Updated: August 9, 2026

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The single most misunderstood line in a precious metals IRA contract is the storage clause. Two words carry the entire distinction: allocated and unallocated. One means your specific bar sits in a labeled slot at a depository under your IRA custodian’s name. The other means you hold a claim on a shared pool of metal owned by a bullion bank or refiner. The tax code, the storage economics, and the failure risk profile all change on that one word.

This page is a plain reading of the two storage models, side by side, with the IRS mechanics that push a self-directed gold IRA toward allocated storage by default. No sales pitch. The goal is to give a retiree reading a first custodian contract the vocabulary to understand what they are actually signing.

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What allocated storage actually means

Allocated storage means the depository holds specific physical items assigned to your account. Each bar carries a refiner name, a serial number, a weight, and an assay stamp. Each coin is counted and identified. The depository’s records tie those exact items to your IRA. If the depository fails or is audited, the trustee can walk into the vault and point to the bars that belong to your account.

Within allocated storage, two sub-forms exist. Segregated storage places your bars in a dedicated bin, cage, or shelf, physically separated from other clients’ holdings. Commingled allocated storage keeps your specific bars in a shared vault area, still identifiable by serial number, but stacked with other clients’ bars of the same product type. Both are allocated. Only segregated puts your metal behind its own physical partition.

Under either form, the legal relationship is bailment. You (through your IRA trustee) remain the owner of the metal. The depository is a custodian holding property for a fee. The metal is not on the depository’s balance sheet as an asset, and it is not available to the depository’s creditors in a bankruptcy proceeding, because it is not the depository’s property.

What unallocated storage actually means

Unallocated storage is a book-entry claim on a pooled inventory. You do not own specific bars. You own a credit on the counterparty’s ledger for a stated weight of a stated fineness of gold or silver. The counterparty (usually a bullion bank, a refiner, or a large dealer) owns the physical inventory outright. Your claim sits alongside every other client’s claim on the same pool.

Unallocated accounts dominate the professional wholesale market. The London bullion market runs largely on unallocated books at member banks. Metal moves between accounts as journal entries, not as physical movements, which keeps trading cheap and fast at institutional scale. That structure works for a bullion bank clearing millions of ounces a day. It works less well for a retiree who wants a physical asset in a retirement account.

The legal relationship under unallocated storage is debtor and creditor. You are an unsecured creditor of the counterparty for the stated weight of metal. If the counterparty enters bankruptcy, you queue with other general creditors. You may recover cents on the dollar. The metal itself, being the counterparty’s asset, is available to satisfy the counterparty’s obligations before your claim gets paid.

Cost, liquidity, counterparty risk side by side

The three dimensions that drive the choice for institutional buyers are cost, liquidity, and counterparty risk. Each cuts a different direction between allocated and unallocated storage.

Dimension	Allocated (segregated or commingled)	Unallocated (pooled claim)
Storage fee	Higher. Typically a flat annual fee ($100 to $300) or 0.5% to 1% of value per year at retail IRA depositories.	Low or zero. The counterparty earns from lending the pool, so client storage is often bundled into the spread.
Liquidity	Sell-back takes a few business days. The depository confirms the bar, releases it, and settles the trade.	Instant book transfer between accounts on the same ledger. Physical delivery on request may trigger a conversion fee.
Counterparty risk	Bailment. Metal is your property, bankruptcy remote from the depository.	Unsecured credit exposure to the counterparty. Recovery depends on the counterparty’s solvency.
Verification	Serial numbers auditable. Third-party audits (Bureau Veritas, Inspectorate) confirm bar identity.	You hold a ledger entry. Verification depends on the counterparty’s books and controls.
Typical user	Retail IRA holder, high-net-worth investor, sovereign wealth fund.	Bullion bank, refiner, ETF custodian, wholesale trader.

Precious metals IRA fee-drag calculator

Precious metals IRAs charge mostly flat dollar fees (setup, annual custodian, storage). Flat fees take a much bigger bite out of a small account than a large one. Enter your numbers to see the drag.

Amount invested (USD) Total flat fees per year (USD) One-time setup fee (USD) Years held

Estimate only. Fee amounts vary by provider and are often not published; enter figures you confirm in writing. This tool ignores metal price changes and the dealer spread, which also affect returns. Not financial advice.

A retiree reading this table sees the tradeoff clearly. Unallocated is cheaper and faster to trade, but the metal is not yours in a legal sense. Allocated costs more per year, but the metal is your property and the depository’s failure does not put your holdings at risk of loss to other creditors. For an IRA, the tax code closes the tradeoff by pushing you toward allocated storage by default.

Why an IRA is allocated by default

The starting point is IRC section 408, which defines what an individual retirement account is and how it must operate. Subsection (a)(2) requires the trustee of an IRA to be a bank or a person who demonstrates to the Treasury that it can administer the trust in a manner consistent with the rules. The physical metal held by the trustee is IRA property, not personal property, and it must stay under the trustee’s control until distribution.

