How Does a Precious Metal IRA Work? Rules, Fees, and Storage

A precious metal IRA is a self-directed Individual Retirement Account that holds physical gold, silver, platinum, or palladium instead of stocks or funds. It follows the same federal tax rules as any traditional or Roth IRA, but the mechanics involve extra parts: an IRS-approved custodian to administer the account, a secure depository to hold the metal, and strict purity standards for what you’re allowed to buy. Get the structure right and it behaves like a normal retirement account. Get one detail wrong, such as taking personal possession of the coins, and the IRS can treat the whole balance as a taxable distribution.

The Basic Structure

A precious metal IRA is not a distinct account type under the tax code. It’s a self-directed version of either a traditional IRA or a Roth IRA, and the tax treatment flows from that choice rather than from what the account holds.

Two entities keep the account compliant. The custodian, which must be a bank, a federally insured credit union, or a non-bank organization that has received IRS approval, handles the paperwork: processing your investment directions, filing Form 5498 for contributions and year-end values, issuing Form 1099-R for distributions, and keeping records the IRS can audit.¹² The depository, a specialized high-security vault, holds the physical metal. The statute prohibits mixing IRA assets with your personal property, and this two-entity structure exists to enforce that separation.

How the Tax Treatment Works

Contributions to a traditional precious metal IRA may be deductible depending on your income and workplace plan coverage. The metal grows tax-deferred, and distributions in retirement are taxed at your ordinary income rate.

Here’s the wrinkle most people miss. Gold held outside a retirement account is generally taxed at the 28% collectibles rate. Inside a traditional IRA, the wrapper controls the tax treatment, not the underlying asset, so distributions are taxed at your regular income tax rate regardless of what the account holds.

A Roth precious metal IRA works the other direction. You contribute after-tax dollars, get no deduction now, and qualified withdrawals in retirement come out tax-free, including all the growth. Roth eligibility phases out at higher incomes, and traditional IRA deductibility phases out too when you or your spouse are covered by a workplace plan.³

What You Can Actually Put In It

Not every gold bar or silver coin qualifies. The tax code treats any collectible bought inside an IRA as an immediate taxable distribution equal to the purchase price.¹ Physical metals avoid that classification only if they meet a purity threshold or fall under a named exemption.

Congress tied the purity standard to what commodity futures exchanges require for physical delivery. In practice, that means .995 fineness for gold, .999 for silver, and .9995 for both platinum and palladium.⁴ Investment-grade bars and rounds from major refiners usually clear these thresholds without issue.

Certain government-minted coins get a separate exemption. The American Gold Eagle, for instance, is 22-karat with a fineness of only .9167, well below the bullion floor, yet the statute specifically names U.S. gold, silver, and platinum coins minted under federal law as permissible.⁵⁶ Foreign bullion coins like the Canadian Maple Leaf or Austrian Philharmonic also qualify, provided they meet the fineness standard for the relevant metal.

What doesn’t qualify: rare coins valued for age or rarity, antiques, jewelry, art, stamps, and gems. If an item’s worth comes from anything other than its metal content, the IRS treats it as a collectible.

Funding the Account

Annual contribution limits for 2026 are $7,500 across all your IRAs combined, or $8,600 if you’re 50 or older.³ Contribute $5,000 to a regular Roth IRA and you have $2,500 left for the precious metal account that year. Because those numbers don’t build a large metal position quickly, most people fund these accounts primarily by rolling over an existing 401(k) or IRA, which has no dollar cap.

Three funding methods are available:

A trustee-to-trustee transfer moves funds directly from one IRA custodian to another. No taxes are withheld, and the transfer isn’t subject to any annual rollover limit.⁷
A direct rollover from a workplace plan sends the funds straight from the plan administrator to the new IRA custodian, again with no withholding.⁸
A 60-day rollover pays the distribution to you first, and you have 60 days to deposit it into the new IRA. Workplace plans withhold 20% automatically; IRAs withhold 10% by default. Miss the 60-day window and the entire amount becomes taxable.⁸

One rule that catches people: you’re limited to one indirect (60-day) IRA-to-IRA rollover in any 12-month period across all your IRAs.⁷ Trustee-to-trustee transfers don’t count toward that limit, which is another reason they’re the preferred approach.

How the Purchase and Storage Happen

Once the account is funded, you submit a Direction of Investment form telling the custodian which metals to buy, from which dealer, and where to store them. The custodian wires payment directly to the dealer from IRA funds. You choose everything, but the money moves from the IRA, never from your personal bank account. Buying metal personally and then transferring it in counts as selling property to your own retirement account, which is a prohibited transaction.

