IRS Rules for Precious Metals IRAs: What You Must Know

The IRS does not hand out tax advantages without attaching strings. Precious metals IRAs—sometimes called gold IRAs or self-directed IRAs—come with a specific set of federal regulations that govern which metals qualify, where they must be stored, who can hold them, and what happens if you break the rules. The penalties for violations range from significant tax bills to the complete disqualification of the entire account.

This guide covers the core IRS rules every gold IRA investor should understand before opening an account.

The Statutory Foundation: IRC Section 408(m)

The legal basis for holding precious metals in an IRA comes from Internal Revenue Code Section 408(m). That section defines which metals qualify as IRA investments and which do not. By default, the IRS classifies collectibles—including most physical metals—as ineligible IRA assets. Section 408(m)(3) carves out specific exceptions for certain coins and bullion that meet defined purity thresholds.

Any metal that does not meet those statutory criteria is treated as a collectible, and IRA purchase of a collectible is treated as a taxable distribution equal to the purchase price.

Approved Metals and Purity Standards

To qualify for IRA investment, a metal must meet the following fineness standards:

• Gold: .995 fine (99.5% pure) or better
• Silver: .999 fine (99.9% pure) or better
• Platinum: .9995 fine (99.95% pure) or better
• Palladium: .9995 fine (99.95% pure) or better

There is one notable statutory exception: certain government-minted coins are explicitly approved by Congress regardless of their exact purity. These include:

• American Gold Eagle coins (22-karat, .9167 fine—below the standard threshold but explicitly authorized)
• American Silver Eagle coins
• American Gold, Silver, Platinum, and Palladium Buffalo and Eagle coins
• Australian Kangaroo/Nugget coins, Canadian Maple Leaf coins, and Austrian Philharmonic coins, provided they meet purity requirements
• Any coin issued under the laws of any U.S. state (subject to purity rules)

What Is Not Allowed

Collectible coins, numismatic coins (valued for rarity or condition rather than metal content), and any metals below the purity thresholds above are prohibited. This includes South African Krugerrands (.9167 fine), which—unlike the American Gold Eagle—are not explicitly authorized by statute and fall short of the .995 requirement. Some custodians will flag this; others may not.

The Custodian Requirement

All IRAs, including self-directed precious metals IRAs, must be administered by a qualified trustee or custodian. You cannot be the custodian of your own IRA. The custodian must be a bank, a federally or state-chartered credit union, a savings institution, or an IRS-approved non-bank trustee.

The custodian is responsible for:

• Holding the IRA assets (or arranging for their holding at an approved depository)
• Maintaining records and filing required IRS forms (Form 5498 annually, Form 1099-R for distributions)
• Processing contributions, distributions, and rollovers
• Ensuring transactions within the account comply with IRS rules

Not every custodian accepts physical precious metals. Standard IRA custodians (brokerages, banks) typically limit accounts to publicly traded securities. You need a custodian that specifically handles self-directed IRAs with physical asset capability.

The Storage Mandate: No Home Storage

This is perhaps the most misunderstood and most violated rule in the gold IRA space. The IRS requires that physical precious metals held in an IRA be stored with an approved depository—not in a home safe, not in a bank safe deposit box rented in your own name, and not anywhere under your direct physical control.

Some companies advertise "home storage gold IRAs" as a legal structure. The IRS has challenged these arrangements aggressively, and the Tax Court has ruled against account holders who attempted them. The fundamental problem: if you have physical control of the metals, you effectively have constructive receipt of a distribution. See our dedicated article on home storage gold IRAs for the full legal picture.

Approved storage options are:

• Segregated storage: Your metals are stored separately and identified as yours. Generally costs more but provides clearer ownership documentation.
• Commingled (non-segregated) storage: Your metals are stored alongside metals belonging to other account holders. Lower cost; your ownership is tracked by weight and type on the depository's ledger.

Prohibited Transactions

IRC Section 4975 defines "prohibited transactions" that can disqualify an IRA entirely. If a prohibited transaction occurs, the entire IRA is treated as distributed on January 1 of the year the transaction took place, triggering income taxes on the full account value plus the 10% early withdrawal penalty if you are under 59½.

Common prohibited transactions in the precious metals IRA context include:

• Purchasing metals from a company in which you or a disqualified person (spouse, lineal descendants, business partners) have an ownership interest
• Selling metals you personally own to your IRA
• Using IRA metals as collateral for a personal loan
• Taking personal possession of metals that are IRA assets (even temporarily)
• Paying IRA expenses with personal funds in a way that benefits a disqualified person

Contribution Limits

Precious metals IRAs follow the same annual contribution limits as all IRAs. For 2024, the limit is $7,000 per year ($8,000 if you are age 50 or older). This limit applies across all your IRAs combined—you cannot contribute $7,000 to a traditional gold IRA and another $7,000 to a Roth gold IRA in the same year.

Rollovers from 401(k) plans or other retirement accounts do not count against the annual contribution limit and are not capped at these amounts.

Required Minimum Distributions (RMDs)

Traditional gold IRAs are subject to Required Minimum Distributions beginning at age 73 (for those born between 1951 and 1959; age 75 for those born in 1960 or later, under the SECURE 2.0 Act). The RMD amount is calculated based on the prior year-end account value divided by an IRS life expectancy factor.

Because the account holds physical metals rather than cash, satisfying an RMD requires either:

• Selling enough metal to generate cash equal to the RMD amount, then distributing that cash, or
• Taking an in-kind distribution of physical metal equal in value to the RMD amount (the metals are then transferred out of the IRA and into your personal possession, which is a taxable distribution at fair market value)

Roth gold IRAs have no RMDs during the original owner's lifetime.

Consequences of Violations

The IRS does not treat violations lightly. Depending on the type of violation:

• Holding a disqualified metal: The purchase price is treated as a distribution and taxed accordingly.
• Prohibited transaction: The entire IRA is disqualified as of January 1 of the year the transaction occurred. All assets are treated as distributed and taxed.
• Home storage: Personal possession of IRA metals is treated as a distribution. The fair market value of the metals on the date of possession becomes taxable income.
• Missed RMD: A 25% excise tax on the amount that should have been distributed (reduced to 10% if corrected within two years).