Opening a gold IRA is different from opening a brokerage account, and the difference comes down to structure. When you buy a mutual fund, one institution handles everything. When you buy physical gold inside an IRA, federal rules split the job among three separate parties: a dealer that sells the metal, a custodian that administers the account, and a depository that stores the metal.
Understanding who does what makes the whole process easier to navigate and easier to price out. This article walks through each role, then follows a dollar from your existing retirement account all the way into a vault.
Why Three Parties?
The tax code, specifically Section 408(m) of the Internal Revenue Code, allows IRAs to hold certain precious metals only if the metal is in the possession of the IRA's trustee or custodian. You cannot hold it yourself. That requirement, combined with the practical need for someone to sell you the metal and somewhere secure to keep it, creates the three-party structure.
No single company is required to fill all three roles, and in practice most do not. A gold IRA company you see advertised is usually a dealer that works with one or more independent custodians and depositories. Knowing this helps you ask the right question at every step: "Which of the three roles are you playing, and who fills the other two?"
If you are brand new to the topic, our complete guide to gold IRAs covers the basics before this deeper dive.
The Dealer: Who Sells You the Metal
The dealer is the retail-facing company. It markets gold IRAs, helps you pick coins or bars, and sells you the metal. A few things to understand about dealers:
- They earn money on the spread. Dealers buy metal at one price and sell it to you at a higher price. That markup over the spot price (the current market price of the raw metal) is how they get paid, and it varies significantly between companies and between products.
- They are salespeople, not advisors. Even a helpful, knowledgeable representative is compensated for selling metal, so treat product recommendations as sales information rather than advice. Note that collectible and numismatic coins are prohibited in IRAs and often carry the highest markups.
- Product selection matters. The IRS requires gold to be at least .995 fine (with an exception for American Gold Eagle coins), silver .999, and platinum and palladium .9995. A reputable dealer will only offer IRA-eligible products for your IRA and will say so plainly.
The Custodian: Who Administers the Account
Every IRA, gold or otherwise, must have a trustee or custodian approved to handle retirement accounts, typically a bank, trust company, or similar institution. For a gold IRA you need a self-directed IRA custodian, one that is set up to hold alternative assets rather than just stocks and funds.
The custodian's job includes:
- Opening and maintaining the IRA in your name
- Receiving your funding (contributions, transfers, or rollovers)
- Executing your instructions to buy or sell metal
- Coordinating with the depository on storage
- Filing required IRS reports and annual valuations
- Processing distributions when you take money out
Two points are worth underlining. First, the custodian acts on your direction; it does not pick investments for you or vouch for the dealer's pricing. Second, the custodian is the reason "home storage gold IRA" pitches fall apart: the metal must stay in the custodian's control at an approved facility. Taking personal possession is treated as a distribution, taxable and subject to a 10% penalty if you are under age 59 1/2. Our article on gold IRA storage rules explains why this rule has real teeth.
The Depository: Where the Metal Lives
The depository is an IRS-approved, high-security vaulting facility. It physically holds your coins and bars, insures them, and undergoes audits. When your custodian confirms a purchase, the dealer ships the metal directly to the depository, where it is verified and recorded to your account.
Depositories generally offer two storage types:
| Storage type | What it means | Typical cost | | --- | --- | --- | | Commingled | Your metals are pooled with other clients' holdings of the same products; you own an equivalent quantity | Lower | | Segregated | Your specific coins and bars are stored separately under your name | Higher |
Either arrangement satisfies IRS rules. Segregated storage appeals to people who want the exact items they bought returned to them; commingled storage keeps annual costs down.
Following the Money: A Typical Setup, Step by Step
Here is how the pieces fit together in a typical new account:
- You choose a gold IRA company and custodian. Often the dealer suggests custodians it works with, but you can usually choose your own.
- You open the self-directed IRA. Paperwork establishes the account with the custodian, as a traditional or Roth IRA.
- You fund it. Most people move existing retirement money by direct trustee-to-trustee transfer (unlimited and not taxable) or by rolling over a workplace plan such as a 401(k). Indirect rollovers, where you receive the money personally, carry a 60-day redeposit deadline and a one-per-12-months limit, so direct movement is generally safer. See our 401(k) to gold IRA rollover guide for details.
- You select metals with the dealer. Only IRA-eligible products, with pricing confirmed before you commit.
- The custodian pays the dealer from your IRA. You never touch the money or the metal.
- The dealer ships to the depository. The depository verifies the shipment and credits it to your account.
- Ongoing administration. The custodian sends statements and valuations, and bills annual fees.
When you eventually take distributions, you can typically sell metal and withdraw cash, or in some cases take an in-kind distribution of the physical metal itself, which is taxed on its value at that time.
What All This Costs
Because three parties are involved, expect several distinct fees. Typical ranges, which you should verify with each company:
- Account setup: $50 to $250, one time
- Annual custodian fee: $75 to $300
- Annual storage fee: $100 to $300, with segregated storage at the higher end
- Dealer markup and buyback spread: varies by company and product
None of these fees are inherently unreasonable; vaulting and administering physical assets costs money. Structures vary between companies, so get every fee in writing before funding an account, and see our fees and taxes section for a full breakdown of what to look for.
Questions to Ask Each Party
A short due-diligence list:
- Dealer: What is your markup over spot on this exact product? Do you have a buyback program, and at what spread? Are all products you are recommending IRA-eligible?
- Custodian: What are all annual fees, and do they scale with account value? How are distributions processed and how long do they take?
- Depository: Is storage segregated or commingled? What insurance is in place? How often are holdings audited?
Our guide on how to choose a gold IRA company expands this list considerably.
The Bottom Line
A gold IRA works through a deliberate separation of duties: the dealer sells, the custodian administers, and the depository stores. That structure exists to protect the tax-advantaged status of your account, and it also gives you three natural checkpoints for comparing costs and service. Keep in mind that precious metals prices fluctuate and can lose value, and that gold produces no income or dividends, so most guidance treats metals as a modest diversification slice rather than a core holding.
GoldIRAFinder.com is a free matching service, not a dealer, custodian, or advisor. If you would like to compare providers side by side, you can get matched with trusted Gold IRA companies, and we recommend consulting a qualified financial or tax professional before making any changes to your retirement accounts.