Why must a silver IRA be opened at a custodian?
Because the statute defines an IRA as a trust held by a bank or by a trustee the IRS has approved. The account has to exist before any silver can be bought, and the metal must be delivered into the trustee's possession rather than yours.
Section 408 of the Internal Revenue Code requires that an individual retirement account be a trust whose trustee is a bank or a person the IRS is satisfied will administer it properly as written in the statute. The bullion exception in the same section adds a condition of its own: approved metal qualifies only while a qualifying trustee holds physical possession of it.
That is the whole architecture. You direct the account, the trustee holds it, and the metal sits at a depository the trustee instructs. Order matters in practice: the account is opened and funded first, and the silver is purchased second, by written instruction. Anyone proposing to sell you silver before an account exists has the sequence backwards.
The gold version of this page is gold IRA custodians. The legal framework is identical, and the two sections most worth reading here, accepted-product lists and the cost of moving silver between depositories, are not on it.
What does a silver IRA custodian actually do?
It opens and administers the account, receives your rollover or transfer, holds title for your benefit, executes your written buy and sell instructions, arranges depository storage, values the account for statements, and files annual reporting on Forms 5498 and 1099-R.
Read that list as a job description rather than a service promise. Each item is administrative. The custodian moves money, holds title, settles instructions, and reports. It does that reliably and it does nothing else, which is exactly what you want from the party holding your retirement account.
It also reports the account to the IRS every year on Form 5498 and every distribution on Form 1099-R, which is why the mechanics in silver IRA tax rules matter before you fund rather than after.
What will a custodian never do for you?
Choose your silver, negotiate or verify your premium over spot, give investment or tax advice, or vouch for the dealer who sold to you. A custodian settling a purchase is not the custodian approving its price.
This is where most silver IRA harm originates, and it is not subtle. A caller says the purchase is being made through a regulated custodian, and the listener reasonably infers that somebody is checking the price. Nobody is. The custodian settles the instruction it was given at the number on the invoice.
The exposure is larger in silver than in gold for a simple arithmetic reason: premiums are quoted as a percentage of a much smaller unit value, and the widest premiums in this business ride on small silver coins. Full numbers are at silver IRA fees compared, and the technique for reading a quote before you authorize it is at how to read a quote.
Custodian, dealer, depository: who does what?
The custodian holds the account and the title. The dealer sources and prices the metal. The depository physically stores it. These are three separate companies, and the separation is the control, not an inconvenience.
- Custodian. Administers the account, settles instructions, reports to the IRS. Regulated as a bank or trust company, or approved by the IRS as a non-bank trustee.
- Dealer. Supplies the silver and quotes the price. This is the role Dormy occupies, and the only role we occupy.
- Depository. Holds the metal under the custodian's instruction, insures it, and reports inventory. Terms are covered at silver IRA storage.
When those roles collapse into one, the account holder loses the only independent record of what was bought, at what price, and where it is. That is the structural concern the Tax Court addressed in McNulty v. Commissioner, and the reason a home storage arrangement fails.
Do all custodians accept all eligible silver?
No. Meeting the statutory .999 purity test makes silver eligible in law. Being on your custodian's and depository's accepted-product lists makes it eligible in practice, and those lists are narrower, which is a distinction that arises more often with silver than with gold.
This is the most useful silver-specific fact on the page. The statute sets a purity floor. The custodian and the depository then decide what they will actually administer and store, based on verifiability, refiner accreditation, and handling. In gold the gap between those two lists is small, because the eligible universe is dominated by a handful of sovereign coins and accredited bars.
Silver has a far larger tail: private-mint rounds, generic bars from many refiners, and very large industrial bars. Some custodians decline generic product they cannot verify to an accredited source, and some depositories will not take thousand-ounce bars into a retail IRA position because the unit is too large to distribute or sell in part. None of that is a purity question, and nothing in the statute tells you about it.
The practical rule is short. Get the accepted-product list from your custodian, in writing, before you buy anything, and buy from it. Which products are eligible in law is covered at IRA eligible metals, and no dealer, including us, should ever be your only source for that answer.
How do silver IRA custodian fees work?
Typically a one-time setup charge, an annual administration fee that is either flat or scaled to account value, storage billed separately by the depository, and per-transaction charges on purchases, sales, and wires. Metal type rarely changes the administration fee itself.
Two silver-specific cautions. First, per-transaction fees. If you buy silver in many small lots rather than in sealed units, each ticket can carry a charge, and a flat charge is proportionally larger against a small silver purchase than against a gold one. Buy in sensible increments.
Second, annual minimums on the storage side. A minimum applies regardless of balance, and silver accounts often begin smaller, so the fixed cost is a larger share of the position in year one. Neither point is a reason to avoid silver. Both are reasons to see the whole schedule before funding, which is modelled line by line at silver IRA fees compared.
The fee nobody puts on the schedule
The dealer premium over spot is not a custodian fee, appears on no fee schedule, and is usually the largest single cost of the whole arrangement. Ask for it as a percentage over the live spot price, per product, in writing, before you authorize anything.
How do you verify a custodian is legitimate?
Confirm the entity is a bank, a state or federally chartered trust company, or an IRS-approved non-bank trustee, and check that directly with the regulator or the IRS list rather than with the company's own marketing.
- Ask for the exact legal entity name and its charter or approval status, then look it up with the chartering regulator.
- Ask which depository will hold the metal, and verify that facility separately.
- Read FINRA's investor guidance on physical metals and the CFTC advisory on precious metals fraud before any first call, not after.
- Treat a firm that resists naming its trustee and depository in writing as having answered the question.
Can you change custodians later?
Yes, by trustee-to-trustee transfer, which is not taxable when done correctly. With silver the question to ask first is physical: moving the metal to a new depository means insured freight on a heavy consignment, while selling and repurchasing means paying a spread twice.
In a gold account this is usually a small logistical matter. In a silver account it is a real decision with a real cost, because the same value is many times the weight. Ask both custodians what they charge, ask what the freight and insurance will be, and compare that against the round-trip spread of selling and rebuying. Then choose with the numbers in front of you.
The distinction between a transfer and a rollover, which is the thing people get wrong here, is explained at transfer versus rollover and in the silver context at silver IRA rollovers.
Which questions should you ask before funding?
Ask for the complete written fee schedule, the depository options and storage terms, the accepted silver product list, per-transaction charges, the sale process, termination and in-kind shipping costs, and what happens if your dealer stops answering the phone.
- What is the total of every annual charge at my expected balance?
- Which depositories may I choose, and on what storage terms?
- Which silver products will you accept, and which will you not?
- What does a purchase, a sale, and a wire each cost?
- How do I sell, how long does it take, and who quotes the bid?
- What does it cost to close the account or ship the metal to me?
- Which pricing source values my statement?
A broader list, written for the dealer side of the conversation, is at ten questions that end bad sales calls.
How does Dormy work with custodians?
Dormy is the dealer and nothing else. We never hold your account and never store your metal. We coordinate with the custodian you choose, or introduce established ones, quote the metal in writing, and deliver to the depository your custodian instructs.
Every purchase is authorized by you on a recorded compliance call before it is placed, and accounts are non-discretionary, which means nothing is ever bought or sold without your instruction. That process is published in full at how orders and buyback work.
We will also say plainly which parts of this are not our job. Custodian selection is yours, tax treatment belongs with your professional, and eligibility should be confirmed with your custodian rather than taken from any dealer's website, this one included.