In-Kind Distributions: Taking Delivery of Your Metals
An in-kind distribution lets you take the actual coins or bars out of your precious metals IRA instead of selling them for cash. The custodian reports the metal's fair market value on the distribution date as the amount distributed on Form 1099-R, and for a traditional IRA that value is generally taxable income even though you received no cash.
Why People Take Metal Instead of Cash
Some account owners want to keep holding gold or silver after it leaves the IRA, perhaps to pass it to family or store it privately. Selling the metal inside the account and buying it back outside means paying the spread twice, so taking delivery can avoid one round of dealer costs. Others use in-kind distributions to satisfy required minimum distributions without selling during a period they see as a poor time to sell.
The tradeoff is that you take on storage, insurance and security once the metal is in your hands. Our guides to storing gold at home and insuring precious metals cover those responsibilities.
Step by Step: Getting Your Metals Delivered
- Check what you hold. Your statement lists the specific coins and bars by type and quantity. In segregated storage, you receive the exact items; in commingled storage, you receive items of the same type and weight. See segregated vs. commingled storage.
- Submit the custodian's distribution form. Mark it as an in-kind distribution and list the items. Indicate a delivery address, which is usually required to match the address on file.
- Choose withholding. Because no cash is created, any federal tax withholding has to come from cash in the account or be waived. Some custodians will sell a small portion to fund withholding if you ask.
- Depository release. The custodian instructs the depository to release the metal. It is packed and shipped, typically insured and requiring a signature.
- Inspect on arrival. Count and inspect everything against the release paperwork, and keep that paperwork with your records.
Shipping, handling and per-transaction fees are common. Ask your custodian and depository for their fee schedules first.
How Fair Market Value Is Determined
The custodian must assign a fair market value to the metal on the date it is distributed. Custodians typically use a pricing source based on market prices for each product, which may reflect the spot price, a bid price or a published valuation for that specific coin or bar. Practices vary by custodian, so ask which method yours uses. Our page on reading your metals IRA statement explains why these values can differ from what a dealer would pay.
That value goes in Box 1 of Form 1099-R as the gross distribution. For a traditional IRA, the taxable amount is generally the same unless you have nondeductible basis in your IRAs. For a qualified Roth distribution, it is generally not taxable.
Your Cost Basis After Delivery
Once the metal is distributed, your basis in it for future sales is generally its fair market value on the distribution date, the amount included in income (or reported) at that time. Your holding period for capital gains purposes starts the day after distribution, not the day the IRA bought the metal.
When you later sell, gold and silver bullion are treated as collectibles. If you hold them more than one year after distribution, long-term gains are taxed at a maximum federal rate of 28%, as described in IRS Topic 409. A sale within a year is a short-term gain taxed as ordinary income. Our page on taxes on selling physical gold goes further.
Other Things to Check First
Early distribution tax
An in-kind distribution is still a distribution. If you are under the IRS-defined age and no exception applies, the additional 10% tax may apply to the taxable amount.
Bars versus coins
Large bars can be harder to sell in pieces later. If you might sell gradually, you may prefer that distributions consist of coins or smaller bars.
Not a rollover
Taking metal home is different from moving it in kind to another custodian. A custodian-to-custodian in-kind transfer keeps the metal inside an IRA and is not taxable.
Where a Metals Company Fits
Your custodian processes in-kind distributions, not the dealer. Goldco, a precious metals company, sells metals for IRAs and stores IRA metals at an independent insured depository. If you later want to sell coins you received, Goldco advertises a buyback program; review its written terms, and see our page on the program.
Frequently Asked Questions
Do I pay tax if I take gold out of my IRA instead of cash?
Yes, for a traditional IRA. The fair market value on the distribution date is generally taxable as ordinary income.
Can I put the metal back into the IRA later?
A distributed asset can generally be rolled back into an IRA within 60 days, and the same property must be returned. The one-rollover-per-12-months rule applies. Confirm with your custodian and tax professional first.
Can I pick up my metal at the depository?
Some depositories allow pickup by appointment once the custodian authorizes release. Many only ship.