Gold in IRA - is the gold still there??

tincup

Not sure how many of you have gold in an IRA... myself, I do not. Never liked the idea of how a custodian had to store the gold.

Just finiished reading an interesting thread on another site, where an individual decided he was going to take his gold out of his IRA, and pay the penalties, etc. Nearly a month has passed, and he still has not yet received his gold. It appears he may be getting a run around. The Trust company that he has to go through says they have not heard anything from HSBC Bank (where the coins are supposedly being held), AND HSBC does not allow them to contact them regarding checking on the status of delivery. The individual was told he will just have to wait until he receives them.

The Trust Company told the individual that they have NO idea when the coins will be shipped, and that even if they called the HSBC bank holding the coins, it wouldn't do any good, because they won't reply.

HUH? Talk about warning flags.....

It will be interesting to me to see how this turns out. Another question I have.... the individual invested in Proof American gold eagles.... and, since it appears these are now carrying a pretty good premium and demand, I wonder if he will actually receive these. Or, will he receive some sort of 'like kind' substitute? (this is assuming he will receive anything at all).

So.... where is his gold? Not actually in storage, and they have to go to the open market to purchase? Or, is he just too small of an investor for the bank to give any time to, to send him his gold? We have had doubts for some time on whether the GLD and SLV funds, other paper IOUS's out there, etc., actually have enough gold to back up their obligations. Now I wonder about the IRA's that individuals have put gold into........

Have any of you had any experience with this..... having gold in an IRA and then trying to take it back out?

PerryHall

<< <i>Have any of you had any experience with this..... having gold in an IRA and then trying to take it back out? >>



Isn't there some kind of tax penalty when you take assets out of your IRA?

PerryHall

My strategy is to buy PM's with cash and then hide it from the government and other thieves.

roadrunner

I had been under the impression that gold deposited in an IRA could not be paid back out in physical bullion, but ultimately by check/fiat. I've seen conflicting analytical articles on the above so I welcome seeing a case where the investor actually gets physical coins back. I don't think the IRA can operate under the "like-kind" caveat but would have to return the identical item to you, assuming you are to get something tangible in payment. As TD said in another post that would mean proof AGE's with all their original mint issed paperwork and packaging. Anything less would not be adequate (ie PCGS holdered PF69's).

Sinclair has commented over the past year on several occasions that getting Comex delivery of gold/silver bullion is very difficult. Whether this is based on an intent to purposely delay bullion delivery or merely an antiquated inventory system operating with much more volume than ever before with too little support remains to be seen. I'm sure if you're willing to accept GLD shares or a check instead of reducing warehouse levels the Comex will probably speed things up for you.

Is the gold still there? Good question. I hope the telemarketers aren't getting access to HSBC's holdings and reselling the same AGE's to new clients. It would be an interesting revolving door and no different than CDS's where 50 bets were made on a single mortgage or in this case a single coin. And if the IRA custodian only needs to pay off the final value of the PF AGE via check, such a scheme could never be detected.

roadrunner

jmski52

It will be interesting to me to see how this turns out. Another question I have.... the individual invested in Proof American gold eagles.... and, since it appears these are now carrying a pretty good premium and demand, I wonder if he will actually receive these.

I ordered gold from NW Territorial Mint a couple years ago, and this is the same crap they handed me. They were taking their own sweet time, keeping my money and waiting to buy some coins at an advantageous moment, while I had to sweat it out, wondering if I'd get my money back. This appears to be the same type of garbage.

Isn't there some kind of tax penalty when you take assets out of your IRA?

"Early Withdrawal" from an IRA is subject to a 10% penalty right off the top, and in addition to that you must pay the taxes on any gains, based on your marginal tax rate for the year.

For example, if you are in the 30% tax bracket and take $100,000 from your IRA in an early withdrawal, you pay $10,000 in penalties. And supposing that half of your withdrawal is a gain from having the IRA over a number of years, then your tax on the $45,000 gain would be another $15,000. The $45,000 basis from your original IRA contributions wouldn't be taxed.

(note - I'm not sure whether any portion of the 10% tax is pro-rated from the principal before figuring the gain, but I think that's how it's done.) Either way, there's no getting out of a retirement plan without the government taking a huge chunk.

