Most retirement accounts limit you to stocks, bonds, and mutual funds. A Self-Directed IRA changes that—it lets you invest in physical gold, real estate, private equity, and other alternative assets the IRS normally keeps off-limits. Here's how it works, what the rules are, and whether it makes sense for your situation.
What is a Self-Directed IRA?
A Self-Directed IRA (SDIRA) is a retirement account that gives you control over your investment choices. Unlike traditional IRAs managed by brokerage firms that restrict you to their approved products, a self-directed account lets you invest in alternative assets—including physical precious metals.
The "self-directed" part doesn't mean you handle everything yourself. You still need a custodian (a financial institution approved by the IRS to hold retirement assets), but that custodian doesn't limit your investment options or push you toward certain products.
For gold investors, an SDIRA is the only legal way to hold physical gold in a retirement account with tax advantages. You can't just buy gold coins and stick them in a regular IRA—the IRS requires specific custodians, approved depositories, and compliant metals.
How It Works
Setting up a Self-Directed Gold IRA follows a specific process. First, you choose a custodian that specializes in alternative assets—not all custodians handle precious metals. Popular choices include Equity Trust, New Direction IRA, and STRATA Trust.
Next, you fund the account. This can happen through a direct contribution, a rollover from an existing 401(k) or IRA, or a transfer from another retirement account. Rollovers are the most common method for Gold IRAs since they allow you to move larger sums without hitting annual contribution limits.
Once funded, you direct your custodian to purchase specific precious metals from an authorized dealer. The metals are then shipped directly to an IRS-approved depository—not to your home. The custodian holds the paperwork; the depository holds the physical gold.
When you want to sell or take a distribution, the process reverses: the depository ships the metals to a dealer, the sale proceeds go to your IRA, and from there you can reinvest or distribute to yourself (subject to IRS rules and potential taxes).
IRS Rules & Regulations
The IRS has strict requirements for precious metals in retirement accounts. Not all gold qualifies. To be IRA-eligible, gold must be 99.5% pure (0.995 fineness). This includes American Gold Eagles (the one exception—allowed despite being 91.67% gold), American Gold Buffaloes, Canadian Maple Leafs, and certain bars from approved refiners.
What's not allowed? Collectible coins, rare numismatic pieces, and most foreign coins don't qualify. The IRS specifically prohibits collectibles in IRAs, so that rare $20 Saint-Gaudens you inherited can't go in your retirement account.
Storage is non-negotiable: IRA metals must be held by an IRS-approved trustee or depository. Home storage is illegal—despite what some companies claim. The "home storage IRA" is a myth that's gotten people in serious trouble with the IRS. Don't fall for it.
Contribution limits follow standard IRA rules. For 2026, that's $7,000 per year ($8,000 if you're 50 or older). Rollovers from existing retirement accounts don't count against these limits, which is why most Gold IRA investors use rollovers rather than annual contributions.
Pros & Cons
Advantages
- True Diversification
- Inflation Hedge
- Tax Benefits
Disadvantages
- Higher Fees
- Strict IRS Rules
- No Yield/Dividends
How to Set Up a Self-Directed Gold IRA
Step 1: Choose a Custodian — Not all IRA custodians allow precious metals. You need one that specializes in self-directed accounts with alternative assets. The custodian handles the paperwork and ensures IRS compliance.
Step 2: Fund Your Account — Transfer or roll over funds from an existing retirement account, or make a cash contribution. Rollovers from 401(k)s, 403(b)s, and traditional IRAs are common. Make sure it's a trustee-to-trustee transfer to avoid tax complications.
Step 3: Select Your Metals — Work with an authorized precious metals dealer to choose IRA-eligible gold (or silver, platinum, palladium). The dealer must ship directly to your depository—metals cannot pass through your hands.
Step 4: Arrange Storage — Your custodian will work with an IRS-approved depository. Options include segregated storage (your metals stored separately) or non-segregated (commingled with other investors' holdings). Segregated costs more but ensures you get your exact coins back.
Step 5: Maintain Compliance — Keep records, pay your annual fees, and don't touch the metals. Any personal use of IRA assets is a prohibited transaction that can disqualify your entire account.
Frequently Asked Questions
Can I store Gold IRA metals at home?
No. Despite claims from some companies, the IRS requires precious metals IRA assets to be stored by an approved custodian or depository. Home storage constitutes a distribution, triggering taxes and penalties.
What's the difference between a Gold IRA and a Self-Directed IRA?
A Gold IRA is a type of Self-Directed IRA. "Self-directed" is the category that allows alternative investments; "Gold IRA" is a self-directed account specifically used for precious metals. All Gold IRAs are self-directed, but not all self-directed IRAs hold gold.
Can I roll over my 401(k) into a Self-Directed Gold IRA?
Yes, in most cases. If you've left your employer, you can roll over your 401(k) into any IRA, including a self-directed one. If you're still employed, check if your plan allows "in-service" rollovers—not all do.
What happens when I retire and want my gold?
You have options: take an in-kind distribution (receive the physical gold, but pay taxes on its value), sell the metals and take a cash distribution, or leave them in the IRA and take Required Minimum Distributions starting at age 73.
Are Self-Directed Gold IRAs risky?
The structure itself isn't risky—it's the same tax-advantaged account as any IRA. The risk lies in the investment: gold prices fluctuate, fees are higher than index funds, and you're responsible for choosing compliant products. Do your research.
Written By
Thomas Richardson
Thomas is a former wealth manager with 20+ years of experience. He founded Rich Dad Retirement to expose the flaws of traditional "paper asset" retirement planning and educate Americans on the stability of physical precious metals.