Allocated vs Unallocated Precious Metals: What It Means for Your IRA

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Last updated: July 22, 2026 · By White Metal Resources Editorial

The words allocated and unallocated get used loosely in bullion marketing, and the difference matters more when a retirement account is involved. This page walks through what each term means legally, why a precious-metals IRA can only sit inside one of the two structures, and how to verify that the storage on your account really is what a custodian says it is. Every claim traces back to the statute, the IRS Issue Snapshot, or the London Bullion Market Association.

What allocated and unallocated storage actually mean

Allocated storage means specific bars or coins are recorded on the vault's books as belonging to you. Each item has a serial number or a mint identifier. The vault holds those pieces on your behalf, and the metal never appears as an asset on the vault operator's balance sheet.

Unallocated storage works the opposite way. You hold a claim against the vault's general inventory for a certain weight of metal, not for specific pieces. The vault owns the physical bullion. You own a promise from the vault. In legal terms you are a creditor of the operator, not an owner of tangible property.

The difference shows up most clearly if the vault operator goes bankrupt. Allocated metal is not part of the operator's estate, so it passes back to its owners. An unallocated claim ranks alongside other unsecured creditors and can be delayed, reduced, or partly lost. That structural gap is the reason the two labels are not interchangeable.

Worth knowing: allocated is a status the vault records for you. It is not a synonym for "in a safe" or "in a secure location." Metal can be in a very safe vault and still be unallocated, and metal can be allocated across two facilities that share a network.

Why only allocated storage works inside an IRA

The federal rule for holding metal inside an individual retirement account sits in Internal Revenue Code section 408(m)(3). The statute says the metal must be in "the physical possession of a trustee described under subsection (a)," which means a bank or an IRS-approved non-bank trustee (source: 26 U.S.C. section 408(m)). The IRS restates the same rule in its collectibles Issue Snapshot (source: IRS collectibles Issue Snapshot).

An unallocated position fails that test. The trustee does not have physical possession of specific metal on your behalf, because your interest is a paper claim against the vault's inventory. Only allocated storage puts real, identified bullion into the trustee's hands for the account.

The practical effect is that any compliant precious-metals IRA has to be allocated. A custodian that describes storage as "unallocated," "pooled," or "book entry only" is describing an arrangement that does not meet section 408(m)(3). If a custodian offers a pool-share arrangement inside an IRA, that is a warning sign about how the whole account is being run.

Segregated and commingled: the two allocated subtypes

Once storage is allocated, the vault can still handle the physical bars in two different ways. Both subtypes are compliant inside an IRA, and the choice affects cost more than legal safety.

Segregated allocated storage keeps your specific pieces physically apart from anyone else's. If you own a set of one-ounce silver bars from a named refiner, those same serial-numbered bars come back to you at distribution. Vaults sometimes call this "personal" or "individual" storage, and the fee usually runs higher because each account occupies its own labeled space.

Commingled allocated storage holds your specific bars alongside identical bars from other allocated accounts. Every bar in the pile is titled to a named owner, and the vault records show which bars belong to whom. At distribution you receive equivalent bars of the same type and fineness, not the exact serial numbers you started with. The fee usually runs lower because the vault packs more accounts into the same shelf space.

Commingled allocated is often confused with unallocated. It is not the same thing. In commingled allocated storage every bar has a titled owner. In unallocated storage the vault owns the bars and you own a claim. The distinction is small on paper and enormous in a bankruptcy.

Sources: 26 U.S.C. section 408(m); IRS collectibles Issue Snapshot; LBMA Good Delivery documentation. Checked June 2026.

How to check that your IRA metal is really allocated

A written label from a sales script is not verification. Because the difference has legal weight, the check needs to come from the custodian and the depository, not from the dealer that sold you the metal. The steps below are the ones we recommend running before you fund an account.

1. Ask the custodian for the storage type in writing. The custodian is the party that has to satisfy section 408(m)(3), so the answer belongs on custodian letterhead or in the custodian portal, not in a dealer brochure.
2. Confirm the depository name and address. Common depositories used for precious-metals IRAs include Delaware Depository in Wilmington, International Depository Services in New Castle and in Texas, and Brink's Global Services locations in New York, Salt Lake City, and Los Angeles.
3. Ask which allocation subtype applies. The two allowed answers inside an IRA are "allocated segregated" and "allocated commingled." Anything with the word "unallocated," "pooled," or "book entry" is not a compliant answer.
4. Request the depository storage agreement. Read the sections labeled title, ownership, and bankruptcy remote. A compliant IRA agreement will state that title to the metal rests with the account, not with the operator.
5. Ask for a periodic bar list or holdings report. Segregated storage should produce a list of serial numbers. Commingled storage should produce a titled-ounce report tied to your account.
6. Match the answers against your custodian statement. If the custodian's account statement, the depository agreement, and the dealer invoice all describe the same allocation type, the arrangement is consistent.

This is a verification sequence, not financial or tax advice. The full setup and vetting flow, including custodian selection and the choice of dealer, sits in how to open a silver IRA and silver IRA custodians.

What allocation type does to your annual costs

Allocation type mostly shows up in the storage line of your fee schedule. Custodian fees, dealer spreads, and the IRA setup charge are usually the same across allocated segregated and allocated commingled. What differs is how much shelf space the vault sets aside for your account.

