coin guide

Using a Self-Directed IRA for Precious Metals

A self-directed IRA for precious metals is an ordinary IRA held by a custodian that permits assets most custodians won't hold, physical gold, silver, platinum and palladium among them. The custodian holds and administers the metal and handles the tax reporting, but it doesn't judge the purchase. You make every investment decision, and you can't take possession of the metal while the IRA owns it.

Self-Directed Is a Custodian's Policy, Not an Account Type

The tax code has no account type called "self-directed." The working definition comes from a February 2023 SEC investor alert, which calls it "an IRA held by a custodian that allows investment in a broader set of assets than most IRA custodians permit." The account underneath is a traditional, Roth, SEP or SIMPLE IRA, and the IRS says the investment restrictions apply equally to all types of IRAs.

The U.S. Tax Court drew the boundary in two sentences of McNulty v. Commissioner. The owner of a self-directed IRA "is entitled to direct how her IRA assets are invested without forfeiting the tax benefits of an IRA," and the owner "may not take actual and unfettered possession of the IRA assets." Directing is the right. Possessing isn't.

What the IRS Lets the Account Hold

Section 408(m) lists metals and coins as collectibles, then lets some back in by exception. IRS Publication 590-A sums up the exceptions: "one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department," plus certain platinum coins and certain gold, silver, palladium and platinum bullion.

Two routes sit behind that summary. American Gold Eagles in those sizes, the 1 oz American Silver Eagle and U.S. Mint platinum coins qualify by name. Everything else qualifies only as bullion, at or above the fineness a regulated futures exchange requires for delivery. Section 408 states no purity number. COMEX and NYMEX contract rules supply them: 995 for gold and 999 for silver on COMEX, and 99.95% for platinum and palladium on NYMEX. Those tests define IRA-eligible gold and IRA-eligible silver.

Palladium has no named coin, so palladium coins qualify on purity alone. 31 U.S.C. 5112 defines the American Palladium Eagle as a 1 troy ounce coin of .9995 fine palladium, or 99.95%, exactly the minimum. Platinum coins from mints other than the U.S. Mint aren't named either, so they need 99.95% fineness and your custodian's acceptance.

The IRS publishes no list of approved products. Its FAQ says "there is no list of approved investments for retirement plans," and an IRA's trustee or custodian may impose additional restrictions of its own. Confirm that yours accepts a product before the IRA pays.

Who Can Serve as the Trustee or Custodian

Section 408(a)(2) of the tax code requires an IRA's trustee to be a bank or "such other person who demonstrates to the satisfaction of the Secretary" of the Treasury that it will administer the IRA as the law requires. Section 408(h) adds that in a custodial account, "the custodian of such account shall be treated as the trustee thereof," which explains why you'll see both words for one role. IRS Publication 590-A lists who qualifies: a bank, a federally insured credit union, a savings and loan association, or an entity the IRS has approved.

How to Check a Custodian

Start with the IRS's list of approved nonbank trustees and custodians, kept under Treasury Regulation 1.408-2(e). The posted list carries the date April 1, 2026, and the IRS says it updates the list frequently, so look on the day you're deciding.

A custodian missing from that list can still qualify. The SEC cautions that it "is not a complete list of every custodian." Banks don't appear on a nonbank list, and Section 408(n) defines "bank" to take in a corporation supervised and examined by its state's banking authority. A state-chartered trust company can serve as trustee on those terms without appearing on the IRS list. Ask an unlisted custodian which regulator supervises it, then confirm with that regulator.

What the Custodian Does and Doesn't Do

The job is narrow. In the Tax Court's words, a custodian "is required to maintain custody of the IRA assets, maintain the required records, and process transactions that involve IRA assets." For a metals purchase, you pick the product and give the instruction, the custodian pays from the IRA, and the metal goes into the trustee's possession. You never take delivery.

Reporting belongs to the custodian too. Each year it files Form 5498 with the IRA's fair market value on December 31 and reports any distribution on Form 1099-R. For a traditional IRA, the custodian holding the account at year end must also report your required minimum distribution or offer to calculate it by January 31.

What the Custodian Doesn't Check

No custodian vets what the IRA buys. According to the SEC, self-directed IRA custodians "DO NOT evaluate the quality or legitimacy of any investment in the self-directed IRA or its promoters" and don't verify the financial information supplied for one. The capitals are the SEC's. Its alert adds that using a legitimate custodian "DOES NOT make that investment legitimate."

For metal, nobody at the custodian tells you whether the price was fair, and the statement won't show it. A CFTC and FINRA bulletin says the statement shows the metal's "melt" value, total bullion weight times the spot price. The premium, the amount charged over spot, sits outside that figure, so the statement reads lower than what the IRA paid. Run the CFTC's sum before the IRA buys: weight times spot, set against the quoted price.

