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

As we’ve seen in recent years, inflation can mean your money doesn’t go as far as it used to. And you certainly don’t want to reach retirement and realize your savings aren’t as valuable as you thought. 

A precious metals IRA is one way to hedge against inflation by investing in an asset that has historically held its value. These accounts can also save you money at tax time. Keep reading to learn more 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.

Because the IRS considers gold and precious metals to be 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 these retirement funds and where you can store them.

How does a precious metals IRA work?

A precious metals IRA can be opened in one of two types: traditional or Roth. Both have tax advantages, although they work in slightly different ways:

• 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 With few exceptions, assets withdrawn before age 59½ are subject to a 10% tax penalty in addition to ordinary income tax. Currently, at age 73, traditional IRA account holders must begin taking required minimum distributions (RMDs), which are mandatory withdrawals. Failure to take them could result in a 25% penalty.
• 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.

IRA-approved precious metals

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. In addition to coins, you can also hold bars and rounds in your IRA so long as they meet IRS standards.

Metal	Examples of eligible coins	Purity
Gold	American Eagle*, Canadian Maple Leaf, Australian Kangaroo	99.5%
Silver	American Eagle, Australian Kookaburra, Chinese Panda	99.9%
Platinum	American Eagle, Australian Koala, Isle of Man Noble	99.95%
Palladium	Canadian Maple Leaf	99.95%

However, the IRS 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 qualify for a precious metals IRA.

Other precious metals IRA rules

Purity standards are only one requirement for precious metals IRAs. You also need to follow these government rules:

• All self-directed IRAs, including precious metals IRAs, must be overseen by an IRS-approved custodian.
• Precious metals cannot be stored at home or in a bank safe deposit box and must be kept in an approved depository.
• Money must be transferred or deposited into the IRA and used to purchase precious metals. You cannot deposit precious metals you already own. 

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. 

Traditional brokerages typically aren’t equipped to handle self-directed IRAs, and you’ll need a custodian who specializes in these accounts. Check out our guide below for several excellent, top-rated places to start.

To set up a precious metals IRA, 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. A gold IRA company can help connect you to experienced custodians who work with precious metals.
2. Fund your account: You can make a cash contribution up to IRS limits or rollover money from an existing retirement account. Some custodians have minimum opening balance requirements. 
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 that has IRA experience. Companies such as Anthem Gold Group and Priority Gold 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 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 also wise.

Best companies to start a precious metals IRA

Our expert reviews of precious metals IRA providers offer a thorough comparison of the industry’s top companies, focusing on critical aspects like pricing transparency, customer service, and IRA setup. 

With our detailed analysis, you’ll have the insights you need to confidently select the best option to meet your long-term investment objectives.

American Hartford Gold

Best overall

4.9 _/5

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Why we picked it

American Hartford Gold is widely recognized for its commitment to customer service, offering clients a wealth of educational resources to make informed decisions. With a broad selection of gold and silver coins, it’s an ideal option for investors at any stage of their precious metals journey. 

The company emphasizes helping clients navigate the process of setting up a precious metals IRA with ease.

• Extensive educational resources
• High customer satisfaction
• Wide selection of gold and silver coins

• Account set-up fee is undisclosed
• Limited information on platinum and palladium options

Metals sold	Gold, silver, platinum bars, and coins
IRA minimum	$10,000
Account setup fee	Yes but undisclosed

Priority Gold

Best price charts

4.6 _/5

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Why we picked it

Priority Gold stands out with its in-depth and regularly updated price charts, giving investors an edge in tracking market fluctuations. This company focuses on transparency, offering competitive pricing and a range of gold and silver coins for those looking to invest in precious metals IRAs.

• Excellent real-time price charts
• Transparent pricing
• Wide selection of coins

• Higher minimum investment requirement
• Limited information on platinum options

Metals sold	Gold, silver bars and coins
IRA minimum	$25,000
Account setup fee	$50

Lear Capital

4.2 _/5

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Why we picked it

Lear Capital has established itself as a trusted name in the precious metals industry. It excels in providing investment support, including personalized consultations and educational resources. Its approach to creditworthiness assessments and terms make it an ideal choice for investors seeking guidance in building a precious metals portfolio. It’s especially fitting for investors using precious metals to hedge against market fluctuations.

• 24-hour risk-free purchase guarantee
• Diverse precious metals inventory
• Fee waivers for large investments
• Secure, insured shipping
• 24/7 account access

• High origination fees
• Requires a phone consultation for setup

How to make withdrawals from a precious metals IRA

When you are ready to take money from your precious metals IRA, there are two ways to make a withdrawal:

1. Cash: To make a cash withdrawal, you’ll need to liquidate – sell – some of your precious metals. Your custodian may be able to help facilitate the sale, and some gold dealers have buy-back programs in which they will purchase the gold they sold you when you are ready to make a withdrawal. Once the gold is liquidated, you’ll receive 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, 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. 

Consider investing in exchange-traded funds (ETFs) or strategic asset funds to reduce or avoid these fees.

ETFs

ETFs are groups of assets, often categorized by industry. Investing in an ETF provides greater diversity in a portfolio than purchasing a single stock or asset. 

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 or companies 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 can all let you reap the benefits of investing in precious metals. 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 also invest in ETFs and strategic asset funds using a regular traditional or Roth IRA. These funds don’t require a self-directed IRA.

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. However, your custodian will take care of any paperwork requirements for your IRA.

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 metals IRA offers diversification and protection against inflation but comes with certain downsides. 

Potential negatives include the following:

• Higher fees than regular IRAs
• No option to keep metals in an IRA at your home
• Less liquidity than other investments
• Value of precious metals is subject to market volatility

How much does it cost to start a gold IRA?

Starting a gold IRA involves several costs that vary by provider. Typically, you might expect the following:

• Setup fee: $50 to $200, one-time
• Administrative fee: $75 to $300, annually 
• Storage fee: $100 and $300, annually

The purchase price for gold and other metals often includes a markup over the spot price. 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 best companies to start a precious metals IRA