steps:
- Confirm the custodian directly. Ask for the custodian's IRS approval and cross-check the name against public regulator listings, not just the promoter's marketing.
- Insist on a named depository. Reputable gold IRA custodians work with established depositories that provide segregated or allocated storage and periodic audit reports.
- Treat "home storage IRA" marketing as a red flag. Since McNulty, the phrase itself is a signal to walk away.
- Coordinate allocations with a tax advisor. A single misclassified transaction can convert years of tax deferral into an unexpected liability.
Gold and silver can play a legitimate role in a diversified retirement portfolio, and a properly structured precious metals IRA remains a valid vehicle for that exposure. The McNulty decision simply confirms what the statute has said all along: physical possession by the account holder—dressed up in an LLC or not—turns a retirement account into a taxable event.
Sources: U.S. Tax Court (McNulty v. Commissioner, 157 T.C. No. 10), Internal Revenue Service (IRC §408(m); Publication 590-B), Coin World, IRA Financial Group, National Coin & Bullion Association