Precious Metals IRA Rules: Storage, Limits, and Prohibited Transactions

A precious metals IRA follows the standard IRA rules with a narrow set of additions: the gold, silver, platinum, or palladium inside it must meet IRS purity standards, must be bought through a self-directed custodian, and must stay in the physical possession of a bank or IRS-approved non-bank trustee. Break the custody rule or buy the wrong metal and the IRS treats the transaction as a taxable distribution of the entire amount involved, often with penalties layered on top.

Which Metals Qualify

The IRS classifies most metals and gems as collectibles, and using IRA funds to buy a collectible is treated as a taxable distribution equal to the purchase price. Investment-grade bullion and specific coins are carved out, but only when they meet the fineness that a regulated futures contract market requires for physical delivery.¹ Under current COMEX and NYMEX specifications, those minimums are:

Gold: 99.5% fine
Silver: 99.9% fine
Platinum: 99.95% fine
Palladium: 99.95% fine

Bars from accredited refiners and many government-minted foreign coins like the Canadian Maple Leaf clear these thresholds. Anything that doesn’t is a collectible for tax purposes.

The statute also names specific U.S. Mint coins that qualify regardless of alloy: American Gold Eagles, American Silver Eagles, and American Platinum Eagles, along with coins issued under the laws of any U.S. state.¹ The Gold Eagle is the notable exception here; its 22-karat composition is 91.67% gold, below the general bullion standard, but Congress authorized it by name. Numismatic and rare coins with collector premiums are out, even if the underlying metal is pure enough. The value has to come from bullion content, not scarcity or historical interest.²

Where the Metals Must Be Held

The IRS requires all bullion and coins in an IRA to remain in the physical possession of a bank or an approved non-bank trustee.² If the metals leave qualified custody, the exception from the collectibles rule disappears and the acquisition becomes a taxable distribution.¹

In practice, most precious metals IRAs use a commercial depository operating as an IRS-approved non-bank trustee, though bank vaults also work. The custodian that administers your paperwork and files tax reports and the depository that physically holds the metals are usually separate entities. Metals ship directly from the dealer to the depository. You never handle them.

The Home-Storage Trap

Some promoters sell a structure in which your IRA owns an LLC and you, as the LLC’s manager, exercise “checkbook control” and store the metals in a personal safe or safe deposit box. The Tax Court rejected this arrangement in McNulty v. Commissioner, ruling that an IRA owner who took physical possession of American Eagle coins through an LLC received a taxable distribution even though she claimed she was holding them in a fiduciary capacity. The court emphasized that personal control over IRA assets is fundamentally inconsistent with how IRAs are supposed to work. Any home-storage pitch for IRA gold is selling a structure the IRS has specifically challenged.

Segregated vs. Commingled Storage

Depositories generally offer two arrangements. Segregated storage keeps your metals physically separate and tracked by serial number. Commingled storage pools your metals with other clients’ holdings of the same type, and you own a share of the pool. The IRS does not require segregated storage; both satisfy the custody rule. Segregated storage typically runs $150 to $300 per year versus roughly $100 to $250 for commingled.

Prohibited Transactions and What They Cost

The fastest way to destroy a precious metals IRA is a prohibited transaction. The IRS defines these broadly as any direct or indirect dealing between the IRA and a “disqualified person,” a group that includes you, your spouse, your parents, your children, and their spouses.³ Common violations include:

Selling metals you already own into the IRA. Purchases have to be made fresh through the custodian.
Borrowing from the IRA or pledging its assets as collateral for a personal loan.
Taking physical possession of the metals, as in the McNulty facts.
Any arrangement in which you or a family member personally benefits from the IRA’s holdings.

Two provisions combine to make the consequences steep. Under IRC 408(e)(2), a prohibited transaction strips the IRA of its tax-exempt status as of January 1 of the year it occurred, and the entire account balance is treated as distributed to you on that date.¹ Section 4975 adds a 15% excise tax on the amount involved for each year the violation goes uncorrected, escalating to 100% if you fail to fix it.³ If you’re under 59½, the 10% early distribution penalty also applies to the deemed distribution.

Opening and Funding the Account

A precious metals IRA is opened through a self-directed IRA custodian, not a standard brokerage. Confirm upfront that the custodian supports precious metals and has an established relationship with an approved depository. Once the account exists, you fund it one of three ways: direct contributions, a trustee-to-trustee transfer from an existing IRA, or a rollover.

