Taking Distributions From a Metals IRA
You can take money out of a precious metals IRA in two ways: sell the metal inside the account and withdraw cash, or take the coins and bars themselves as an in-kind distribution. Either way, a traditional IRA distribution is generally taxed as ordinary income on its value, and withdrawals before the IRS-defined age may face an additional 10% tax unless an exception applies.
Cash Distributions: Selling Metal First
For a cash distribution, the custodian sells some or all of the account's metal, usually back to a dealer, and the proceeds land in the IRA's cash position. The custodian then pays out the amount you request by check or bank transfer.
Things to understand about this route:
- Sale price. Metal is sold at a dealer's bid price, which is typically below the retail price you paid. Our page on premiums and spreads explains the gap.
- Who buys it. You can often choose the dealer, including the company that sold you the metal if it offers a buyback. Goldco, for example, advertises a buyback program for IRA-approved coins; review its written terms before relying on it. See the Goldco buyback program.
- Timing. The sale must settle before the custodian can pay you, so a cash distribution can take longer than one from a brokerage IRA.
In-Kind Distributions: Taking the Metal
An in-kind distribution moves the metal itself out of the IRA. The depository ships the coins or bars to you (or releases them for pickup, where allowed), and the custodian reports the fair market value of what you received as the distribution amount. Once out of the IRA, the metal is yours to keep, store or sell.
Because no sale happens, you still owe tax on the value without receiving cash to pay it. Many people withhold or set aside cash for this. Our dedicated page on in-kind distributions covers shipping, valuation and record-keeping.
How Distributions Are Taxed
The tax treatment depends on the account type, not on the fact that the account held metal. IRS Publication 590-B is the main reference.
Traditional, SEP and SIMPLE accounts
Distributions are generally included in income and taxed at ordinary rates, except for any portion representing after-tax (nondeductible) contributions. Those nondeductible amounts, called basis, are tracked on Form 8606.
Roth accounts
Qualified Roth distributions are tax-free. A distribution is generally qualified if the account has met the five-year requirement and you have reached the IRS-defined age or meet another qualifying condition. See Roth gold IRA.
Early distributions
Taking money out before the IRS-defined age can trigger an additional 10% tax on the taxable amount, unless an exception applies. The IRS lists exceptions on its page on the tax on early distributions.
What does not apply
The collectibles capital gains rate does not apply to IRA distributions. The distribution is ordinary income. Capital gains rules only become relevant after metal leaves the account and you later sell it, as described in gold IRA taxes.
How a Custodian Processes a Request
- Request form. You complete the custodian's distribution request, stating the amount or specific metals, cash or in kind, and delivery details.
- Withholding election. For IRA distributions, federal income tax is withheld by default unless you choose a different rate or opt out on the custodian's form. State withholding may also apply.
- Sale or release. For cash, the custodian coordinates a sale with a dealer. For in-kind, it instructs the depository to release the metal.
- Payment or shipment. Cash is sent after settlement; metal ships insured to the address on file.
- Tax reporting. In January of the following year, the custodian issues Form 1099-R showing the gross distribution and any tax withheld.
Custodians often charge transaction, shipping or account closing fees. Ask for a fee schedule before you request a distribution.
Planning Around Distributions
Metals pay no interest or dividends, so the only way to generate cash in a metals IRA is to sell metal. If you expect regular withdrawals, or if required minimum distributions will apply, consider how often you would need to sell and whether fractional coins or smaller bars would make partial sales easier.
Frequently Asked Questions
Can I take some metal and some cash?
Generally yes. Custodians can process a partial sale and a partial in-kind release, though each may carry its own fees.
Is selling metal inside the account a taxable event?
No. Selling inside a traditional or Roth IRA is not taxed. Tax applies when money or metal is distributed out of the account.
What form reports my distribution?
Form 1099-R, issued by your custodian, reports the gross amount distributed and any federal tax withheld.
Does Goldco process distributions?
No. Distributions are handled by your IRA custodian. Goldco is a precious metals company that sells metals and advertises a buyback program.