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Personal Finance

What Is a Custodian for a Gold IRA?

Gold has long been a popular choice for investors seeking to diversify their assets. It has traditionally been used as a hedge against inflation and may hold its value better than stocks during an economic downturn.

While anyone can buy and hold precious metals, there are tax benefits for those who open a gold IRA. Depending on whether you open a traditional or Roth account, an IRA can provide either an immediate tax deduction for contributions or tax-free withdrawals in retirement.

However, to get these tax benefits for gold investments, you’ll need two things: a self-directed IRA and an account custodian. In this guide, we’ll cover everything you need to know about gold IRA custodians, including how to select one and the costs involved.

What do gold IRA custodians do?

An IRA custodian can be a bank, life insurance company, trust company, or other entity approved by the IRS. Their job is to hold the assets in an IRA and ensure all account activity complies with IRS regulations. Here’s a look at the duties you can expect them to hold:

DutyPerformed by IRA custodian?
Implement transactions to buy, sell, or roll over investments
Keep an inventory of assets
Provide required notices, such as those about required minimum distributions in retirement
Maintain and submit IRS-required records
Provide investment advice
Evaluate IRA-eligibility for gold

Do I need an IRA custodian for gold?

Government rules dictate that all IRAs must have custodians, including gold IRAs. Since a gold IRA is a type of self-directed IRA, you’ll need a specialized custodian to handle your account.

If you plan to buy gold directly and hold it as an investment outside of an IRA, then no custodian is needed. However, remember that investing in gold without an IRA means you won’t receive  tax benefits associated with an IRA. 

What are the best gold IRA custodians?

Fortunately, finding a gold IRA custodian isn’t hard. Many gold companies, such as American Hartford Gold and Oxford Gold Group, work closely with custodians and make the process of opening a gold IRA seamless.

Gold companies can work with a variety of custodians, but the following are most common:

Equity Trust has been in business since 1974 and is considered by many to be an industry leader among self-directed IRA custodians. STRATA Trust was formed in 2008 and has $4 billion of assets under its custody.

These are just two of nearly two dozen custodians that are commonly used for gold IRAs. Other companies include the following:

How to select a gold IRA custodian

Many gold IRA companies work with specific custodians. However, if you open a self-directed IRA yourself, you can select any custodian that will support a self-directed IRA. When comparing your options, consider the following:

  • Fees for account set-up and management
  • Privacy and security policies
  • Years in business
  • Customer reviews
  • Turnaround time for transactions
  • Customer service availability

Much of this information—including fee schedules—is available on many custodians’ websites. But if you can’t find it there, a representative from the company should be able to provide these details. During this conversation, ask these questions:

  • Do you specialize in gold and precious metals IRAs?
  • Can you send me your fee schedule?
  • Will I get to choose the depository that stores my gold?
  • How can I withdraw precious metals and how quickly are those transactions completed?
  • How are transactions and other reporting requirements communicated to me and/or the IRS?
  • If I need help, when and how is customer service available?
  • Is my gold insured against theft or damage while being stored, and what are the insurance coverage limits and exclusions?
  • Is there anything that sets you apart from other gold IRA custodians?

If you find that a company is evasive or offers vague information, consider looking elsewhere for a custodian.

To get started, search online for “list of self-directed IRA custodians” for names and links to business websites.

Ask the expert

Erin Kinkade

CFP®

I suggest that the beneficiary searches for the top three custodians that have been established for the longest period of time, and that have good reviews and are reputable financial institutions. Contact each custodian to request information on fees, and discuss service and reporting structure. If you are uncertain after interviewing at least three custodians, it may be beneficial to contact a financial professional to discuss your goals.  Additionally, it could be helpful to discuss with trusted friends or family who have invested in Gold IRAs.

What does a gold custodian cost?

You should expect to pay a combination of the following fees to your gold IRA custodian.

FeeTypical amount
Set up$50
Annual maintenace$100 – $400
Storage fesCan be tiered with minimum of $100 or flat fee
Transaction fees$50 – $75

Here is a closer look at what to know about these costs.