Segregated allocated storage tends to run higher each year because a dedicated area is set aside for your specific bars. Commingled allocated storage tends to run lower because your titled bars share space with same-type bars from other accounts. Both prices sit above the truly cheapest option, which is unallocated. That option is unavailable to an IRA.

The calculator below is a general fee-drag estimator. It uses an account balance and an all-in annual cost, so you can drop in the number your custodian quotes for either subtype and see the pressure that puts on the account over time.

Where allocated storage gets mislabeled or misunderstood

Even with the labels defined, three patterns tend to trip up savers when they read a fee schedule or a marketing page.

The first pattern is the word "pooled." Some vaults use "pooled" as a friendly synonym for allocated commingled, and some use it as a plain description of unallocated storage. The custodian statement is the only reliable reference. If the metal is on the vault operator's balance sheet as inventory, the position is unallocated regardless of how a sales page describes it.

The second pattern is the word "assigned." Assignment of specific bars is a hallmark of segregated allocated storage, and a good custodian will describe assignment in writing. A vague reference to "assigned metal" without a serial number list, or without a titled-ounce report, is not proof.

The third pattern is buying at a dealer and expecting allocation status to transfer automatically. Physical delivery to a personal safe is not allocated storage inside an IRA. It is a distribution. The IRS applied that rule to the taxpayers in McNulty v. Commissioner in 2021, and home storage of IRA metal remains banned no matter how the metal is titled at the dealer.

When unallocated metal has a use outside an IRA

Outside a retirement account, unallocated storage is a normal choice for reasons that have nothing to do with the IRA rules. It usually costs less per ounce, it settles faster on paper, and it works well for large industrial buyers that treat metal as a working input.

None of that carries over into an IRA. The moment a self-directed IRA is the owner, section 408(m)(3) applies, and the physical-possession requirement forces the account into allocated storage. If unallocated storage looks attractive for tax or trading reasons in a taxable brokerage account, that decision is independent of the retirement account discussion on this page.

The comparison between physical metal inside an IRA and physical metal in a personal safe is covered separately in silver IRA vs physical silver. The comparison between physical metal and a fund wrapper is covered in silver IRA vs silver ETF.

When this account structure is a bad idea

A balanced page has to name where the whole account structure works against a saver, and this is where we do that. There is no CTA in this section.

• Small balances against the storage floor. Vault fees for allocated storage carry a minimum per account. On a low balance, that minimum can consume a large share of the account each year, and the storage subtype cannot fix that.
• You expect to sell within a few years. Both allocated subtypes cost more than a mainstream stock or bond position, and the dealer spread comes on top when you sell. A short horizon rarely absorbs those costs.
• You want a low-cost paper exposure. If the point of holding metal is tactical trading rather than long-term physical ownership, an IRA that requires allocated storage adds cost that a plain brokerage account would not have. A silver ETF may fit better.
• You cannot get a clean written answer on the storage type. If a custodian or dealer resists confirming the allocation subtype in writing, the answer is to walk away, not to sign. The whole point of allocated storage is that the arrangement is documented.

Allocated and unallocated storage, questions answered

Is unallocated storage ever allowed inside a precious-metals IRA?

No. The federal rule under section 408(m)(3) requires an IRS-approved trustee to hold the metal in physical possession for the account. An unallocated position is a creditor claim against the vault, not physical possession of specific metal. Any IRA offering that describes storage as unallocated, pooled, or book-entry only does not meet that test.

Is commingled allocated storage the same as unallocated storage?

No, and the difference matters legally. In commingled allocated storage the vault records show which bars belong to which titled account, and the metal sits off the vault's balance sheet. In unallocated storage the vault owns the metal and you hold a paper claim. Both allocated subtypes qualify inside an IRA. Unallocated does not.

Why do custodians use different labels for the same thing?

The industry has never fully standardized the vocabulary. Some vaults use "pooled" for allocated commingled storage. Others use "pooled" for unallocated storage. Some describe segregated storage as "personal" or "individual." The reliable reference is your custodian statement and the depository storage agreement, not the dealer marketing page.

Is segregated storage safer than commingled storage inside an IRA?

Both allocated subtypes protect the metal from the vault's creditors, and both come back to you at distribution. Segregated storage returns the exact bars you started with, which some savers value for auditability. Commingled storage returns equivalent bars of the same type and fineness. Legal ownership is the same either way.

Does the allocated versus unallocated question apply to a silver ETF?

A silver ETF is a fund, not physical metal titled to your account. The fund holds bars through a custodian arrangement that has its own trust and delivery mechanics. Those mechanics differ from allocated and unallocated storage in a bullion account, and they are governed by the fund's prospectus rather than by section 408(m)(3).

Can I switch my IRA metal from commingled to segregated storage later?

Usually yes, through your custodian and the depository. The custodian instructs the vault to move the metal from a pooled titled area to a dedicated space, and the fee schedule updates accordingly. Confirm any transfer fee and any change to the annual storage line in writing before the switch.

Does the physical-possession rule apply to gold, silver, platinum, and palladium equally?

Yes. Section 408(m)(3) covers all four metals, and it requires physical possession by an IRS-approved trustee for each of them. The eligibility fineness differs by metal, with silver at .999, gold at .995, and platinum and palladium at .9995. The storage rule is the same across the four.

Do I need an audit report to prove my metal is allocated?

An independent audit is not required by statute, but many depositories publish periodic audit reports that can be cross-checked against your account statement. Reviewing that audit report is one way to verify that the titled ounces in your name match the bars physically present in the vault.