The original intent of a tax-deferred retirement savings plan such as an IRA was to save on taxes by lowing your take-home earnings (and thereby your income tax for the year) by setting aside a chunk of money that would be taxed after you retired, when your income tax rate would be lower. Now that the handwriting is on the wall - higher taxes are inevitable to fund Congress's out-of-control spending and increasing interest on the national debt - there is no guarantee that your marginal tax rate will be at all lower when you retire. Not only is there no guarantee, but it looks pretty ominous, imo.

Based on that type of assessment, I decided not to keep my retirement money in anyone else's hand besides my own. In my case, most of my IRA was gain, because I had made some good moves over the years, consequently the whole deduct on the withdrawal from my IRA ran to about 45%.

Since that was a little bit before the market crashed, I was lucky enough to get my money out of the IRA, pay the taxes and penalty, and now I have all of my assets in my own control. It feels really good.

jmski52

It's absurd that the government allows gold in an IRA without allowing the individual to have the bullion in hand. There is no good reason for that rule.

Just one more example of how big government is not looking out for anybody but themselves. No surprise there.

tincup

roadrunner, you may be right about payment being made by check/fiat. I definitely do not know the rules for gold being inside an IRA.

But if in fact they can pay you off with check/fiat........ what would be the point in even having gold in the IRA in the first place then? It would just be like another 'paper' investment.

Now that I think about it, the individual in the other thread mentioned that he was having to pay for 'storage' each year also. So this would imply to me that he should be getting physical back. Unless the 'storage' charge is just a bogus fee..... like we found out last year about one of the institutions that were supposedly storing gold for an individual-- it turned out that they were charging storage fees, but they did not have the gold at all. And in the ensuing lawsuit they said this was standard industry practice!

Just think what a scandal it will be...... if we find out that the games being played with GLD, SLV, COMEX, etc., are also being played with the gold in IRA's. Astounding..... ! I remember articles saying that individuals invested rolls of AGE such as the key date 1991 into their IRA's, and of course proofs.... (some articles say that is where a lot of the 1991's are). If those coins are not in fact there......

Physical is the ONLY way to go IMO.

mkman123

physical is the way to go to avoid garbage like that. Hope people start learning that!

tincup can you link the other site? I want to take a look

tincup

link to the site (I tried to post a link you could click, but for some reason it would not work. So here is the address):

https://www.kitcomm.com/showthread.php?t=49966

roadrunner

But if in fact they can pay you off with check/fiat........ what would be the point in even having gold in the IRA in the first place then? It would just be like another 'paper' investment.

There's a difference. The paper "asset" can go completely belly up at any time but gold will always be there until the day the alchemists win. So you get the benefits of physical gold safety and its appreciation until it's time for you to cash out. Anyone holding in bullion in hand eventually has to cash out for fiat if they want to buy things from the store. The only difference in these 2 cases is that you have to trust the custodian and the IRA system to eventually pay you off per the original terms. Even if the IRA custodian sold off your gold wouldn't they still be required to pay you bullion market price on the day you cashed out? If you held shares of GLD whose to say what could happen to the price of that vs. real bullion over time? GLD is only as good as the bullion and derivative contracts that stand behind it. Even if the govt decided to confiscate all bullion gold in IRA's they would still have to pay you its true value on that day. But what if they changed the rules to pay you off in Comex or GLD equivalent price....which could be far less than spot bullion price down the road.

Since this guy put Proof AGE's into his account I would expect that he gets paid based on the current Proof AGE price. If that doesn't happen there is a problem.

Gold is still listed on the USTreasury books at $42/oz...so $50 for an AGE would represent a 20% profit to "face" value (lol). Then again FDR pulled off his trick in 1933-34 by confiscating at the then current price of $20.67 then revaluing gold to $35/oz. once he had it. The people holding cash saw dollars and all assets denominated in dollars (stocks, bonds, etc.) devalue 40% overnight.

roadrunner

yellowkid

Without knowing how the account is set up it is fruitless to speculate, but let me anyhow. I can't believe you would be getting the gold itself, most likely a check, then you pay the taxes incurred, and the 10% penalty, that gold could be costing $1500 an ounce! Never take anything from an IRA before 59 1/2!