Where the Depository Fits

A depository is the vault where the trustee keeps the metal, and the law's rule names the trustee, not the vault. Under Section 408(m)(3), bullion qualifies only "if such bullion is in the physical possession of a trustee" that meets Section 408's requirements. An IRS FAQ restates the condition as physical possession of a bank or an IRS-approved nonbank trustee.

So "IRS-approved depository" works as shorthand. The IRS approves trustees and custodians, and its published list covers those entities, not vaults. Section 408(a)(5) also bars commingling an IRA's assets with other property, except in a common trust fund or common investment fund. Put the storage questions to the custodian in writing: which facility holds the metal, how it records the IRA's holdings, and what storage and insurance cost.

Two Ways Owners Break the Account

Section 408 punishes two mistakes on very different scales.

Buying a Collectible Is Taxed on That Item's Cost

When an IRA buys metal that fails both routes, the purchase stands and the tax code treats it as a payout. Section 408(m)(1) counts it as a distribution "in an amount equal to the cost to such account of such collectible." An IRS FAQ adds that the amount is considered distributed in the year invested, and a 10% additional tax on early distributions may apply. The damage stops there. Under Publication 590-A, an amount already included in your income this way isn't included again when the collectible later leaves the IRA.

A Prohibited Transaction Costs the Whole Account

The IRS's examples of prohibited transactions with an IRA include borrowing money from it, selling property to it, using it as security for a loan and buying property for personal use with IRA funds. The penalty doesn't scale. If the owner engages in one at any time during the year, the IRS says "the account stops being an IRA as of the first day of that year" and counts every asset as distributed at fair market value on that day. A collectible costs the tax on one purchase. A prohibited transaction puts the whole balance on that year's return.

The IRA-Owned LLC and Home Storage

One arrangement tries to pair an IRA with home storage: the IRA owns an LLC, the LLC buys the coins and the owner keeps them. The IRS FAQ answers it by name, right after the trustee-possession rule: "This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion."

The Tax Court agreed in McNulty v. Commissioner, filed November 18, 2021. An IRA-owned LLC bought American Eagle coins, and the owner kept them in a safe at home. The court held that she received taxable distributions for tax years 2015 and 2016 equal to the coins' cost when she took them. Penalties stood too. The service that set up the LLC had advertised on its website that owners could hold the coins without tax consequences, and the court called that website an advertisement, not professional advice a reasonable person could rely on.

Two details keep McNulty from being overstated. The Tax Court accepted that an IRA may invest in a single-member LLC, and it tied the tax to her control over the coins. The IRS also conceded she hadn't engaged in a prohibited transaction, so the bill covered the coins she took, not the whole IRA. A prohibited transaction on other facts would have cost all of it.

Higher Fees and Fewer Safeguards Than an Ordinary IRA

The SEC's alert says self-directed IRA fees may be significantly higher than those for other types of investment accounts, and it names the types: transaction fees, account opening fees, annual account fees, administrative fees and asset-specific fees. For metal, the CFTC adds monthly administrative fees, and handling and storage charges. Fees vary by custodian, so ask for the full schedule in writing before you fund the IRA.

Self-direction also removes reviewers. Once money rolls from a 401(k) into a self-directed IRA, a CFTC and FINRA bulletin says, "You no longer have fiduciaries or advisors there to help you guard against bad investments."

Liquidity is the other gap. Metal pays no income, so a traditional IRA's required minimum distributions, which generally begin at age 73, have to come from selling metal or taking it out as property. The SEC notes that alternative assets can be hard to sell when those distributions come due.

Buying IRA Metal on Our Marketplace

Many products in our catalog are eligible when they meet the IRS requirements above, and we can help you choose a custodian and a storage option. Start at our Precious Metals IRA page. Since no custodian reviews what the IRA pays, check the way out before the way in: we run a two-way market, with the bid shown beside the ask on our product pages.

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

What are the downsides of a gold IRA?

Beyond the fees, the limits come from the metal and from the rules. The CFTC notes that precious metals don't pay dividends or compound the way other assets can, and that their prices are just as volatile as those of other assets. You can't hold the metal yourself, no custodian reviews what the IRA buys, and a traditional IRA's required distributions can force a sale.

Can a Roth IRA be a self-directed IRA for precious metals?

Yes. Self-direction is the custodian's policy, so a Roth IRA can hold the same metal under the same trustee-possession rule. According to IRS Publication 590-B, the original owner of a Roth IRA doesn't have to take distributions at any age, so no required distribution forces you to sell metal or move it out during your lifetime.

Can my self-directed IRA buy gold or silver I already own?

No. Selling property to your IRA appears on the IRS's list of prohibited transactions, and family doesn't get around it: disqualified persons include your spouse, your ancestors, your lineal descendants and their spouses. The cost is the whole IRA, not the one purchase. The IRA has to buy its metal from an unrelated seller, with the custodian paying from the IRA.