Gold IRA: What the Fear Ads Leave Out About Fees, Markups and the Tax Rules

By Eric Ridley, attorney, Ridley Law. Updated September 2026.

Part of our money myths series, where we look at the money advice that spreads on Instagram, TikTok, YouTube and late-night TV and ask who gets paid when you follow it.

Who gets paid when you roll your 401(k) into a gold IRA?

Mostly the dealer, through a markup you can’t see on your statement; the CFTC puts collectible-coin premiums at 40% to 200% over spot (2020).

You can’t buy coins inside a regular 401(k), so the rep has you open a self-directed IRA at a custodian, roll your 401(k) into it, and have the custodian buy coins from the dealer. The rep is paid on what you buy. The CFTC’s 2020 advisory says customers are often steered to “numismatic” or proof coins, told those will only go up because they’re rare, and that those coins are hard to value and hard to sell.

The markup also stays off your statement. A custodian’s disclosure from GoldStar Trust says its statements show spot value and don’t reflect dealer markups. So the day after closing, your statement may show $60,000 of metal for the $100,000 you rolled over, and nothing on the page says why.

GoldStar Trust’s 2026 schedule lists a $50 setup fee, $90 a year for maintenance and $125 a year for commingled storage, with segregated storage at $225 a year or more. STRATA Trust lists a $150 annual IRA fee plus $115 to $175 a year for storage. Equity Trust lists $110 to $160 a year for storage. The SEC, NASAA and FINRA warn that self-directed IRA fees may be significantly higher than those for other accounts.

What does the tax code actually allow in an IRA?

An IRA that buys a “collectible,” which includes any metal or coin, is treated as taking a taxable distribution, unless the item fits a narrow exception for certain coins and for bullion held by a trustee (26 U.S.C. § 408(m)).

Section 408(m)(1) treats an IRA’s purchase of any collectible as a distribution of its cost, and section 408(m)(2) lists “any metal or gem” and “any coin” as collectibles. The IRS adds that if you’re under 59½, a 10% additional tax may apply on top of income tax.

Section 408(m)(3) carves out two things:

• American Eagle gold, silver and platinum coins and certain state-issued coins.
• Gold, silver, platinum or palladium bullion at least as fine as a futures exchange requires (COMEX requires 995 fineness for gold), but only “if such bullion is in the physical possession of a trustee.”

That last condition is where the home-storage pitch goes wrong. And buying property for your own use with IRA money is a prohibited transaction. The IRS says that if you engage in one, the account stops being an IRA as of January 1 of that year and the whole account is treated as distributed.

Can I keep my IRA gold at home?

No: in McNulty v. Commissioner (2021) the Tax Court held that gold coins an IRA bought through an LLC and kept in the owners’ home safe were taxable distributions, and it added penalties.

The promoter’s website said coins could be kept at home without tax or penalties so long as they were “titled” to an LLC. Mrs. McNulty’s IRA funded an LLC, the LLC bought 320 one-ounce American Eagle gold coins for $374,000, and the coins were shipped to the couple’s home and kept in a safe. The court rejected the LLC argument: IRA assets must be held by a trustee, and an owner who takes possession receives a distribution. It found tax deficiencies of $250,558 for 2015 and $18,094 for 2016 and sustained accuracy-related penalties under 26 U.S.C. § 6662(a). The court noted the couple, both professionals, had liquidated nearly $750,000 from their retirement accounts “to invest in a questionable internet scheme without disclosing the transactions to their C.P.A.” (McNulty v. Commissioner, 157 T.C. No. 10, Nov. 18, 2021.)

What happened in the gold IRA fraud cases?

Regulators have won judgments for overcharging retirees in Southern California and beyond; Red Rock Secured customers paid about $69 million for coins worth $30 million, a consent order found (CFTC, 2024).

• Red Rock Secured (El Segundo). The CFTC, the California Department of Financial Protection and Innovation and Hawaii’s securities regulator sued. The 2024 consent order found the firm convinced at least 950 people to pay over $69 million for coins worth only $30 million, at markups of 91.89% to 129.97%, mostly from retirement accounts. Reps quoted a 1% to 5% markup on bullion, then sold the “premium” coins. The order requires $38,984,313.90 in restitution, $5.1 million in disgorgement and $12.25 million in penalties. The SEC separately alleged reps told investors to “protect” their retirement savings by selling Thrift Savings Plan, 401(k) and IRA holdings, and obtained a consent judgment of more than $76.4 million, entered without admitting or denying. The two agencies’ amounts likely overlap and shouldn’t be added.
• Safeguard Metals (Los Angeles area). The CFTC, with the DFPI and other states, won a final judgment in 2025. NASAA reports the defendants solicited about $68 million, mostly retirement savings, from at least 450 people. The court’s 2025 decision, entered after the defendants consented to liability, recites that sales reps were instructed to use “fraudulent solicitations designed to instill fear in elderly and retirement aged investors.” It set customer losses at $25,569,303 and ordered restitution plus an equal civil penalty.
• Lear Capital. New York’s attorney general alleged undisclosed commissions of up to 33% on more than $43 million in sales and secured $6 million in January 2022. California and other states resolved their claims through Lear’s bankruptcy in a $5.5 million settlement, the DFPI reported in 2023.
• Metals.com / TMTE. The CFTC and 30 states alleged in 2020 that the dealers took $185 million, including $140 million of retirement savings from more than 1,600 people, with overcharges of 100% to more than 300%. These are allegations. Bloomberg Law reported in August 2026 that the court denied both sides summary judgment and set the case for trial, and the docket was still active in late September 2026.