InYHWHWeTrust

<< <i>.... Never take anything from an IRA before 59 1/2! >>



Unless you think that there is a good chance 'someone else' might take it from you or freeze it-- to be a ' true patriot in trying times '(i.e. the same entity which gave you the benefit in the first place).

edited to add: I'm with jmski52 on this issue.

tincup

So if an individual placed a roll of 1991 AGE $25 into the IRA years ago.... when they decide to draw out, they will just get the price of the gold? Ouch, considering those are bid at $1400 per coin......

tincup

There again, I suppose it all depends on the fine print of the contract that was signed. but I picture the same kind of loopholes that are built in the SLV, GLD prospectus.

OPA

<< <i>For example, if you are in the 30% tax bracket and take $100,000 from your IRA in an early withdrawal, you pay $10,000 in penalties. And supposing that half of your withdrawal is a gain from having the IRA over a number of years, then your tax on the $45,000 gain would be another $15,000. The $45,000 basis from your original IRA contributions wouldn't be taxed. >>



I believe you are only partially correct for most early IRA withdrawals... Yes, there is a 10% penalty, however, since your IRA is funded from pre-tax income, the entire amount withdrawn is considered ordinary income, regardless of any long or short term capital gains, you are taxed accordingly. Correct me if I'm wrong.

jmski52

since your IRA is funded from pre-tax income, the entire amount withdrawn is considered ordinary income, regardless of any long or short term capital gains, you are taxed accordingly.

Actually, I think that you are correct, for a tax-deferred IRA. The whole amount is taxable at your marginal rate.

I was thinking of a non tax-deferred IRA in which taxes were paid prior to making the IRA deposit. I had both types at one point.

Unless you think that there is a good chance 'someone else' might take it from you or freeze it

There's that aspect, but there is also the fact that the money will be taxed at some point anyway, and who knows at what rate?

But, besides that - if you leave money in a typical retirement account and don't believe that you have protection from inflation, your gains may be eaten by a deteriorating dollar anyway. If you can buy GLD in your retirement account, that can soften the blow, but the risk of the unknown is still there.

Gold in the hand....................is just how I feel about things now, that's really all there is to it.

Konahead

<< <i>My strategy is to buy PM's with cash and then hide it from the government and other thieves. >>

mhammerman

OK, so they have your IRA/401, do you think they just invest it for you (hint, it's not about you)? Nope, but they will collect the taxes for the gov when you take it, not only your 10% early withdrawal but 20% upon withdrawal plus what ever your bracket is in addition so right off the bat you're out 30% and probably another 18% if you're in the 38% bracket so the 50% match by your employer is just sucked up by the gov (10%+38%)...now, if you had kept that money in your pocket in the first place...you'd still have that money and not be on the hook for the 40% drubbin' you took last year. If you really think this is a good deal then you should definitely keep your money in there. Got a gold IRA...just a piece of paper, like all the other paper. Hey, it's not really gold, they just call it that.

yellowkid

I don't see why someone would put gold in an IRA in the first place. The beauty of an IRA is that you can accumulate interest and dividends with taxes deferred until you draw it, with compounding, left alone for a few years, you can have quite a sum, but gold bars would just sit there, throwing off nothing, put your gold in the safety deposit box or under your mattress!! The one benefit I can see from hoarding gold is that you could sell it off in small lots when you retire and not claim the income, assuming it has gone up some.

jmski52

accumulate interest and dividends with taxes deferred until you draw it, with compounding, left alone for a few years, you can have quite a sum

all taxed heavily when withdrawn, as noted above

I don't see why someone would put gold in an IRA in the first place.

You wouldn't. However, if you really didn't want to withdraw from your IRA and still didn't like mutual funds or stocks, you could use GLD if your plan permits it, in order to hedge against a possible drop in stocks or the dollar. Problem is, it's still vulnerable to paper fraud.

yellowkid

<< <i>accumulate interest and dividends with taxes deferred until you draw it, with compounding, left alone for a few years, you can have quite a sum

all taxed heavily when withdrawn, as noted above

Money that you received a deduction on when you saved it, it can sit for 30 years compounding with no taxes , then you pay taxes as ordinary income when you withdraw it, still quite a deal.

adamlaneus

Gold, unfortunately, does not 'compound'. Gold does not pay dividends. Gold does, however, require storage fees.

