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Precious metals IRA

Gold and silver in an IRA, explained plainly.

What a precious metals IRA is, what it costs, and how to avoid the sales tactics regulators warn about. We do not sell IRAs or metals, and we earn nothing if you open one.

What it is
A self-directed IRA that holds physical gold, silver, platinum or palladium instead of stocks and funds.
Who holds the metal
A bank or IRS-approved custodian, with the metal stored at a depository. Not you, and not at home.
What it can hold
Only coins and bars that meet IRS rules. Most collector coins and jewelry are not allowed.
How you fund it
A new contribution, a transfer from another IRA, or a rollover from a 401(k) or similar plan.

Overview

How a precious metals IRA works

A precious metals IRA is a type of self-directed IRA. It follows the same tax rules as any traditional or Roth IRA, but the account owns physical metal. US tax law treats most metals and coins in an IRA as “collectibles”, which are not allowed. It makes an exception for certain coins and for bullion of high purity held by a trustee (IRS: investments in collectibles).

The three parties

  • Custodian: a bank or IRS-approved non-bank trustee that runs the account and files the tax forms.
  • Dealer: sells the metal to the account. You choose the dealer; the custodian pays it from the account.
  • Depository: stores the metal. It may be “commingled” (pooled) or “segregated” (your own bars and coins, usually for a higher fee).

You cannot keep IRA metal at home

Some promoters sell “home storage” or “checkbook” gold IRAs. In McNulty v. Commissioner (2021), the US Tax Court ruled that IRA owners who took personal possession of their IRA’s coins had taken taxable distributions. If you hold the metal yourself, the IRS can treat it as withdrawn, with tax and possibly penalties.

What it costs

A precious metals IRA has costs a stock IRA usually does not. Ask for every one of these in writing before you sign:

  • Account setup fee and yearly custodian fee.
  • Yearly storage and insurance fee (often higher for segregated storage).
  • The dealer’s price for each product, compared with its melt value. Our coin and bar pages show live melt values.
  • What the dealer will pay to buy the same metal back, today. The gap between the two is the spread.
  • Fees to sell, to ship metal out, or to close the account.

The CFTC describes a case in which a dealer and custodian charged nearly half the value of a retirement account in commissions and fees. Large markups are the most common way people lose money.

Warning signs

  • An unsolicited call, or ads warning that your savings will be wiped out by a crash.
  • Pressure to move all, or most, of your retirement savings into metals.
  • “Free silver” or bonus offers. The cost is usually built into the price.
  • Steering towards proof, “limited edition” or “semi-numismatic” coins instead of plain bullion. These carry much higher markups.
  • Being told you can store IRA metal at home.
  • A salesperson who calls themselves an “IRA expert” but is not a registered investment adviser.

Read the regulators’ own warnings: CFTC: precious metals frauds,CFTC: 10 things to ask before buying metals, andSEC, NASAA and FINRA: self-directed IRAs and the risk of fraud.

Selling, or taking the metal out

  • Selling inside the IRA: the custodian sells to a dealer and the cash stays in the account. No tax until you withdraw.
  • Taking metal out (an “in-kind” distribution): the metal is shipped to you and its market value that day counts as a withdrawal, taxed like any IRA withdrawal.
  • Required minimum distributions apply to traditional IRAs as usual. You may need to sell metal to cover them.

See IRS Publication 590-B for distribution rules.

Is it right for you?

We cannot tell you that, and anyone selling metals has a reason to say yes. A fee-only financial adviser, who does not earn a commission on what you buy, can help you decide how much, if any, of your retirement savings belongs in metals.

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