The CFTC counts more than $500 million in alleged fraudulent metals sales it has charged over the past decade. The CFTC and FINRA say some gold and silver IRA victims had one-third to one-half of their savings drained by markups, fees and commissions.

Why do gold IRA ads target retirees?

Because retirees hold their savings in 401(k)s and IRAs, and a fear pitch moves that money fast; the FTC told the Senate Aging Committee in 2014 that precious metals scams prey on older Americans worried about their retirement.

The FTC’s 2016 complaint against one seller described national TV and radio ads touting gold and silver as a safe retirement investment. In 2025 the FTC warned consumers that “Nobody legit will tell you to protect your money by transferring or withdrawing it from your bank or investment accounts. But scammers will.” When the pitch tells an older person to move money to “protect” it, that’s the signal to stop.

California law gives older victims a remedy. Financial abuse of an elder, anyone 65 or older, includes taking property “for a wrongful use or with intent to defraud,” and a person who “knew or should have known” the conduct was likely to harm the elder has taken it for a wrongful use (Welf. & Inst. Code, §§ 15610.27, 15610.30). If a parent has been pushed into a rollover, our elder financial abuse guide explains what families can do, and financial elder abuse and trust contests covers the litigation side.

Is gold a bad investment?

Not always, but over the long run it has trailed stocks badly: 5.61% a year for gold vs. 10.02% for the S&P 500 with dividends from 1928 through 2025 (Damodaran, NYU Stern data).

Gold also has long droughts. Its year-end price was $589.75 in 1980 and $274.45 in 2000, down 53%, and it didn’t finish a year above the 1980 level again until 2006. Someone who bought at the end of 1980 had less than their money back for most of 25 years.

Over the ten years 2016 through 2025, gold beat the S&P 500, 15.14% a year to 14.68%, and it rose 66% in 2025 alone. That run is exactly why the ads are everywhere now. A recent run doesn’t make a markup of 40% or more a good deal, and it doesn’t make a fear script honest.

When is a gold IRA legitimately fine?

When it’s a small slice of your savings, holds IRA-eligible bullion or American Eagles bought near spot, and sits with a real trustee, not in your closet.

The tax code permits it (26 U.S.C. § 408(m)(3)), and the FTC itself has said precious metals can be a legitimate investment. A person who wants some gold exposure as a hedge can have it. The cheaper route for most people is inside the IRA or 401(k) they already have: the CFTC and FINRA note that exchange-traded products holding metals can often be added to an existing IRA and are fully regulated. They also warn that rolling over a retirement account to buy large amounts of bullion, paying high fees and commissions, may not make sense for retirees.

Gold IRA pitch vs. a better alternative

What should you do instead?

1. Hang up on the fear script

   Anyone telling you to move retirement money to “protect” it is following a script the FTC calls a scam line. Take a week and talk to someone who isn’t paid on the sale.

2. Get the spot price and the markup in writing

   Ask the dealer for the spot price, the premium as a percent and what it would pay to buy the coins back today. If it won’t put that on paper, walk away.

3. Buy bullion or Eagles, not “rare” coins

   Collectible coins carry the biggest premiums and the thinnest resale market. The tax exception covers bullion and American Eagles anyway.

4. Consider a gold fund in the account you already have

   No rollover, no custodian, no vault fee, and you can sell any trading day.

5. Keep your beneficiary designations and trust in order

   Coins in an IRA pass by the IRA’s beneficiary form, and coins at home pass under your will or trust. Our beneficiary designation audit and who gets the guns, gold and crypto cover both.

Frequently asked questions

Is a gold IRA a scam?

No. A gold IRA is legal under 26 U.S.C. § 408(m)(3) if it holds eligible coins or bullion with a trustee. The scams are in the sales: high-markup collectible coins, hidden commissions and fear-based rollovers, as in the Red Rock Secured and Safeguard Metals cases.

How much does a gold IRA cost?

Published 2026 custodian schedules run roughly $200 to $400 a year in setup, maintenance and storage fees, before the dealer’s markup. The markup is the big number: 5% to 10% on bullion and 40% to 200% on collectible coins, per the CFTC.

Can I store gold from my IRA at home?

No. The Tax Court held in McNulty v. Commissioner (2021) that coins kept at home were taxable distributions, and it imposed penalties. Bullion has to be in a trustee’s physical possession.

Is rolling my 401(k) into gold tax-free?

A rollover to a self-directed IRA generally isn’t taxed, per IRS Publication 590-A. Buying ineligible coins with the money, or taking the coins home, is treated as a distribution, taxable and possibly subject to the 10% additional tax if you’re under 59½.

What taxes apply to gold held outside an IRA?

Gains on gold bullion and coins held more than a year are taxed as collectibles at a top federal rate of 28%, higher than the usual long-term capital gains rate, per the IRS.

My parent bought coins after a TV ad. What can we do?

Get the purchase paperwork and the custodian statements, compare what was paid with spot value, and report it to the CFTC, the California DFPI and the FTC. If your parent is 65 or older and was pushed into it, California’s elder financial abuse law may give a claim.