Self-Directed IRA Basics for Precious Metals
A self-directed IRA is an ordinary IRA held by a custodian that permits assets beyond stocks, bonds, and funds, such as physical precious metals. The tax rules are identical to any other IRA; what changes is that you choose the specific assets and the custodian simply administers them. Physical gold, silver, platinum, and palladium generally require this kind of account because most mainstream IRA providers do not hold bullion.
What "Self-Directed" Actually Means
"Self-directed" is not a separate category in the tax code. Internal Revenue Code section 408 defines an IRA as a trust or custodial account meeting certain requirements, and it does not list a menu of permitted assets. Instead, it prohibits a few things, notably life insurance and most collectibles, and leaves the rest to the custodian's policies. A brokerage typically limits you to the securities it trades. A self-directed custodian will hold a wider range, including real estate, private notes, and precious metals, as long as the asset is legal for an IRA.
The term is mostly about responsibility. The custodian does not review whether a purchase is a good idea. You select the metal and the dealer, and you are responsible for making sure each transaction follows IRS rules.
Who Can Serve as Custodian
IRS Publication 590-A explains that the trustee or custodian of an IRA must be a bank, a federally insured credit union, a savings and loan association, or another entity approved by the IRS to act as a nonbank trustee. Many self-directed custodians fall into that last group. You can ask any custodian which category it belongs to and how it is regulated. Our page on what precious metals custodians do covers how to evaluate them.
Custodian Duties Versus Your Duties
Understanding the split helps avoid surprises.
The custodian typically:
- Opens and maintains the account and holds legal title to its assets
- Accepts transfers, rollovers, and contributions, and confirms they are within IRS rules
- Pays dealers on your written direction and arranges for metal to go to a depository
- Issues statements and files Forms 5498 and 1099-R
- Processes distributions, including in-kind shipments of metal
You typically:
- Choose the products, the dealer, and the price
- Confirm each product is IRA eligible before buying
- Avoid prohibited transactions and personal use of account assets
- Keep track of deadlines, such as the 60-day window on an indirect rollover
- Pay or arrange payment of custodian and storage fees
Custodians usually state in their agreements that they do not give financial, legal, or tax advice and do not vet the dealers you choose. That makes your own due diligence, or a licensed professional's review, more important than with a conventional account.
IRS Rules That Matter Most for Metals
The collectibles rule and the bullion exception
Under section 408(m), when an individually directed account acquires a collectible, the cost is treated as a distribution. Coins and metals are listed as collectibles, but the law excepts certain coins and bullion that meet minimum fineness standards. This is the reason only specific products are allowed. See the collectibles rule and IRS purity standards for the detail.
Prohibited transactions
You cannot use IRA assets for your own benefit or deal with "disqualified persons," such as yourself, your spouse, ancestors, lineal descendants, and certain businesses you control. Selling your personal coins to your IRA, buying metal from the IRA for yourself, or storing account metal at home are examples that can create problems. If a prohibited transaction occurs, the IRS generally treats the account as distributed as of the first day of that year. The IRS summarizes these rules on its prohibited transactions page.
Contribution and distribution rules
Contribution limits, rollover rules, and required minimum distributions all apply exactly as they would to a brokerage IRA. Limits change over time, so check the current figures on IRS pages rather than relying on older articles.
Why Metals Need a Self-Directed Account
Three practical reasons:
- Physical custody. Bullion must be held by a qualified trustee, which in practice means an approved depository that the custodian contracts with. Most brokerages do not have that arrangement.
- Product-level eligibility checks. The custodian needs procedures to confirm each coin or bar meets IRS standards.
- Outside dealers. The metal is bought from a precious metals company, not from the custodian, so the account must allow payments to third-party sellers.
Note that a gold ETF can be held in a normal brokerage IRA, but you own shares in a fund, not specific bars. For that comparison, see physical gold in an IRA vs a gold ETF.
Checkbook Structures Are a Different Thing
Some promoters pair a self-directed IRA with an LLC that the owner manages, sometimes called a "checkbook IRA." That structure gives you more direct control, and with it more ways to break the rules, particularly around storing metal at home. The home storage risks page explains a Tax Court case on this point. Most precious metals buyers use a standard custodian-plus-depository arrangement instead.
How Precious Metals Companies Fit In
Because the custodian will not help pick products, many people work with a precious metals company that sells IRA-eligible metal and coordinates the custodian paperwork. Goldco says it works with all major self-directed IRA custodians, and its FAQ references Equity Trust statements. Our page on Goldco storage and custodian partners describes how that arrangement works and what to confirm in writing.
Frequently Asked Questions
Can I convert my existing brokerage account to hold metals?
Usually not in place. You open a self-directed account with a custodian that handles metals and transfer some or all of the existing balance into it.
Is a self-directed account riskier for precious metals?
The tax rules are the same, but you carry more responsibility for compliance and product selection. The assets themselves have their own price risks.
Can one self-directed account hold both metals and other assets?
Often yes, depending on the custodian. Some specialize in metals only; others handle many asset types.