Precious Metals IRA: How It Works and How to Get Started

Gold and precious metals are time-tested hedges against inflation and can diversify your investment portfolio during economic uncertainty. A precious metal IRA can protect you against eroding purchasing power, help you save for retirement, and give you access to valuable tax benefits. While you can buy gold and precious metals directly, an IRA will help secure your investment. 

This guide will answer your questions about precious metal IRAs, including what they are, how to open one, alternatives to consider, and tips to avoid scams.  

What is a precious metals IRA?

A precious metals IRA is an individual retirement account that allows you to invest in physical metals. These accounts are sometimes called gold IRAs, but you can also purchase silver, platinum, and palladium within them.

The two types of IRAs are traditional and Roth. Both have tax advantages, although their structures differ:

• Traditional: Contributions to a traditional IRA may be tax-deductible. Money in the account grows tax-deferred, and withdrawals in retirement are taxed as regular income. With few exceptions, assets withdrawn before age 59½ are subject to a 10% tax penalty in addition to ordinary income tax. At age 72, traditional IRA accountholders must begin taking required minimum distributions (RMDs). When RMDs begin depends on when you were born. If you were born before January 1, 1950, your RMD start age is 72. If you were born between January 1, 1950, and December 31, 1959, your RMD start age is 73. If you were born on or after January 1, 1960, your RMD start age is 75.
• Roth: There is no immediate tax deduction with Roth IRAs. They are funded with after-tax dollars, but then the money grows tax-free, and you can withdraw it tax-free in retirement. No RMDs apply for Roth accounts during the original Roth IRA account owner’s lifetime, but a 10% tax penalty and ordinary income tax might apply on early withdrawals of gains before age 59½. Because contributions (aka your cost basis) have already been taxed, you can take them out at any time without penalty.

	Traditional IRA	Roth IRA
Eligibility	Have taxable compensation	Meet income requirements
Tax-deductible?	Contributions may be deductible	No immediate tax benefit
Tax impact in retirement	Withdrawals are taxed as regular income	Withdrawals aren’t taxed unless earnings are withdrawn before age 59½
Contribution limits*	$7,000 ($8,000 for ages 50 and up)	$7,000 ($8,000 for ages 50 and up)
RMDs	Required at age 72, 73, or 75, and after death of account owner	After death of account owner
Penalties	10% for withdrawals before age 59½	10% for withdrawals of earnings before age 59½

In 2024, workers younger than 50 can contribute up to $7,000 to an IRA, while those 50 and older can contribute up to $8,000. The IRS’s other rules, such as income limits, dictate who can contribute to these accounts.

Because the IRS considers gold and precious metals alternative investments, they can only be held in self-directed IRAs. As you’ll see below, you must meet requirements for the types of precious metals you can buy within a retirement fund and where you can store them.

What precious metals are IRA-eligible?

The IRS limits the types of precious metals you can hold in an IRA. Here are the four types of metals allowed and examples of items that meet IRS regulations.

Metal	Eligible coins	Bars and rounds?	Purity
Gold	American EagleCanadian Maple LeafAustralian Kangaroo	✅	99.5%
Silver	American EagleAustralian KookaburraChinese Panda	✅	99.9%
Platinum	American EagleAustralian KoalaIsle of Man Noble	✅	99.5%
Palladium	Canadian Maple Leaf	✅	99.5%

The IRS also does not allow collectible or rare coins to be held in an IRA, and some popular currencies, such as the French 20 Franc and Mexican 50 Peso, do not meet government regulations.

Other precious metals IRA rules

Important rules to consider when you’re investing in precious metal IRAs include: 

• Only certain metals can be included. As outlined above, they must meet a specific purity set by the IRS.
• They need to be held by an IRS-approved custodian. You can’t store these metals at home.
• Precious metals must be purchased through an IRA. You can’t use coins or metals you already own to fund an IRA, and bars and rounds must be produced at an accredited or certified manufacturer or a national government mint.
• The annual contribution limits for precious metal IRAs are the same as traditional or Roth IRAs. As of 2023, the limit is $6,500, or $7,500 if you’re over 50 years old. Like traditional IRAs, precious metal IRAs are subject to RMDs starting at age 72, 73, or 75. 

