Gold IRAs
Gold IRA Custodian vs. Dealer vs. Depository: Who Does What
The company whose ad you saw is almost never the company that holds your IRA, and neither of them is the one guarding the metal. Once you can tell the three apart, you'll know who to ask about price, who to ask about taxes, and whose statement to trust for what.
Who's who
- The dealer sells the metal and earns the premium on it. It's the "gold IRA company" in the ads.
- The custodian is the legal holder of your IRA. It keeps the records and reports to the IRS. Checking the dealer and the price is your job.
- The depository is the vault. It stores and insures the metal and charges a yearly storage fee.
- The dealer's premium is usually the biggest cost. It's inside the metal's price, so ask for it as a percentage.
- You can pick the custodian yourself, and the depository from the custodian's list. Ask, even if the dealer has "preferred" ones.
Why are there three companies at all?
Tax law forces the split. An IRA has to be held by a bank, a federally insured credit union, or another business the IRS has approved as a trustee or custodian. You can't hold your own IRA, and a coin dealer isn't one of those things.
Then there's the metal. Bullion only escapes the IRA ban on collectibles if it's in the physical possession of that trustee. Custodians are record-keeping companies without vaults of their own, so they contract with depositories to hold the metal for them.
So you get a seller, a record-keeper, and a vault: separate businesses with separate contracts.
The dealer: the one who sells you the metal
The dealer is who you'll talk to first and most. It runs the ads, mails the information kit, has a salesperson call, and helps you fill in the custodian's forms. When your IRA has cash in it, the dealer sells it coins or bars. Later, it will often offer to buy them back. What happens after you request a kit follows that sequence step by step.
What the dealer is not: your IRA's holder, a tax adviser, or a fiduciary. The Commodity Futures Trading Commission says it plainly in a customer advisory: precious metals dealers are typically salespeople paid commissions on what they sell, and unlike financial professionals with a fiduciary responsibility, they aren't obliged to have your best interests in mind.
How the dealer gets paid
Through the markup, also called the premium or spread. Gold has a market price, the spot price. The dealer sells above it and buys back below it, and the gap is the dealer's income.
Each dealer sets its own premium, so ask for it in writing, as a percentage over spot.
Say your IRA sends a dealer $100,000 and the premium is 8%. About $92,600 of metal at spot value goes to the vault, and the premium is about $7,400, or 7.4% of the purchase. It's inside the invoice price instead of on its own line, so work it out from the spot price or ask the dealer for it.
The custodian: the one who holds the IRA
The custodian is the financial institution whose name is on the account. Legally, your IRA's assets are held by the custodian for your benefit. Its work is administrative:
- Opening the account and accepting transfers and rollovers
- Paying the dealer from your IRA when you sign a purchase direction
- Keeping the record of exactly what the IRA owns
- Sending statements and reporting the account's year-end value
- Filing Form 5498 for money coming in and Form 1099-R for money or metal going out
- Processing sales, distributions, and required minimum distributions
Every purchase needs your signature on a direction form telling the custodian what to buy, from whom, and at what price.
Where the custodian's job ends
The custodian carries out your instruction, and judging the purchase is up to you. An investor alert from the SEC and state securities regulators says self-directed IRA custodians are responsible only for holding and administering the assets, generally don't evaluate the quality or legitimacy of any investment or its promoters, and usually don't investigate the accuracy of financial information about an investment.
In a gold IRA, that means comparing prices is up to you. The custodian confirms the product is a type it accepts and pays the invoice; it won't tell you whether another dealer would have charged less. Our guide to the self-directed IRA goes deeper on this.
How the custodian gets paid
Fees you can see: a one-time setup fee, a yearly account fee that's either flat or tied to account value, and small charges for wires and transactions. These are on a published fee schedule, and you should ask for it before you open anything.
The depository: the one who guards the metal
The depository is a high-security vault business. It receives the metal from the dealer, checks it against the packing list, stores it, insures it, and reports the holdings back to the custodian. When you sell or take a distribution, it ships the metal out on the custodian's instruction.
You'll rarely deal with it directly. Its customer is the custodian, acting for your IRA, and metal leaves the vault only on the custodian's instruction.
It gets paid a yearly storage and insurance fee, usually collected by the custodian. The fee depends on the amount of metal and on whether your holding is stored separately or pooled with identical metal belonging to other customers. Our guide to segregated vs. commingled storage explains the difference.