  • Set-up fee: This is the cost to establish your self-directed IRA. A $50 charge is most common although some companies charge more or less. A few custodians, such as IRA Financial Trust, have no set-up fee.
  • Annual maintenance fee: Annual fees can be assessed as a percentage of the value of your assets, but a flat fee seems to be more common for gold IRAs. These fees can vary significantly from $100 to $400 or more.
  • Storage fees: You’ll need to store your precious metals in an approved depository to be eligible for the tax benefits of a gold IRA. Custodians often collect the fees for storage services. Tiered fees based on the value of investments are common—such as $1 per $1,000 of assets, with a minimum fee of $100. Some companies charge flat fees, though.
  • Transaction fees: These fees may be assessed when a company receives assets for an IRA, liquidates them or arranges for an in-kind transaction. For instance, Accuplan Benefit Services charges $75 for an in-kind distribution of precious metals – that is when the metals are sent directly to you – or $50 for the liquidation of metals for a cash payment.

Fees can vary widely, which is why it’s important to request and review a fee schedule. Sometimes, custodians may charge very low fees in one category but then assess more elsewhere. 

IRA Financial Trust, for example, might not have a set-up fee, but it does charge a $400 annual fee and a $75 transaction fee for standard processing within 48 hours.

While costs are, of course, an important consideration in selecting a gold IRA custodian, it shouldn’t be the only factor you consider. Weigh the expense against a company’s reputation, responsiveness and processing times.

What are the risks and limitations of gold IRA custodians?

For self-directed IRAs, such as gold IRAs, the role of a custodian is limited. According to the U.S. Securities and Exchange Commission, custodians are only responsible for holding and administering assets. They do not do any of the following:

  • Sell investment products
  • Provide investment advice
  • Evaluate the quality or legitimacy of an investment
  • Verify the accuracy of financial information provided for an investment

The SEC notes: “With a self-directed IRA you have sole responsibility for evaluating and understanding the investments in the account.”

For this reason, it is crucial that you do your research about how a gold IRA works and what investments are allowed.

Ask the expert

Erin Kinkade

CFP®

A few risks of choosing the wrong custodian include choosing a company based solely on low fees and costs, which could result in poor customer service or issues such as a lapse in reporting requirements. Not being in compliance with SEC or IRS, which could result in potential excise fees or losing the tax benefits of a gold IRA and creating a potentially large taxable event for the owner. And, having a lack of understanding about the investment could result in an undesirable investment that affects financial and life goals, such as, for example, having a high concentration in a gold IRA compared with total assets.

FAQ

Is a gold IRA custodian the same as a gold IRA company?

These terms seem to be used interchangeably at times, but they can refer to two different things.

A gold IRA custodian is approved by the IRS to hold assets in a self-directed IRA account.

A gold IRA company could mean many things but often refers to a business that sells gold products and will help customers set up a gold IRA. For instance, they may connect people to custodians and facilitate the necessary paperwork.

Can I switch gold custodians later?

If you decide you would like to switch gold IRA custodians, your assets can be moved to a new company. However, there may be a cost involved in rolling over your gold to an account at a new firm.

Do custodians provide insurance for stored gold?

Your gold should be insured against theft or damage while being stored, and this coverage can vary depending on the depository used. Ask the custodian about insurance coverage limits and any exclusions before opening an account. *This is a good item to add to the list of what to look for when “shopping” for a gold IRA custodian or provider..

Be aware, though, that gold is not insured against financial loss due to market fluctuations.

Can I invest in silver or other precious metals with a gold IRA custodian?

Gold IRAs can contain more than just gold. Silver, platinum, and palladium are also allowed in a precious metals IRA so long as they meet IRS guidelines, which include a purity requirement.

How fast can I access my gold if I need it?

That depends on your custodian and whether you are liquidating (e.g. selling) your gold for cash or requesting an in-kind distribution of physical gold. Some custodians may be able to complete these transactions in a few days while it could take a week or longer for other companies. 

Be sure to ask about transaction turnaround times before signing up with a gold IRA custodian.

What happens to my gold if the custodian goes bankrupt?

The custodian doesn’t own the gold; you do. That means if the custodian goes bankrupt, your gold is safe from creditors and can be transferred to a new custodian. Confirm that your gold will be kept off-balance sheet by both the custodian and depository.