If you break any of these rules, you could face significant penalties, such as a 10% early withdrawal penalty or 50% excess tax for noncompliance. 

How to open a precious metals IRA 

Because precious metals are an alternative investment, opening a gold or precious metals IRA is a more involved process than starting a regular IRA. Not all brokerages are equipped to handle self-directed IRAs, and you’ll want to research carefully to ensure you are using a reputable company—check out our guide below for several excellent, top-rated places to start.

To get started, follow these steps:

1. Open a self-directed IRA: Many of the major financial players, such as Vanguard and TD Ameritrade, don’t offer self-directed IRAs. Only certain custodians allow these accounts. Oxford Gold Group, American Hartford Gold, and Lear Capital are a few companies specializing in gold and precious metals IRAs.
2. Fund your account: As we mentioned, IRAs have annual contribution limits of $6,000 for younger workers and $7,000 for those age 50 and older. Some precious metal IRA custodians have higher opening minimum balance requirements, but you can meet those by rolling over money from an IRA.
3. Select a precious metals dealer: Next, you must decide where your IRA will buy precious metals. To meet IRS guidelines, the physical metal must be sent directly to a depository, so it’s best to work with a dealer with experience with gold and precious metals IRAs. Companies such as Goldco and Patriot Gold Group know the government’s rules and can help ensure you stick to them.
4. Decide what to buy: This is often the most enjoyable step. You can buy plain rounds or bars or select coins imprinted with unique designs and from different countries. Just be sure that whatever you buy meets IRS guidelines. Some dealers, such as American Hartford Gold, have clearly marked IRA-eligible products.
5. Choose a depository: The IRS won’t allow you to store precious metals in your home or another personal storage area. Doing so will make you ineligible for IRA tax savings. Instead, you must select from one of about a half dozen IRS-approved depositories.
6. Complete the transaction: Once you know what you’ll buy and where it will be stored, it’s time to implement your plan. Your precious metals IRA provider can walk you through the process of initiating and completing the transaction.

Some gold and precious metals IRA providers work with a limited number of custodians and depositories. While letting them make these decisions for you might be easier, conducting your own research is wise.

Best companies to start a precious metals IRA

Our reviews offer unbiased analyses of precious metals IRA providers, providing you with the critical information needed to make informed investment decisions. You’ll find explanations of each company’s offerings, including their strengths, weaknesses, and unique features. 

We evaluate essential aspects such as customer service, fee structures, and the range of precious metals available, ensuring you understand what each provider offers.

American Hartford Gold Group

Lear Capital

Anthem Gold Group

Goldco

How to make withdrawals from a precious metals IRA

IRAs are intended for retirement savings, so assets in these accounts are meant to be invested long-term. If you decide to sell precious metals but keep the money in the IRA, you won’t have to worry about taxes. However, once you withdraw, it becomes subject to income tax if you have a traditional account.

The two ways to make a withdrawal from a precious metals IRA are:

1. Cash: With a cash withdrawal, the depository buys the metals from the owner and provides payment via a check, wire transfer, or bank transfer.
2. In-kind: You can also request an in-kind withdrawal, where the depository sends you physical gold or precious metals. In-kind transactions are still subject to taxes if your account is a traditional IRA. If you choose this type of distribution, be sure you have a plan to store the metals and know whether you must purchase additional insurance for them.

Either way, remember that withdrawals made before age 59½ may be subject to a 10% tax penalty. Before taking an early withdrawal, look for other options to meet your cash flow needs.

Is a precious metals IRA a good idea?

Daniel Milan, managing partner with Cornerstone Financial Services, LLC in Southfield, Michigan, says gold and precious metals IRAs may be smart for investors if they understand the steps and costs involved. 

“There’s a significant custodial and depository cost,” Milan says. Beyond that, there may be expenses associated with precious metals transactions, and those can mean that owners take home less than the going spot price when they sell. “Let’s say the price of gold is $1,” he says. “You’re not going to get a dollar.”

Fees for self-directed IRAs may be higher than those for regular IRAs, and account holders need to pay monthly or annual fees to keep their metals in a depository. To reduce or avoid these fees, consider investing in exchange-traded funds (ETFs) or strategic asset funds.

Exchange-traded funds (ETFs)

ETFs are groups of assets, often categorized by industry. When you invest in an ETF, you invest in all the fund’s assets at once. 

