Gold IRA Glossary: Terms Every Investor Should Know

Custodian (IRA Trustee): The IRS-approved institution that holds legal title to your IRA assets, administers the account, files required IRS forms, and executes your investment instructions. Must be a bank or IRS-approved nonbank trustee under IRC § 408(a). Not the same as the depository.

Depository: The physically secure facility (vault) where IRA-held precious metals are stored. Approved depositories include Delaware Depository Service Company (DDSC), Brinks, IDS, CNT, and Equity Trust's affiliated facilities. Must be a qualified IRA trustee (the custodian, not a separate entity) under IRC § 408(m)(3)(B).

Dealer (Precious Metals Dealer): The company that sells you the precious metals for your IRA. The dealer is not the custodian and is not the depository — it is a separate third party. Most "Gold IRA companies" are dealers who coordinate with custodians and depositories.

Disqualified Person: Under IRC § 4975(e)(2), persons whose transactions with the IRA may constitute prohibited transactions: the account owner, their spouse, lineal descendants and their spouses, ancestors, fiduciaries, and entities in which any of the above have 50%+ ownership.

IRC Section 408(m)(3): The statutory provision that permits specific precious metals in IRAs. It creates an exception to the general collectibles prohibition (§ 408(m)(1)), specifying eligible gold, silver, platinum, and palladium products.

Prohibited Transaction: Under IRC § 4975, a transaction between the IRA and a disqualified person that violates the exclusivity rules for IRA assets. Consequences: the entire IRA is treated as distributed on January 1 of the year the transaction occurred.

Deemed Distribution: A transaction (prohibited transaction, home storage, ineligible metal purchase) that is treated as if you took a taxable distribution from the IRA, triggering income tax and potentially the early withdrawal penalty, even though no cash was actually distributed.

Self-Directed IRA: An IRA in which the account owner directs all investment decisions, as opposed to a managed IRA where the custodian or broker manages the portfolio. Gold IRAs are a type of self-directed IRA.

Checkbook IRA / IRA LLC: A structure in which the IRA owns a limited liability company (LLC), and the account owner has check-writing authority over the LLC's bank account. Used for certain alternative investments; not legally permissible for storing precious metals at home (McNulty v. Commissioner, 2021).

McNulty v. Commissioner: Tax Court decision (157 T.C. No. 10, November 18, 2021) ruling that home storage of IRA-held gold (through a checkbook LLC) is a prohibited transaction, disqualifying the IRA. The definitive modern authority on the home storage question.

Fineness: The purity of a precious metal, expressed as a decimal fraction or in karats (for gold). IRA-eligible gold bullion requires at minimum .995 fineness (99.5% pure). American Gold Eagles are .9167 fine but IRA-eligible via the named-coin exception.

Karat: Unit of gold purity: 24 karat = 100% pure gold. 22 karat (American Gold Eagle) = 91.67% gold. 18 karat = 75% gold. 10 karat = 41.7% gold. IRA-eligible standards are defined in fineness (decimal), not karats.

Troy Ounce: The standard unit for precious metals weight. One troy ounce = 31.1 grams — slightly heavier than an avoirdupois ounce (28.35 grams). All spot prices and coin weights are stated in troy ounces.

Spot Price: The current market price for immediate delivery of one troy ounce of gold (or other metal), quoted in US dollars. Dealer prices for IRA purchases are the spot price plus the dealer's markup.

Markup / Premium: The amount above spot price that a dealer charges for a specific product. Expressed as a dollar amount or percentage. Fair range for standard bullion: 3–7% over spot.

Allocated Storage (Segregated Storage): Storage arrangement where your specific gold coins or bars are physically separated from other investors' metal, identified by your account, and returnable as the same specific pieces you deposited.

Commingled Storage: Storage arrangement where your metal is pooled with other investors' equivalent metal. You have a claim against the pool for the weight and purity you own — not the specific coins or bars. More economical; suitable for most investors.

LBMA (London Bullion Market Association): The international trade association for the professional OTC market in gold and silver bullion. LBMA accreditation of a refiner (the "Good Delivery List") is the primary indicator that bars from that refiner meet IRA fineness and quality standards.

COMEX: The Commodity Exchange in New York; the primary futures exchange for gold, silver, copper, and other metals in the US. COMEX delivery specifications (.995 fine for gold) set the fineness standard referenced in IRC § 408(m)(3)(B).

Traditional IRA: IRA funded with pre-tax or deductible contributions; distributions are taxed as ordinary income.

Roth IRA: IRA funded with after-tax contributions; qualified distributions are tax-free.

RMD (Required Minimum Distribution): The annual minimum amount that must be distributed from a traditional IRA beginning at age 73 (under SECURE 2.0 Act). Calculated by dividing the prior December 31 account balance by the applicable Uniform Lifetime Table factor.

In-Kind Distribution: A distribution of the actual physical metal (rather than cash), valued at its fair market value (spot price) on the distribution date. The FMV is the taxable amount.

Trustee-to-Trustee Transfer: A direct transfer between IRA custodians where the account owner never receives the funds. No 60-day rule, no annual limit, no withholding applies.

Indirect Rollover: A distribution received by the account owner who then re-deposits it into another IRA within 60 days. Subject to 20% withholding (from employer plans), the once-per-year rollover limit, and the 60-day deadline.

Form 5498: IRA Contribution Information — filed by the custodian annually; reports contributions, rollovers, and year-end fair market value. For your records; not filed with your tax return.

Form 1099-R: Distributions From Pensions, Annuities, Retirement Plans — filed by the custodian for any distribution; used to report the distribution on your Form 1040.

Form 8606: Nondeductible IRAs — filed by you to track non-deductible traditional IRA contributions and Roth conversions; prevents double-taxation on contributions already subject to tax.

Form 5329: Additional Taxes on Qualified Plans — filed to report the 10% early withdrawal penalty, to claim exceptions to the penalty, or to report the 25% excise tax on missed RMDs.

SEPP (Substantially Equal Periodic Payments): An IRS-approved method of taking early IRA distributions without the 10% penalty, using one of three calculation methods (required minimum distribution, annuity, or amortization) applied over the longer of 5 years or until age 59½.

Roth Conversion: The process of moving funds from a traditional IRA to a Roth IRA, paying income tax on the converted amount in the year of conversion. The converted amount is never subject to income tax again on qualified distributions.

Collectibles Tax Rate: The 28% long-term capital gains rate that applies to gains on collectibles — including physical gold held outside an IRA — in a taxable account. Does not apply to gains inside an IRA (where ordinary income tax or tax-free treatment applies at distribution).

UBTI (Unrelated Business Taxable Income): Tax imposed on certain income earned within a tax-exempt entity (like an IRA), particularly income from debt-financed assets (UDFI — Unrelated Debt-Financed Income) in a self-directed IRA holding leveraged real estate. Does not typically apply to Gold IRAs.