A trustee-to-trustee transfer moves money directly between financial institutions. No taxes are withheld, and there’s no cap on how many you can do in a year.⁴ This is the cleanest way to move an existing IRA balance.

With a 60-day rollover, the distribution is paid to you and you have exactly 60 days to redeposit it. Miss the window and the IRS treats the full amount as taxable.⁵ The IRS also limits you to one IRA-to-IRA rollover in any 12-month period, and all of your IRAs (Traditional, Roth, and SIMPLE) are aggregated for this count. Trustee-to-trustee transfers and Roth conversions don’t count against it.⁴

After funding, you select metals and the custodian directs the purchase from an authorized dealer.

Contribution Limits for 2026

A precious metals IRA is a Traditional or Roth IRA holding alternative assets, so the ordinary contribution caps apply. For 2026, the annual limit is $7,500, up from $7,000 in 2025. If you’re 50 or older, an additional $1,100 catch-up contribution brings the total to $8,600.⁶

Contributions above the limit carry a 6% excise tax for each year the excess remains in the account, compounding annually until you withdraw the excess or apply it to a future year.⁷ Because metals can be less liquid than stocks, correcting an overcontribution can take longer than expected.

Withdrawals, RMDs, and In-Kind Distributions

Distributions from a Traditional precious metals IRA before age 59½ are taxed as ordinary income and face a 10% early withdrawal penalty.² Exceptions to the 10% penalty include total disability, a first-time home purchase up to $10,000, substantially equal periodic payments, unreimbursed medical expenses above 7.5% of adjusted gross income, and qualified federally declared disaster distributions up to $22,000.⁸ Ordinary income tax still applies even when a penalty exception is available.

Traditional IRA owners must begin required minimum distributions by April 1 of the year after they turn 73, with each subsequent RMD due by December 31.⁹ The RMD calculation uses the account’s fair market value as of December 31 of the prior year, based on the metals’ market price. Roth IRAs are not subject to RMDs during the owner’s lifetime, which makes a Roth precious metals IRA attractive for investors who don’t want forced liquidation at a bad time.¹⁰

You can also take an RMD or any other distribution in-kind by receiving the physical metals rather than cash. This is the one situation in which taking personal possession of IRA metals is permitted. For a Traditional IRA, the taxable amount is the fair market value of the metals on the distribution date, taxed as ordinary income.¹¹

One detail worth planning for: once the metals are in your hands, your cost basis resets to their fair market value at distribution. If you later sell at a profit, that gain is taxed at the 28% collectibles capital gains rate rather than the lower long-term rates that apply to stocks.

Fees, Markups, and Pricing Fraud

A precious metals IRA costs meaningfully more to maintain than a standard brokerage IRA. The charges come from several places:

Annual custodian maintenance fees, typically $200 to $2,000 depending on the custodian, account value, and number of assets held.
Depository storage fees, roughly $100 to $250 per year for commingled storage and $150 to $300 for segregated.
Dealer markups above the spot price when metals are purchased. The spread between buy and sell price is where the most money can quietly disappear.

The CFTC has warned specifically about predatory pricing in the gold IRA space. In fraud cases the agency has documented, investors lost a third to half of their IRA balance to markups, fees, and commissions before any metals were even bought. One case involved a $300,000 rollover in which the dealer allegedly took $150,000 in fees. Legitimate dealers charge spreads well below 10% for standard bullion products, while fraudulent operators have charged spreads above 300%, often disguised through “semi-numismatic” coins that obscure the true premium.¹²

Before you purchase, compare the dealer’s quoted price against the current spot price for the same metal. If the premium exceeds a few percentage points on standard bullion, ask why. Get the full fee schedule from the custodian in writing before funding the account, including transaction, wire, and closure fees that don’t always appear in the initial marketing materials.

1
Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts
2
Internal Revenue Service. Investments in Collectibles in Individually Directed Qualified Plan Accounts
3
Office of the Law Revision Counsel. 26 USC 4975 – Tax on Prohibited Transactions
4
Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs)
5
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
6
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
7
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
8
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
9
Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
10
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
11
Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs)
12
Commodity Futures Trading Commission. Customer Advisory: 10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals