coin guide

Can I Take Physical Possession of Gold in My IRA?

No. You can't take physical possession of gold in your IRA while it stays in the account. The IRS says IRA bullion has to be in the physical possession of a bank or an IRS-approved nonbank trustee. In 2021 the U.S. Tax Court ruled against an owner who kept her IRA's American Eagles at home. To hold the metal yourself lawfully, you take it out as a distribution.

What the IRS Says About Keeping IRA Gold at Home

The IRS answers the home storage question directly in its questions and answers on IRAs: gold and other bullion are collectibles under the IRA statutes, with an exception "for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved nonbank trustee." Your home safe is neither.

Its next sentence deals with the arrangement you may have seen sold as a home storage or checkbook IRA, where the IRA owns an LLC and the LLC buys the coins. In the IRS's words, "This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion."

None of this limits which metal the account can own. An IRA can hold IRA-eligible gold, including American Gold Eagles and bullion that meets the law's fineness test. What the rule controls is whose hands the metal is in.

Where the Rule Sits in the Tax Code

Congress wrote the rule into section 408(m) of the Internal Revenue Code. Section 408(m) lists any metal and any coin as a collectible, and it treats an IRA's purchase of a collectible as a distribution equal to what the account paid. Then it carves out exceptions: certain named coins, American Gold Eagles and American Silver Eagles among them, and gold, silver, platinum or palladium bullion of a set fineness "if such bullion is in the physical possession of a trustee." Under section 408(a)(2), that trustee is a bank, or another person who has shown the Treasury it will administer the account as the law requires.

Home storage promoters lean on where that clause is printed. It trails the whole list of exceptions, and the code's editors note that it probably belongs to the bullion paragraph alone: "So in original. Concluding provisions probably should be part of subpar. (B)." Hence the claim that American Eagles, excepted as coins, needn't be in a trustee's possession.

What the Tax Court Decided in the McNulty Case

McNulty v. Commissioner, 157 T.C. No. 10, was filed on November 18, 2021. An IRA owner had her self-directed IRA invest in an LLC, the LLC bought American Eagle coins, and she kept them in a safe at home. She'd set the arrangement up through a website advertising that buyers could take possession of coins bought with IRA funds "without any tax consequences."

The court held that she received taxable distributions equal to the coins' cost when she received them: $374,000 for 2015, when the coins were gold Eagles, and $37,380 for 2016, when they were silver. Its rule takes one sentence: "An owner of a self-directed IRA may not take actual and unfettered possession of the IRA assets." Because that rule isn't limited to gold, the same answer applies to IRA-eligible silver.

Oversight decided the case, not labels. With coins in the owner's hands "in whatever capacity the owner may be acting," the Tax Court wrote, no independent oversight could stop her from invading her retirement funds. Owning the LLC wasn't the problem, because the court accepted that an IRA may hold one. Her control over the American Eagles is what made them distributions.

The Tax Court never decided whether American Eagles count as coins or as bullion. Read either way, it said, the possession clause "does not create an exception to the custodial and fiduciary requirements of section 408(a)," so the home storage argument fails on both readings. The court also upheld section 6662(a) penalties for substantial understatements of income tax, and relying on the promoter's website didn't count as reasonable cause.

What the Storage Rule Requires in Practice

To hold physical gold in an IRA, you need a trustee or custodian that's a bank, a federally insured credit union, a savings and loan association or an entity approved by the IRS, and the metal has to be in its possession. A CFTC and FINRA investor bulletin puts it in one line: "Metals in a self-directed IRA must be held by the IRA trustee or custodian."

You can check a custodian yourself. The IRS publishes a list of nonbank trustees and custodians approved under Treasury Regulation 1.408-2(e) and updates it as entities are added or removed. The SEC cautions that it "is not a complete list of every custodian." Banks aren't on it, and section 408(n) defines a bank to include a corporation supervised and examined by its state's banking authority. A state-chartered trust company can therefore serve as trustee without appearing on the list, so ask an unlisted custodian which banking regulator supervises it.

The phrase "IRS-approved depository" in sales material is shorthand: what the IRS approves is trustees and custodians, not vaults. Section 408(a)(5) adds that IRA assets "will not be commingled with other property" except in a common trust fund or common investment fund, so IRA metal can't be pooled with metal you own.