Section 408(m) then carves out precious metals as a permitted asset class inside an IRA. Under 408(m)(3), certain gold, silver, platinum, and palladium coins and bullion that meet stated fineness standards are excluded from the general prohibition on collectibles, provided the metal is in the physical possession of the trustee.

The phrase “physical possession of the trustee” is the anchor. A pooled claim on a third party’s inventory is not physical possession by the IRA trustee. A serial-numbered bar sitting in a depository account titled to the trustee is.

The Treasury regulation that expands on the trustee’s duties is 26 CFR 1.408-2. It requires the non-bank trustee to maintain the assets of the IRA in a way that keeps them identifiable and separate from the trustee’s own assets. An unallocated pooled claim fails that separation test at the metal level, because the underlying inventory belongs to the counterparty, not to the trust.

IRS Publication 590-A restates the rule in plain reader language: IRA assets must be held by a qualified trustee, and precious metals inside the IRA must be held in the trustee’s physical possession. That is the reason every reputable gold IRA custodian contracts with an approved depository (Delaware Depository, Brink’s, IDS, HSBC, and a small number of others) and offers allocated storage as the standard product. Unallocated is not a supported IRA storage model at the retail level.

Any dealer who offers an “unallocated gold IRA” or a “pool account IRA” is either using loose language for a standard allocated product, or offering something that does not satisfy the physical-possession rule.

In the second case, the IRS treats the position as a distribution of the IRA on the day of purchase. The full purchase price is included in gross income. A 10% additional tax applies if the account holder is under 59.5. That is a bad outcome for a retiree acting on a sales pitch.

LBMA Good Delivery and why it matters for allocated bars

The LBMA Good Delivery framework is the industry standard that defines an acceptable large gold or silver bar for the London wholesale market. The Good Delivery list names the refiners whose bars meet the physical, fineness, and marking specifications. A Good Delivery gold bar weighs about 400 troy ounces, tests at 995.0 fineness or better, and carries the refiner’s stamp, serial number, weight, and assay mark.

Good Delivery matters for allocated storage because it defines the population of bars that trade at wholesale market prices without an assay penalty. A bar off the list can still be a real bar with real metal, but it may need to be re-refined or re-assayed before a bullion bank will accept it. That step imposes a discount at resale.

An allocated IRA holding stocked with Good Delivery bars from listed refiners (PAMP, Valcambi, Perth Mint, Royal Canadian Mint, Argor-Heraeus, others) preserves clean resale mechanics.

For retail IRA holders, the practical version is a kilo bar or a smaller Good Delivery equivalent from a listed refiner, held under allocated storage at an approved depository. That structure combines the bailment protection of allocated storage with the market liquidity of Good Delivery inventory. It is the operational default across the retail gold IRA industry, though buyers should still verify the refiner list at contract signing.

Segregated versus commingled inside allocated storage

Once you accept that the IRA has to be allocated, the next choice is segregated or commingled. Both are allocated. The metal in both is your property, identifiable by serial number, held by the depository as bailee. The difference is the physical partition inside the vault.

Segregated storage puts your bars in a dedicated compartment, often a labeled bin or a locked shelf. When the depository pulls your metal for a sale or a distribution in kind, the audit trail is short. Commingled allocated storage keeps your bars in a shared area with other clients’ bars of the same product. The bars are still identifiable, but retrieved by serial number lookup rather than by walking to a labeled shelf.

Segregated typically costs about 20% to 40% more per year than commingled allocated. Both are legally sufficient for IRC 408(m). The choice is a preference about audit convenience and comfort, not a compliance requirement. For the typical retail retiree with a $50,000 to $250,000 gold IRA, commingled allocated is the industry standard and the cheaper option.

What this means for you as an IRA holder

The takeaway is short. When a custodian contract or a dealer pitch talks about storage, read for two words. If the contract says allocated (segregated or commingled), the metal is your property and the IRA compliance box is checked. If the contract says unallocated, pool, or non-segregated in a way that implies a claim on shared inventory rather than identifiable bars, stop the process and ask for clarification in writing before signing.

Three questions to ask the custodian before you fund the account:

Is my metal held on an allocated basis, with specific bars and coins tied to my IRA by serial number and refiner?
Is the depository an IRS-approved facility (Delaware Depository, Brink’s, IDS, HSBC, or an equivalent) and is it audited by an independent third party?
Are the bars on the LBMA Good Delivery list, or are they retail-format bullion (kilo bars, one-ounce coins) from a recognized refiner?

Written answers to those three questions give you the record you need if the IRS or the depository later asks about the storage arrangement. They also filter out the small number of dealers who use language loosely enough to blur the allocated line. 3 of 27+ gold IRA dealers reviewed by OPRS make the 2026 trusted list, and storage transparency is one of the screens that separates the group.

This page will keep pointing to the same tax code sections and the same LBMA framework as the mechanics evolve. Updated August 9, 2026.

Allocated vs unallocated precious metals IRA storage