Gold ETFs, for example, could comprise both physical gold and stock in mining companies. They offer the benefits of purchasing gold or other metals with a far lower upfront cost and overhead.

Strategic asset funds

Similar to ETFs, strategic asset funds (also known as mutual funds) let you invest in various assets in one fell swoop. Where ETFs often group investments by industry, strategic asset funds tend to target investments based on an objective.

For metals-focused strategic asset funds, the objective might be to allocate a percentage of its resources to gold or other precious metals. When you invest in the fund, you invest in physical gold without purchasing it.

Which precious metals investing strategy is best for you?

Precious metals IRAs, ETFs, and strategic asset funds let you reap precious metals investing benefits. But these investment strategies aren’t equal for all investors. Here are the most notable advantages and disadvantages:

	Pros	Cons
Precious metals IRAs	Direct control over what metals you invest in	High initial investment, ongoing maintenance fees
ETFs	Typically require little active management	Portfolio diversity limited by market segment
Strategic asset funds	Managed by professional investment team	May need to meet asset or income requirements

You can invest in ETFs and strategic asset funds using a traditional or Roth IRA. It’s not an either-or situation.

Regardless of how you buy precious metals, be sure to balance them with other investments. Diversity is a hallmark of a successful investment strategy, and it is never wise to hold too much of your portfolio in a single asset, especially one as illiquid as gold and precious metals.

For those who decide to open a gold or precious metals IRA, Milan urges people to do their research. “Don’t go in blind,” he says. “It’s education first.”

Look out for scams

Thanks to rising inflation, interest in gold and precious metals run high. That also means scammers are looking to exploit unsuspecting investors.

The Commodity Futures Trading Commission (CFTC) says the following tactics can be red flags that you’re talking to a fraudster:

• Unsolicited calls or online, TV, or radio ads promising massive returns on precious metals.
• High-pressure pitches that name-drop someone important or create the impression that other savvy investors have already committed their money.
• Financing agreements that allow you to pay only a percentage of the stated value of an investment.
• Agreements with missing information, such as the name of a financial institution or where the physical metal is located.

A salesperson should be able to provide their licensing information, and you can confirm it on the National Futures Association website or by calling the CFTC at 1-866-366-2382. 

Above all, a company or representative should be able to explain the investment in terms you can understand. If they can’t, take that as a sure sign to walk away.

FAQ

Do you need to report precious metals to the IRS?

Yes, depending on the nature of the transaction, you may need to report precious metals to the IRS. When you sell precious metals, such as gold and silver, and realize a profit, you must report this on your tax return as a capital gain. 

The IRS requires dealers to file Form 1099-B for certain types of precious metal sales if the sales exceed specific quantities. If you hold precious metals in an IRA, specific reporting requirements exist for contributions and distributions.

How much gold can a U.S. citizen legally own?

There are no legal restrictions on the amount of gold a U.S. citizen can own. The U.S. government lifted the restrictions on gold ownership in 1974, allowing private citizens to buy, hold, and sell gold freely in any quantity, including bullion, coins, and jewelry.

What are the negatives of a precious metal IRA?

A precious metal IRA offers diversification and protection against inflation but comes with certain downsides. These include higher fees than traditional IRAs, such as setup, storage, and custodial fees. The physical metals must also be stored in an IRS-approved depository, adding to the costs and complexity. Precious metals can also be less liquid than other investments, making it harder to sell or access funds quickly. Furthermore, their value is subject to market volatility, influenced by economic conditions and geopolitical events.

How much does it cost to start a gold IRA?

Starting a gold IRA involves several costs that vary by provider. Typically, you’ll encounter a setup fee ranging from $50 to $200 and annual administrative fees of $75 to $300 for account maintenance. Storage fees for keeping your gold in an IRS-approved depository may cost between $100 and $300 annually. Purchase fees often include a markup over the spot price of gold. Some providers may also charge extra for wiring funds, processing transactions, or closing the account.

How we selected the best precious metals IRAs

LendEDU evaluates gold dealers to help readers find the best precious metal IRAs and inventories for direct purchase. Our latest analysis reviewed 550 data points from 25 dealers, with 22 data points collected from each. This information is gathered from company websites, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of the top precious metals IRAs