Where the money goes
| What you pay | Who receives it | When | Where you'll see it |
|---|---|---|---|
| Markup over the spot price | Dealer | Each purchase | Nowhere as its own line. It's inside the price on the dealer's invoice. |
| Buyback spread under the spot price | Dealer, or whoever buys the metal | Each sale | Nowhere as its own line. It's inside the sale price. |
| Setup fee | Custodian | Once | Custodian's fee schedule and statement |
| Annual account fee | Custodian | Yearly | Custodian's fee schedule and statement |
| Storage and insurance fee | Depository, usually billed through the custodian | Yearly | Custodian's statement |
| Wire and transaction fees | Custodian | As they happen | Custodian's statement |
| Shipping, if you take metal out | Depository or carrier | On distribution | Custodian's statement or a separate invoice |
Look at where the dollars are. On the published fee schedules we've read, the custodian and depository together collect a few hundred dollars a year. The dealer's premium on a $100,000 purchase is several thousand dollars, paid once. So the premium is the number to compare between dealers, and a first-year fee waiver, welcome as it is, is small next to it.
Our fee guide shows what each cost pays for and adds them up on a sample account, and the calculator lets you try your own numbers.
What each company's paperwork shows
Three companies means three sets of documents, and each one answers a different question.
The dealer's invoice or trade confirmation
It lists each product, the quantity, the price per coin or bar, and the total. This is the only document that shows what you paid. It doesn't show the spot price at that moment, so it doesn't show the markup. Write down the spot price yourself on the day you lock in the trade, and keep it with the invoice.
The custodian's statement
It lists what the IRA holds, any cash, the fees charged, and a value for the metal. That value is an estimate, and it isn't an offer to buy. A sale brings in a dealer's buyback price, which is a little under the market price for common bullion and depends on collector demand for premium coins.
The custodian also reports the account's year-end value to the IRS, and for a traditional IRA that figure drives your required minimum distribution. Ask how the custodian values the metal. If you hold coins that cost far more than their gold content, ask which number it uses.
The depository's records
The depository confirms to the custodian what it received and what it's holding. Ask the custodian for that confirmation and compare it with the dealer's invoice. The items and counts should match exactly.
Which of the three can you choose yourself?
All of them, within limits.
The dealer is entirely your choice. Your IRA can buy from any dealer the custodian will send money to, and you can use a different dealer for each purchase and for the sale.
The custodian is your choice too. Dealers have custodians they work with regularly, because the paperwork runs smoothly. You can go with one of those, or open the self-directed IRA first and then shop dealers with the account ready.
The depository is chosen from the list your custodian works with. Ask for that list early, so if a particular vault or location matters to you, you can check it before picking the custodian.
One question we'd always ask: do the dealer and custodian share owners, or pay each other for referrals? Neither is illegal. You should know about it before you take one company's word about the other.
Who do you call about what?
| Your question | Who to ask |
|---|---|
| What's the price, and how far is it above spot? | Dealer |
| What would you pay me for this metal today? | Dealer, and a second dealer for comparison |
| What exactly does my IRA hold? | Custodian |
| How do I take my RMD? | Custodian, and a tax professional for the amount |
| Is my metal stored separately, and how is it insured? | Custodian first, then the depository |
Before you send money anywhere, look up all three companies. Our guides on checking a gold IRA company's background and choosing a gold IRA company show how.
Common questions
Who actually holds my gold IRA?
The custodian holds the IRA and is the owner of record for your benefit. The depository has physical possession of the metal on the custodian's behalf. The dealer holds nothing once the sale is complete.
Can I change custodians later without selling my metal?
Yes, by a custodian-to-custodian transfer that moves the account with the metal still in it. Expect a transfer-out or closing fee, which was $150 to $250 on the schedules we've read, and shipping if the new custodian uses a different depository. Ask both custodians before you start.
What happens to my metal if the dealer goes out of business?
Metal that's already been delivered to the depository belongs to your IRA and is recorded by the custodian, so the dealer's fate doesn't change who owns it. You'd need another dealer when it's time to sell. The risk is in the gap between paying and delivery, so confirm with the custodian that the metal arrived.
Can I buy from one dealer and sell to another?
Yes. Your IRA isn't tied to the dealer it bought from. Getting a second buyback quote is one of the few easy ways to check whether the first one is fair.
We base our guides on primary sources such as the IRS, the Department of Labor, and federal regulators. Read our editorial policy. Spot an error? Tell us.
