Gold IRA Guide

How a precious metals IRA is set up and who holds the metal

A gold IRA is an ordinary individual retirement account, governed by the same tax code sections as any other IRA, except that a self-directed custodian lets it own physical bullion instead of only stocks, bonds and funds. The account owner picks the metal; a bank or IRS-approved nonbank trustee holds the account, and a depository holds the metal.

Most brokerage IRAs can’t do this. Their custodians simply don’t accept physical assets. That’s why a precious metals IRA almost always means opening a separate self-directed account with a custodian that handles alternative assets.

The three parties in the arrangement

• The custodian or trustee is the legal holder of the account. Under Treasury regulations it must be a bank, a federally insured credit union or savings institution, or a nonbank entity the IRS has approved to act as an IRA trustee. It files the tax forms (Form 5498 each year, Form 1099-R for distributions).
• The dealer sells the coins or bars to the IRA. The IRA pays the dealer out of its own cash; the account owner does not pay personally and then get reimbursed.
• The depository stores the metal under the custodian’s name, for the benefit of the IRA. It reports holdings to the custodian, which reports values to the owner.

Why the metal can’t come from your own safe

Regular IRA contributions must be made in cash. You can’t contribute coins you already own, and you can’t sell your personal coins to your IRA. The account owner is a disqualified person under the prohibited-transaction rules of section 4975, so any sale, exchange or lease between the owner and the IRA is off limits. Buying from a dealer with the IRA’s cash is the only clean route in.

Collectibles and the section 408(m) exceptions

Internal Revenue Code section 408(m) treats the purchase of a collectible by a self-directed IRA as a distribution of the amount spent. Metals, coins, gems, stamps, art, rugs, antiques and alcoholic beverages are all on the collectibles list. Without an exception, an IRA that bought a gold coin would be treated as if it had paid that money out to the owner, which means income tax and, for owners under 59½, usually the 10% additional tax on early distributions.

The exceptions are narrow. They cover certain U.S. government coins named in the statute, such as the American Gold Eagle and its 22-karat exception, plus gold, silver, platinum and palladium bullion that meets the fineness a regulated futures exchange requires for delivery. Both exceptions carry a condition: the metal must be in the physical possession of the IRA trustee. That condition is what drives every storage rule below.

Custodians add their own screening on top of the statute. A bar or coin can meet the fineness minimum and still be refused because the custodian only accepts products from accredited refiners and mints, or because it can’t verify a particular product.

Depository storage, the home-storage problem and gold IRA rules on distributions

Metal bought for an IRA ships from the dealer directly to a depository. The owner never takes delivery. Depositories generally offer two ways to hold it, and the choice affects both cost and what comes back when the metal is sold or distributed.

For standard bullion coins the difference is mostly cost, since one Maple Leaf of a given year is interchangeable with another. For large bars with serial numbers and assay certificates, some owners prefer to keep the specific bar on record.

Why “home storage” IRAs keep failing

Some promoters have sold an arrangement in which the IRA owns a limited liability company, the owner manages the LLC, and the LLC buys coins that the owner keeps at home or in a personal safe deposit box. The pitch is that the LLC, not the owner, holds the metal.

In a 2021 Tax Court decision, the court rejected that argument. The taxpayer had used an IRA-owned LLC to buy American Eagle coins and kept them at home. The court held that the owner had taken actual possession, so the purchases were treated as taxable distributions, and it upheld accuracy-related penalties as well. The Eagles themselves were eligible coins; the problem was who held them. Eligibility of the product and possession by the trustee are two separate tests, and failing either one is enough.

Traditional and Roth versions

A metals IRA can be either type, and the ordinary rules follow the account, not the asset.

• In a traditional IRA, contributions may be deductible depending on income and workplace plan coverage, growth is tax-deferred, and withdrawals are taxed as ordinary income.
• In a Roth IRA, contributions aren’t deductible, and qualified distributions (generally after the five-year holding period and age 59½) are tax-free.
• Annual contribution limits are set by the IRS each year and apply to all of a person’s IRAs combined, not per account.
• Gains inside either account are not taxed at the 28% collectibles rate while the metal stays in the IRA. That rate matters only for metal held outside a retirement account.

Required minimum distributions from a metals account

Traditional IRAs are subject to required minimum distributions once the owner reaches the applicable age, which Congress changed under the SECURE 2.0 Act. Roth IRAs have no RMDs during the original owner’s lifetime. The RMD is figured on the account’s year-end value, so the custodian needs a fair market value for the metal every year.

Metal doesn’t pay dividends, so a traditional metals IRA with no cash has two ways to meet an RMD: the custodian sells enough metal to raise the cash, or the owner takes coins or bars out in kind. An owner with several traditional IRAs can add up the RMDs and take the total from any one of them, which some owners do to avoid selling metal.

