Precious Metals in a SEP IRA
A SEP IRA can hold physical gold, silver, platinum and palladium if the account is self-directed and held by a custodian that allows precious metals. Because a SEP IRA is a type of traditional IRA, the same purity, storage and collectibles rules apply as for any metals IRA. The difference is mainly in who contributes and how.
What a SEP Is and Who Uses It
SEP stands for Simplified Employee Pension. According to the IRS, it is a plan that lets an employer, including a self-employed person with no staff, make contributions toward retirement for themselves and any eligible employees. Each participant has their own SEP IRA, which the IRS treats as a traditional IRA for most purposes.
SEPs are popular with sole proprietors, freelancers, consultants and small partnerships for a few practical reasons:
- Low administration. There is generally no annual Form 5500 filing for the plan, and setup can be done with a model form (IRS Form 5305-SEP) or a prototype document from a provider.
- Flexible funding. The employer decides each year whether to contribute and how much, within IRS limits. A slow year can mean no contribution at all.
- Employer-only money. SEP contributions come from the employer, not from employee salary deferrals. If you are self-employed, you are both.
One rule surprises many business owners: contributions must be made as the same percentage of compensation for every eligible employee. You cannot put a higher percentage into your own SEP IRA than you give your staff. The annual limit and the compensation cap are adjusted over time, so check the current figures on the IRS SEP plan page rather than relying on a number you read elsewhere.
Holding Physical Metals in a Self-Directed SEP
Most SEP IRAs are opened at banks or brokerages that only offer stocks, bonds and funds. To hold physical bullion, you need a self-directed IRA with a custodian that administers alternative assets. The custodian holds legal title, keeps records and reports to the IRS. The metals themselves sit in an approved depository, not with you.
The rules on which metals qualify come from Internal Revenue Code section 408(m). Gold generally must be at least .995 fine, silver .999, and platinum and palladium .9995, with a specific exception for American Eagle coins. Our page on IRS purity standards covers the details, and collectible coins that fall outside those standards are treated as taxable distributions if bought inside the account.
A self-directed SEP can receive new employer contributions directly, which is something not every metals account setup handles smoothly. Some owners keep their main SEP at a conventional provider and periodically move part of the balance into a separate self-directed traditional IRA that holds metals. That works because SEP IRA money can generally be transferred or rolled to a traditional IRA, as the IRS rollover chart shows.
Moving SEP Money Into Gold or Silver
There are two common routes. You can open a self-directed SEP IRA and have future contributions go there, or you can move an existing SEP balance into a self-directed account. For the second route, a direct trustee-to-trustee transfer is usually cleaner than taking a check yourself, since a trustee-to-trustee transfer is not subject to the 60-day window or the one-rollover-per-12-months limit that applies to indirect IRA-to-IRA rollovers.
Once the funds arrive, you instruct the custodian to buy specific metals from the dealer you choose. The dealer ships to the depository, and the custodian records the holdings on your statement.
Practical Points for Business Owners
Employees and fairness rules
If you have eligible employees, each one has their own SEP IRA and controls its holdings. Offering a metals option to yourself does not require you to offer it to staff, but contributions must follow the uniform-percentage rule regardless of what each person buys.
Deadlines and timing
SEP contributions can generally be made up to the due date of the business's tax return, including extensions. Bullion purchases inside the account happen after the money settles, so the price you pay depends on the market at that time, not on the date you made the contribution.
Liquidity for future distributions
Because a SEP IRA is a traditional IRA, it becomes subject to required minimum distributions once required by IRS rules. Metals do not pay interest or dividends, so plan how you might cover distributions, whether by selling some metal or taking it in kind.
Costs
Self-directed custodians and depositories usually charge setup, annual and storage fees. Compare those against the size of your account. Our overview of metals IRA fees explains the common categories.
Where Goldco Fits
Goldco is a precious metals company that offers gold and silver for precious-metals IRAs funded by transfer or rollover from an existing IRA, 401(k) or other qualified retirement account, which can include SEP IRA balances. It says it works with all major self-directed IRA custodians and that IRA metals go to an independent insured depository. Its precious metals specialists can explain the process, but they are not licensed to give financial, legal or tax advice. You can read our Goldco review or the Goldco rollover process page for more.
Frequently Asked Questions
Can a SEP IRA hold gold coins?
Yes, if the SEP IRA is self-directed with a custodian that permits metals and the coins meet IRS fineness rules or the American Eagle exception. The coins must be held by an approved trustee or depository.
Can I make SEP and personal contributions in the same year?
Generally yes. SEP contributions are employer contributions and do not reduce your personal IRA contribution limit, though deductibility of the personal contribution can be affected by being covered by a plan. The IRS SEP page explains the details.
Can I move my SEP IRA into a metals IRA without tax?
A direct transfer from a SEP IRA to another SEP or traditional IRA is generally not taxable. Taking the money personally starts a 60-day clock and can create tax problems if missed.
Do my employees have to buy metals too?
No. Each participant directs their own SEP IRA. The plan only requires uniform contribution percentages, not identical holdings.