An Ineligible Holding and a Prohibited Transaction Carry Different Penalties

Two penalties get confused, and one is far larger. Metal held outside the exception is taxed as a distribution equal to what the IRA paid for that item, and the rest of the account is untouched. McNulty ended that way because the Commissioner conceded there'd been no prohibited transaction under section 4975. Publication 590-A adds that an amount taxed like this isn't taxed again when the item is later actually distributed.

A prohibited transaction costs the whole account. Among the IRS's examples are borrowing money from the IRA, selling property to it, using it as security for a loan and buying property for personal use with IRA funds. Under section 408(e)(2), the account stops being an IRA as of the first day of that year, and it's treated as distributing all its assets to you at fair market value on that day.

How to Take Possession Lawfully With a Distribution in Kind

The IRS says you can take distributions from your IRA at any time without showing hardship, and a distribution doesn't have to be cash. Ask the custodian for a distribution in kind: it ships the coins or bars to you and reports their fair market value on the date of distribution in box 1 of Form 1099-R. That value, not the price the IRA paid, is the amount distributed.

Metal From a Traditional IRA

Publication 590-B says a distribution from a traditional IRA is taxed as ordinary income, whatever the account held. Under age 59 1/2, you generally owe a 10% additional tax on top of it, reported on Form 5329. After 59 1/2 that additional tax no longer applies, and distributions aren't required until you reach age 73, so in those years the timing is yours to choose.

Metal From a Roth IRA

A qualified distribution from a Roth IRA is tax free. To qualify, it has to come after the 5-year period that begins with the first tax year you contributed to a Roth, and you have to be 59 1/2 or older or meet another listed condition, such as disability. Qualified or not, the metal's basis becomes its fair market value on the date of distribution, the starting figure for any gain when you later sell.

Once distributed, the metal is ordinary personal property, and you decide where to keep it. Our post on how to store precious metals properly covers the options.

Required Minimum Distributions Can Be Taken in Metal

Traditional IRA owners must begin required minimum distributions (RMDs) at age 73, with the first due by April 1 of the following year. Each year's amount is the account balance on December 31 of the year before, divided by a life expectancy figure. For an account holding metal, that balance is the metal's value on that date. Your custodian reports the December 31 fair market value on Form 5498, and by January 31 it must tell you the RMD amount or offer to calculate it.

Metal pays no cash, so you meet an RMD by selling metal inside the account or by taking coins or bars of that value in kind. Owning a second traditional IRA opens another route: you figure a separate RMD for each, but you can total them and take the total from any one or more of the IRAs, leaving the metal alone. Falling short can mean a 25% excise tax on the amount not distributed. The original owner of a Roth IRA has no RMDs.

Why IRA Metal Can't Be Swapped for Cash or Your Own Gold

If metal is distributed to you and you change your mind, Publication 590-A makes the rollover back tax free only if the property you contribute is the same property that was distributed to you. You can't keep the coins and deposit cash in their place.

Gold you already own can't go in either. Regular IRA contributions must be in the form of money, and selling your own coins to your IRA is a prohibited transaction. So is a sale by your spouse, your ancestors, your lineal descendants or a descendant's spouse.

To change custodians, use a trustee-to-trustee transfer, which is tax free because there's no distribution to you.

IRA-Eligible Metal on Our Marketplace

An IRA buys its metal through its custodian, and its trustee holds it. Our part is the metal. Many products in our catalog are eligible for a precious metals IRA when they meet IRS requirements, and we can help you choose a custodian and a storage option. We're not a registered investment advisor and can't give individual investment or tax advice, so speak with a tax professional or financial advisor.

Frequently Asked Questions

How to hold physical gold in an IRA?

Use an IRA whose custodian accepts metal, which the SEC calls a self-directed IRA. Fund it with a cash contribution, a transfer or a rollover, then direct the custodian to buy eligible gold with the account's money. The trustee takes possession and keeps it until you sell or take a distribution. You choose the investments. You don't hold them.

Does the IRS know if you buy gold?

Inside an IRA, yes, every year. The custodian reports the account's December 31 value on Form 5498 and any distribution on Form 1099-R. Outside an IRA, a purchase isn't generally reported. A business that receives more than $10,000 in cash must file Form 8300, though, and a broker reports certain sales on Form 1099-B, depending on the metal's form and quantity.

Is it better to have physical gold or a gold IRA?

Neither is better across the board. Gold in an IRA gets the account's tax treatment but stays with a trustee until you take a distribution. Gold you own outright is in your hands, and IRS Topic 409 puts the tax on a long-term gain from selling collectibles such as coins at a maximum 28% rate. Our investing guide takes up that comparison in a separate article.