Taking coins or bars out in kind

An in-kind distribution is taxed at the metal’s fair market value on the date of distribution, as ordinary income from a traditional IRA. The custodian reports that value on Form 1099-R. The metal then becomes personal property with a cost basis equal to that value. If it’s later sold at a gain after more than a year, the gain falls under the collectibles rules that apply outside an IRA.

Moving money in: 401k to gold IRA rollover or direct transfer

Most metals IRAs are funded with money that’s already in another retirement account. There are two mechanisms, and the IRS treats them very differently.

The two clocks on an indirect rollover

The 60-day rule starts when the owner receives the funds. Money not redeposited into an IRA by day 60 is treated as a distribution. Separately, an owner can do only one IRA-to-IRA rollover in any 12-month period, and that limit counts all of the person’s traditional and Roth IRAs together. A second rollover inside the window is a taxable distribution and, if deposited anyway, may be an excess contribution. Trustee-to-trustee transfers don’t count toward the limit, which is why custodians usually steer toward them.

Rolling a workplace plan into metals

A 401(k) itself can’t usually hold physical bullion, so the money moves to a self-directed IRA first. The steps generally run in this order:

1. Confirm with the plan administrator that a distribution is allowed. Plans commonly permit it after leaving the employer; in-service rollovers while still employed depend on the plan’s own terms.
2. Open the self-directed IRA with a custodian that accepts precious metals, choosing traditional or Roth to match the money’s tax status. Pre-tax 401(k) money moved to a Roth IRA is a taxable conversion.
3. Request a direct rollover payable to the new custodian for the owner’s benefit. A check made out to the owner instead triggers mandatory 20% federal withholding, and the owner must make up that 20% from other funds within 60 days to roll over the full amount.
4. Once the cash posts, sign the custodian’s buy direction naming the dealer, product, quantity and price.
5. The custodian pays the dealer, the dealer ships to the depository, and the depository confirms receipt to the custodian.

Rollovers from an employer plan into an IRA aren’t subject to the one-per-12-months IRA rollover limit, though the 60-day deadline still applies when the owner receives a check.

What the account costs and where buyers get hurt

A metals IRA carries layers of cost that a fund in a brokerage IRA doesn’t. None are set by law, and they vary widely between providers, so the only reliable numbers are the ones on a provider’s written fee schedule.

• Account setup fees, charged once by some custodians when the account opens.
• Annual administration fees, either flat or scaled to account value.
• Storage and insurance fees from the depository, often higher for segregated storage.
• Transaction fees each time the custodian processes a purchase, sale or in-kind distribution, plus shipping and wire charges.
• The dealer’s premium over melt value on the way in and its spread on the way out, which is usually the largest cost and the least visible one.

Premiums, spreads and the break-even price

Spot price is a wholesale benchmark for large bars, not what an IRA pays for a coin. A worked example with round numbers shows the effect. Suppose gold is at an example price of $3,000 an ounce and the IRA buys a one-ounce coin at a 10% premium, paying $3,300. If the dealer later buys back at spot, gold has to rise to $3,300 before the position breaks even, before counting a year or more of custodian and storage fees.

The gold spot price and how dealers mark it up covers that benchmark in more detail.

A dealer’s IRA quote can be checked against the gold price today: divide the quoted price by the ounces of pure metal, subtract spot, and what remains is the premium in dollars per ounce.

Bars usually carry lower premiums per ounce than coins, and the gold bar price guide by size shows how that changes with weight.

Sales tactics regulators have warned about

The CFTC, the FTC, the SEC and state securities regulators have all issued consumer warnings about precious metals and self-directed IRA sales. The recurring patterns in those warnings include:

• Fear-driven pitches about a coming market crash or bank failure, used to rush a rollover.
• Switching a buyer from bullion into “collectible,” “rare” or proof coins with far larger markups than standard bullion.
• “Free silver” or bonus-coin offers that are recovered through higher prices on the main purchase.
• Claims that a product is “IRS-approved.” The IRS approves nonbank trustees; it does not certify or endorse coins or bars.
• Undisclosed or vaguely described markups, and buyback promises that aren’t in the written contract.

The general guide to buying gold and comparing dealer quotes covers how premiums are quoted in ordinary purchases, which is the same math an IRA purchase uses.

A gold IRA vs gold funds in a regular IRA

Physically backed exchange-traded products can be held in an ordinary brokerage IRA, because the account owns shares, not metal. That route avoids the custodian, depository and dealer layers but brings its own costs and trade-offs.

How those funds are built, and what their expense ratios cover, is explained on the gold ETFs page. Neither approach removes gold’s own price risk; both simply change who holds the metal and what it costs to hold it.