Self-Directed IRA for Precious Metals

A self-directed IRA is a retirement account that allows you to invest in alternative assets beyond traditional stocks, bonds, and mutual funds. Unlike regular IRAs managed by financial institutions with limited investment options, self-directed IRAs give you complete control over investment decisions. You can invest in physical precious metals (gold, silver, platinum, palladium), real estate, private equity, and other alternative assets. The same tax advantages apply—Traditional self-directed IRAs offer tax-deferred growth with pre-tax contributions, while Roth self-directed IRAs provide tax-free growth with after-tax contributions.

The IRS allows specific precious metals in self-directed IRAs that meet minimum fineness requirements: Gold (99.5% purity), Silver (99.9% purity), Platinum (99.95% purity), and Palladium (99.95% purity). Approved products include American Gold Eagles, Canadian Gold Maple Leafs, Austrian Gold Philharmonics, American Silver Eagles, certain gold and silver bars from approved refiners, and other government-minted coins meeting purity standards. Collectible coins, rare numismatic coins, and jewelry are not permitted. All precious metals must be stored in an IRS-approved depository—you cannot store IRA metals at home.

Opening a self-directed precious metals IRA involves four main steps: (1) Choose an IRS-approved custodian that specializes in self-directed IRAs—the custodian holds the account and reports to the IRS; (2) Complete the account application and fund your IRA through transfer, rollover, or contribution; (3) Select your precious metals from IRS-approved products with guidance from a precious metals dealer; (4) Arrange for secure storage at an IRS-approved depository. The entire process typically takes 2-3 weeks. Most custodians charge annual fees ($75-$300) and storage fees ($100-$300) depending on the value of metals held.

Yes, you can transfer or rollover existing retirement accounts into a self-directed IRA for precious metals investment. Direct transfers from an existing IRA to a self-directed IRA are tax-free and penalty-free with no limits. For 401(k) rollovers, you can typically roll over funds from a former employer's plan. The key is to use direct transfers where funds move directly between custodians—this avoids the 60-day rule and mandatory 20% withholding that applies to indirect rollovers. You maintain the tax treatment of your original account (Traditional to Traditional, Roth to Roth), and the same contribution limits and distribution rules apply.

Yes, IRS prohibited transaction rules apply to all IRAs, including self-directed accounts. You cannot: (1) Use IRA assets for personal benefit before retirement age (no storing metals at home, no personal use); (2) Buy or sell assets to yourself or disqualified persons (spouse, children, parents, certain business partners); (3) Use IRA assets as collateral for loans; (4) Receive compensation for managing IRA investments. Violating these rules can disqualify your entire IRA, making the full value immediately taxable plus a 10% early withdrawal penalty if under 59½. All transactions must provide benefit exclusively to the IRA, not to you personally.

Self-directed IRAs follow the same contribution limits as traditional IRAs set by the IRS. For 2024, you can contribute up to $7,000 annually if you're under age 50, or $8,000 if you're age 50 or older (with the $1,000 catch-up contribution). These limits apply to all your IRAs combined—Traditional and Roth. For Traditional IRAs, contributions may be tax-deductible depending on your income and whether you're covered by a workplace retirement plan. Roth IRA contributions have income limits: phase-out begins at $146,000 (single) or $230,000 (married filing jointly) for 2024. Contribution limits are adjusted periodically for inflation.

When you reach age 59½, you can take distributions from your self-directed IRA without the 10% early withdrawal penalty. You have two options: (1) Take physical delivery of your precious metals—the value is added to your taxable income for Traditional IRAs, while Roth IRA distributions are tax-free if you've held the account for 5+ years; (2) Liquidate the metals and receive cash distributions. For Traditional IRAs, required minimum distributions (RMDs) begin at age 73. The RMD is calculated based on the total IRA value including precious metals. You can satisfy RMDs with cash from liquidating a portion of metals or from other IRA assets. Roth IRAs have no RMDs during your lifetime.