Which is why I would not consider it a good idea in a tax deferred account.

roadrunner

The beauty of an IRA is that you can accumulate interest and dividends with taxes deferred until you draw it, with compounding, left alone for a few years, you can have quite a sum, but gold bars would just sit there, throwing off nothing, put your gold in the safety deposit box or under your mattress!! The one benefit I can see from hoarding gold is that you could sell it off in small lots when you retire and not claim the income, assuming it has gone up some.

Let's not confuse the 37 years prior to 2008 as the "norm" for eternity when it comes to interest, dividends, etc. What transpired from going off the gold standard in 1971 until 2008 is nothing less than a fiat scam of historical proportions. Call it what you like but that's about as simple as it gets. Don't expect to see those 37 years ever again. Going forward a lot of companies will be lucky to be able to pay dividends and the interest most people are currently earning on investments is peanuts. It was a good con while it lasted and the financial community really played it up by inventing 401K's and other vehicles and suggesting that 7-8% returns would be the norm until retirement. Maybe it still might be if a tad of Zimbabwe inflation gets averaged into the mix. One year at 100% hyper-inflation can certainly "boost" that "return" rate.

I read an interesting little "nugget" in a post today on Kitco. They mentioned putting away a small nugget of gold in the year 1 AD. With 4% interest compounded annually until today, the family of that original "investor" would have enough money (or actual gold) equivalent to the 3X the Mass of the earth. So much for compounding and reality. The same logic could have been applied to the baby boomers all retiring on their hefty 401k's/IRA's over the next 0-15 years all the while continuing to earn 8% annually.

roadrunner

yellowkid

<< <i>The beauty of an IRA is that you can accumulate interest and dividends with taxes deferred until you draw it, with compounding, left alone for a few years, you can have quite a sum, but gold bars would just sit there, throwing off nothing, put your gold in the safety deposit box or under your mattress!! The one benefit I can see from hoarding gold is that you could sell it off in small lots when you retire and not claim the income, assuming it has gone up some.

Let's not confuse the 37 years prior to 2008 as the "norm" for eternity when it comes to interest, dividends, etc. What transpired from going off the gold standard in 1971 until 2008 is nothing less than a fiat scam of historical proportions. Call it what you like but that's about as simple as it gets. Don't expect to see those 37 years ever again. Going forward a lot of companies will be lucky to be able to pay dividends and the interest most people are currently earning on investments is peanuts. It was a good con while it lasted and the financial community really played it up by inventing 401K's and other vehicles and suggesting that 7-8% returns would be the norm until retirement. Maybe it still might be if a tad of Zimbabwe inflation gets averaged into the mix. One year at 100% hyper-inflation can certainly "boost" that "return" rate.

I read an interesting little "nugget" in a post today on Kitco. They mentioned putting away a small nugget of gold in the year 1 AD. With 4% interest compounded annually until today, the family of that original "investor" would have enough money (or actual gold) equivalent to the 3X the Mass of the earth. So much for compounding and reality. The same logic could have been applied to the baby boomers all retiring on their hefty 401k's/IRA's over the next 0-15 years all the while continuing to earn 8% annually.

roadrunner >>

How does gold compound? That is a silly idea. After the recent debacle in the financial world I am still 100k ahead of the money I rolled into an IRA when I retired 6 years ago. I will take a piece of it(not cash of course) to Philly this week to buy myself something nice for the collection!

jmski52

How does gold compound? That is a silly idea.

The minimal interest you get on a dollar investment today isn't worth the risk.

After the recent debacle in the financial world I am still 100k ahead of the money I rolled into an IRA when I retired 6 years ago.

And? Does that mean you were 200K ahead at one point?

coynclecter

With 4% interest compounded annually until today, the family of that original "investor" would have enough money (or actual gold) equivalent to the 3X the Mass of the earth




Only an idiot would claim that you could collect interest for 2000 years. The reality is that any borrower, family, bank, governemnt etc would have defaulted every 10-100 years or so. But the nugget would still be real.

yellowkid

<< <i>How does gold compound? That is a silly idea.

The minimal interest you get on a dollar investment today isn't worth the risk.

After the recent debacle in the financial world I am still 100k ahead of the money I rolled into an IRA when I retired 6 years ago.

And? Does that mean you were 200K ahead at one point? >>



Yes, more actually, it's all on paper until you spend it.

mhammerman

"How does gold compound? That is a silly idea."