The dealer ships the metal directly to the designated depository, insured in transit. The depository verifies weight and purity against the shipping manifest, issues an inventory report, and the custodian updates your account records. This chain of custody, where money flows from the IRA to the dealer and metal flows from the dealer to the depository, is the only compliant path. The metals never pass through your hands.

You’ll also pick a storage arrangement. Segregated storage keeps your metals physically separate, labeled to you, at a higher cost. Commingled storage pools your holdings with other investors’ metals and tracks ownership on paper, which costs less but can slow down withdrawals.

Rules That Can Blow Up the Account

The statute requires that IRA-owned bullion be in the physical possession of a trustee, meaning an IRS-approved custodian or bank.¹ Keeping IRA gold in your home safe, no matter how secure, violates that requirement. The IRS treats your possession of IRA-owned metal as an in-kind distribution, taxable at fair market value. If you’re under 59½, add the 10% early withdrawal penalty.⁹

Some promoters market “checkbook IRA” or “IRA LLC” structures, where an LLC owned by your IRA takes personal possession of the metals. The Tax Court rejected this approach in McNulty v. Commissioner (2021). A couple used an IRA-owned LLC to buy American Eagle coins and stored them at home. The court held the entire IRA balance was a deemed distribution because the custodian had no meaningful role and the owner had unrestricted personal control over the coins.

Other prohibited transactions can be just as destructive. You cannot borrow from the account, pledge IRA metal as collateral, buy metals for personal use with IRA funds, or sell your own property to the IRA. The prohibition extends to family members: spouse, parents, children, and their spouses are all disqualified persons. If any prohibited transaction occurs, the account stops being an IRA as of January 1 of that year, and the entire balance becomes taxable.¹⁰

What the Fees Look Like

Precious metal IRAs carry more fees than a typical brokerage IRA because you’re paying for specialized custody and physical storage. Expect several layers:

A one-time account setup fee from the custodian, commonly $50 to $300.
An annual custodian or administrative fee for recordkeeping and tax reporting, roughly $80 to $300 per year. Some custodians charge a percentage of account value instead of a flat fee.
A storage fee paid to the depository, higher for segregated storage than for commingled.
A dealer premium above the raw spot price, typically 5% to 10% for standard bullion. Numismatic or collectible coins carry far higher premiums and aren’t IRA-eligible anyway.¹¹
Wire and transaction fees, often $25 to $50 per wire, sometimes a flat fee per trade.

These costs add up. On a $50,000 account, combined annual fees of $300 to $600 represent a drag of 0.6% to 1.2% before the metal’s price moves at all. A standard index fund IRA might run under 0.10% all-in. Watch for dealers or custodians that waive upfront fees but build higher commissions into the metal price, since that cost is much harder to see.

Taking Money Out

You can start withdrawing from a precious metal IRA without penalty once you reach 59½.¹² Earlier withdrawals trigger a 10% penalty on top of income tax, unless you qualify for a specific exception like disability or a first-time home purchase.⁹

Two options exist when you take a distribution. An in-kind distribution ships the physical metal from the depository to you. A liquidation has the custodian sell your metal to a dealer and either hold or send you the cash. Either way, the custodian issues Form 1099-R reporting fair market value.¹²

For a traditional precious metal IRA, distributions are taxed as ordinary income at your marginal rate. Qualified distributions from a Roth are tax-free, provided the account has been open at least five years and you’re 59½ or older.

Required Minimum Distributions

Traditional precious metal IRAs are subject to Required Minimum Distributions starting at age 73.¹³ Your first RMD is due by April 1 of the year after you turn 73; subsequent RMDs are due by December 31 each year. Roth IRAs owe no RMDs during the original owner’s lifetime. Missing an RMD triggers a 25% excise tax on the shortfall, dropping to 10% if you correct it within a two-year correction window.¹²

Timing a Sale

Selling physical metal is slower than selling stocks. The custodian has to coordinate with a dealer, agree on a price, and settle the trade before cash is available, and that can take several business days, longer in volatile markets. If an RMD deadline is coming up, start early. A missed deadline because the metal hadn’t sold yet won’t excuse the excise tax. For in-kind distributions, once the metal is in your hands, any later sale is a separate taxable event outside the IRA.

1
Office of the Law Revision Counsel. 26 U.S.C. 408 – Individual Retirement Accounts
2
Internal Revenue Service. Approved Nonbank Trustees and Custodians
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
CME Group. Gold (Enhanced Delivery) Futures Contract Specs
5
United States Mint. Bullion Coin Programs
6
Internal Revenue Service. Investments in Collectibles in Individually Directed Qualified Plan Accounts
7
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
8
Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements
9
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
10
Internal Revenue Service. Retirement Topics – Prohibited Transactions
11
CFTC. Customer Advisory – Beware of Gold and Silver Schemes
12
Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements
13
Internal Revenue Service. Retirement Topics – Required Minimum Distributions