Tax Rules Regarding Precious Metals in IRA Accounts

The basic tax rules for investing your IRA funds prohibit purchasing precious metals in the form of coins or bullion, with a few exceptions. Certain coins issued by the U.S. Department of Treasury and state governments can be purchased with your IRA funds. An exception is also made for gold, silver, platinum or palladium bullion. However, these exceptions apply only if the custodian for your IRA actually possesses the coins or bullion purchased with your IRA funds.

IRS Rules for IRA Investments

The IRS does not review, approve or offer advice regarding the type of investments acceptable for IRAs, nor does it give its approval for any specific IRA investment. However, tax rules do specifically prohibit two types of investments for IRA accounts: life insurance and collectibles. A list of examples regarding prohibited collectible investments includes metals and coins, along with artwork, antiques, gems stamps and other personal property. Investing your IRA in life insurance or prohibited collectibles can result in a tax penalty.

Collectible Exceptions

The Internal Revenue Code allows certain coins and bullion to be purchased with your IRA funds as an exception to the general prohibition against purchasing collectibles. The coins that can be purchased include any coin issued under state law, as well as specific types of gold, silver and platinum coins issued by the Department of the Treasury as stated in the Internal Revenue Code section 408(m)(3)(A). For example, the permissible gold coins include four types ranging in value from $5 to $50, with each type having a minimum size, weight and gold requirement. Similar standards are set for silver and platinum coins. The bullion exception includes palladium in addition to gold, silver and platinum. To qualify for this exception, the bullion must meet the contract market standards set by the Commodity Exchange Act.

IRA Custodian Rules

Tax rules require all IRAs to be handled by a trustee or custodian. This means that the account is not in your possession, but in the possession of a third party who is qualified by the IRS to act as a trustee or custodian for IRAs. If your IRA funds are used to purchase permissible coins and bullion, your IRA trustee or custodian takes possession of the coins or bullion and cannot delegate this responsibility to you or any other party. If your trustee or custodian does not take possession of the coins or bullion, purchasing these items with your IRA funds will violate the rule against purchasing collectibles.


If you violate the tax rule against purchasing collectibles with your IRA funds, you can incur a tax penalty. The IRS considers such a purchase as a distribution of IRA funds to you in the year the collectible was purchased. If you are under the age of 59 1/2, you must pay a 10 percent early withdrawal penalty on the amount of the purchase.

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