Gold is not paper money and you don't keep it on deposit so how could it compound, silly idea...bwwaaaaahhhhhhhhhaaaaaahaaaahaaaaa!

fishcooker

Money that you received a deduction on when you saved it, it can sit for 30 years compounding with no taxes , then you pay taxes as ordinary income when you withdraw it, still quite a deal.

$1000 x 4% for 30 years x 30% taxes = $2270 so yeah not a bad deal.

while

$1000 x 30% tax today x 4% for 30 years = $2270

Those with IRAs bet that taxes won't be higher. Results may vary, however its always better to limit one's portfolio to Risks that correspond to Rewards.

dbcoin

I think the flaw in your math below is that the after tax calculation has to account that the 4% for 30 years has to be taxed at 30% as well, while the IRA accumulates tax deferred so the interest over 30 years would be 2.8% after tax.

Thus

IRA = $2270

and after tax = $1602


I would rather defer taxes now because it is assured they will change the rules in the future so at least I get something extra now.

notwilight

<< <i>

<< <i>Have any of you had any experience with this..... having gold in an IRA and then trying to take it back out? >>



Isn't there some kind of tax penalty when you take assets out of your IRA? >>



Yes, it is pretty stiff but less than the premium on proof gold right now. --Jerry

jmski52

Thus

IRA = $2270

and after tax = $1602

Are you accounting for the past 30 years of inflation at this point in your calculations? If not, you should. And you should use Shadowstats numbers rather than the government's changeable inflation numbers that get fudged whenever things don't look so good.

After all, it's not the nominal dollar value that matters, but the purchasing power.

And as fishcooker notes, Those with IRAs bet that taxes won't be higher.

Not to mention - as coynclecter observes, The reality is that any borrower, family, bank, governemnt etc would have defaulted every 10-100 years or so.

secondrepublic

<< <i>It was a good con while it lasted and the financial community really played it up by inventing 401K's and other vehicles and suggesting that 7-8% returns would be the norm until retirement. >>



This is an important point... how can you possibly have the real economy growing at 3% a year and the stock market growing 8% a year over the long run?

The numbers just don't make sense.

If the Dow Jones index compounded at 8% annually, starting at the current level of ~10,000, it would be reach over 1 million in 60 years! That's over a 100x increase.

Whereas the real economy compounding at 3% annually would increase less than 6x over the same time period.

Ponder that. It doesn't make any sense. One can't outpace the other forever.

jmski52

Ponder that. It doesn't make any sense. One can't outpace the other forever.

Same goes for the GDP vs. the National Debt. Which gets us back to coynclecter's observation, The reality is that any borrower, family, bank, governemnt etc would have defaulted every 10-100 years or so.

I sure don't see the gov't reigning in the spending spree.

ttown

Gold Myths Cheat Sheet

fishcooker

the flaw in your math

The taxes are owed. It matters not whether they are paid today or 30 years from now. Deferral means nothing, except the money resides in a government defined account.

What does matter is the law that governs these accounts. What will the tax rate be? What will you be allowed to withdraw and when? What will the means tests costs be?

The most important variables cannot be accounted for, for the "long term" investor.

dbcoin

the flaw in your math

You still don't get it. It's due to compounding. It's ok. It's all good.

roadrunner

Houston, we have an answer.

Today the guy with this problem posted that he received both packages of proof AGE's from his IRA custodian. It took about a month or more but they finally arrived.

I guess that means you get back the gold you put in, not paper...at least until the rules get changed.

roadrunner

CaptHenway

<< <i>Houston, we have an answer.

Today the guy with this problem posted that he received both packages of proof AGE's from his IRA custodian. It took about a month or more but they finally arrived.

I guess that means you get back the gold you put in, not paper...at least until the rules get changed.

roadrunner >>



That is the way I understand it....you get back the exact same coins you put in.
They must have been buried way back in the storage vault. Probably had to move tons of boxes to get to them.
TD

derryb

if you really want PMs in a retirement account, do it with mining stocks in an on-line, self-managed account. Instant trading, no tax on gains (until you start withdrawing), no tax records needed (until you start withdrawing), and if the market should turn before your retire you have other investment options. I'd hate to build up a half million in bullion and then see the bottom fall out right before I retired.