Gold IRA vs Physical Gold: The 28% Rule That Decides It
Short answer. Both routes hold real metal. The trade is simple to state: an IRA shelters the gain but takes away possession and charges you every year. Owning it outright gives you possession and no annual fees, and hands you a tax bill on the way out at a rate designed for collectibles.
That tax difference is the part most comparisons get vague about, so it is where this page starts.
The 28% rule
The IRS treats physical gold, silver, platinum and palladium as collectibles, in the same category as art and antiques. That classification carries its own capital gains treatment.
| Held outside a retirement account | Rate on a long-term gain |
|---|---|
| Shares, funds, most ordinary investments | Capped at 20% |
| Physical gold and silver | Capped at 28% |
| Metal held one year or less | Ordinary income rates |
Two things about that 28% figure matter and are usually stated wrongly.
It is a ceiling, not a flat rate. You pay the lesser of your ordinary income rate or 28%. Someone whose ordinary rate is 22% pays 22%, not 28%. The collectibles rule only bites once your bracket would otherwise exceed 28%, which is why it hurts higher earners specifically.
The net investment income tax can sit on top. Higher earners may also owe an additional 3.8%, which is what produces the roughly 31.8% figure you sometimes see quoted as the maximum.
The surprise: gold ETFs are taxed like metal, not like shares
If a fund is backed by physical bullion, gains on your shares in it are generally treated as collectible gains and face the same 28% ceiling, not the 20% that applies to an ordinary equity holding. People routinely assume a fund is a fund and therefore taxed like one. It is the underlying asset that decides. This matters if you were reaching for an ETF specifically to sidestep the collectibles treatment, because it does not.
Side by side
| Gold in an IRA | Gold owned outright | |
|---|---|---|
| You can hold it | Never | Yes |
| Annual fees | Admin plus storage, every year | None, beyond your own storage choice |
| Tax on the gain | Sheltered inside the account | Collectibles rate, capped at 28% |
| Funded with | Existing retirement money, untaxed to move | Money you have already paid tax on |
| Which metal is allowed | Only what § 408(m) permits | Anything you like |
| Storage and insurance | Approved depository, audited, insured | Your problem to solve |
| Access before 59½ | Distribution, tax plus possible 10% | Sell whenever you want |
| Forced sales from 73 | Yes, unless it is a Roth | Never |
| Minimum to start | Provider minimums, often $25k or $50k | One coin |
How to read that table
The columns are not better and worse. They answer different questions, and which one you are actually asking decides this more than any calculation.
Points to the IRA You are moving existing retirement money
This is the strongest case. A transfer moves 401(k) or IRA funds into metal without a taxable event, and the eventual gain is sheltered. Buying the same metal outright would mean first withdrawing from the retirement account, paying tax on the withdrawal, and then buying with what is left. That sequence is expensive enough to settle the question on its own.
Points to outright You want it in your hands
If the reason you want gold is that you want to be able to touch it, an IRA cannot give you that and no arrangement makes it possible. Buying outright does. You give up the shelter and accept the collectibles rate, and that is a coherent choice rather than a mistake.
Points to outright The amount is modest
Annual administration and storage are largely fixed, so on a small balance they become a serious percentage every year. Our cost-drag calculator shows the shape of it: at $10,000 held for twenty years the total drag can exceed 60% of the balance. Outright ownership of a few coins has no such overhead.
Points to the IRA Your bracket is high and the horizon is long
The collectibles ceiling only bites above 28%, so the shelter is worth most to higher earners holding for a long time. If your ordinary rate is well below 28% and you might sell within a few years, the tax advantage you are paying annual fees to obtain is smaller than it looks.
You do not have to choose only one
Nothing stops you doing both, and in practice many people do: a retirement-account holding funded by a transfer, plus a small amount owned outright for the reasons that have nothing to do with tax. The two routes solve different problems and they are not mutually exclusive.
What we would not do is move an entire retirement account into one asset class because a page like this made it sound clever. That decision needs someone who can see your whole position, and we cannot.
Questions people ask
Can I move gold I already own into an IRA?
No. An IRA cannot acquire assets from you personally; that is a prohibited transaction. Metal you hold stays outside, and the account must make its own purchases. This is the most common irreversible mistake in this area.
Is physical gold reported when I sell it?
Certain sales are reportable by the dealer depending on the product and quantity, and your gain is reportable by you regardless. Treating outright ownership as invisible to the tax system is a mistake, and a fairly expensive one.
Does the 28% rate apply to silver too?
Yes. The collectibles classification covers physical gold, silver, platinum and palladium alike.
What about mining shares?
Shares in a mining company are ordinary equity and are taxed as such, with the 20% long-term ceiling. You are taking company risk rather than metal-price exposure alone, which is a different investment, not a cheaper version of the same one.
If I go the IRA route, what is the first step?
Verify the custodian against the IRS list, confirm the metal qualifies, and use a transfer rather than a rollover so nothing is withheld.
Next
- Whether the wrapper is worth it, with the cost-drag arithmetic
- Why a Roth suits metal better than a traditional account
- How the selling goes wrong, and the two questions that filter most of it
Primary sources
- 26 U.S.C. § 408(m), the collectibles definition that drives both the IRA rule and the tax rate
- IRS, Topic 409 on capital gains and losses, including the collectibles rate
- IRS, required minimum distributions
Metals Retirement is an independent research site. We are not a broker, dealer, custodian, law firm or investment adviser, and nothing here is investment, legal or tax advice. Tax rates and thresholds change and your own rate depends on your bracket and circumstances, so confirm your position with a tax professional before acting. We may be compensated by providers we compare, at no cost to you, and we earn nothing if you decide outright ownership suits you better. Last reviewed 27 July 2026.