Okay, so I finally did it and dumped my 401k for cash, now what?

TexasNationals

I am finally scared enough that I cashed out my larger 401k (still have a newer one I have under $100k in, which I will keep) and now have to decide what to do. I am dealing with mid-low six figures and need a good allocation or avenue. I won't pop all in PM, but 60% or so will go (10% stays cash, 10% in outstanding debt, 10% in coins and 10% in primers, powder, dies, etc.). So what I am looking for is many opinions on what you would do. Let's just say it is $200,000, where do you put it?

Platinum
Palladium
Silver
Gold
Copper
something else

1) I would like to hold the metal, not paper promissory notes
2) I would like to do as much local as possible ( I know several bullion dealers including NTR and Dillon)
3) It won't be at the house, but in SDB or other undisclosed locations, so storage size may become an issue.
4) The more liquid the better

So what say you?

MilesWaits

I read another thread where nearly everyone I respect in this forum wishes they would have dedicated all funds to 90% silver, in retrospect.

Miles

derryb

American Eagles seem to be fairly liquid. Remember that there are higher premiums for a reason, but historically you pass on your premium (if not more) when you sell.
The higher dollar metals require less storage space per dollar of value. I'm thinking platinum is going to be a big winner, may take a while.

My personal preference:
40% silver
40% gold
20% platinum

If you didn't have taxes withheld from your withdrawal make sure you keep enough cash to cover taxes. Also keep in mind that IRS expects taxes to be paid at least quarterly or you will be hit with a penalty at the end of the year. If your withdrawal requires you to still pay taxes you can and should probably make a one-time estimated quarterly tax payment. Seek professional advice or do-it-yerself using the IRS website as a source of information and forms.

Be sure to check tulving.com prices if buying quantity. They are usually very competitive and offer free fast shipping and sometimes a reduction for wired payments.

jmski52

Welcome to the club, TN!

Here's my suggestion - go slow. Pretend that everyone wants your cash and that it is the most valuable asset you own.


What derryb said.

I'm more like 30% silver, 40% gold, 30% platinum. Those ratios aren't much different in their performance.

Pokermandude

<< <i>My personal preference:
40% silver
40% gold
20% platinum >>



Looks about right to me. I'd add 1% gold and subtract 1% silver and/or platinum for each year old you are past 40 (if applicable). The closer you are to retirement, the less % of assets you should keep in the more volatile metals.

Spooly

That is alot of money to put in one "basket".


Derryb - did you get Casey Research e-mail on platinum today? Bearish.



40% in Dividend Stocks with value (low/medium) EPS.

10% in Gold/Silver Mining Stocks.

Gold
30% AGE(15%) & Maples(10%) and Mexican Bullion(5%)

Silver
20% ASE(10%) & Maples(10%)

That is still really heavy on PM's. Hope you own some Land and House.


100% in metals is risky!

acloco

Should have bought 90% four days ago. Sorry.

I think you should consider what you listed as precious metals....not broken down. As they are somewhat....actually...completely tied together.

derryb

OP says he wants it all in physical. I'm bullish on platinum (long term). That is the one metal I would prefer to be in paper, simply because of ease in selling. The only problem I have with a lot of 90% silver is storage.

Weiss

I LOVE precious metals. I was told a couple weeks back at my dentist appointment that I have a second molar that has developed a crack and may require a crown--and I said "YES!!"

I wish I had that fanatical gleam in my eye and faith in metals that I had when gold was $750 and silver was $8.

I don't.

I can't imagine dropping $100k on metals at this point.

Two years ago you could have backed the silver truck up for $17 an ounce. Three years ago you'd have paid $10 or $11. Gold was all you can eat for $800 an ounce 3 years ago. $1000 two years ago.

I suspect I'm in the minority here, but this just doesn't look like a buying opportunity to me:







Holding? Yes, absolutely. And if you haven't yet DEFINITELY cover your SHTF needs. Double it, even. I'd even make small purchases when the opportunity strikes (and maybe $100k is small to TN, in which case: carry on! ). But I think now is the time to snoop out other investments that are lagging and convert.

Pokermandude

Hmm that chart looks familiar...

derryb

Weiss, with all due respect I believe the surge in price since 2006 is a direct result of a US economic policy disaster. Now that the disaster has become worldwide I look for the surge to not only continue, but to strengthen. Until investors feel safe with their investments the wise ones will continue to flock to the safety of PMs. The fact that the central banks causing the disaster are themselves net buyers of gold is a strong indication that I am correct.

I was hesitant to buy gold at $600, then $1000 and then $1400. I remain hesitant but it doesn't prevent me from continuing to buy the dips.

TexasNationals

To answer a few questions that came up

1) I am 31 years old
2) As assumed and stated this won't be in one basket, 40% goes elsewhere and I have other monies in T.I.P.S, IRA's (Roth and traditional), some E.T.F's and muni's)
3) I do need to have physical possession
4) I put 30% aside, well Fidelity put 20% aside for taxes and I put another 10% aside for penalties.
5) I have an appointment with my CPA next week to make sure everything is done right.
6) I just did this, 4 days ago it wasn't an option
7) Only debt is my house, about 70% of the mortgage left, everything else, property (additional), vehicles, NO CC debt, etc.
8) My main fear is stock market crash again, hyper inflation and all kinds of problems, I won't be one of the masses caught with my pants down.
9) I have considered some more property (land only, no structures) here in Texas to hunt, fish, camp and shoot on while leasing the rest to a cattle farm/slaughter house near or get some piggies and chickens and write of a portion for agricultural/farm usage (need to check the laws to be 100% certain).

Baley

Welcome back Weiss. You make the same cases for caution in PMs after such a huge move and pullback as some others here do. It being a PM forum, some will reply, "oh, so you APPROVE of what's going on in the financial world? You LOVE paper? You think all is AOK and politicians are geniuses? Have you stopped beating your wife yet, well have you, YES or NO??" to which you are encouraged to calmly and patiently explain what it is you DO mean..

To TN: Mostly Gold and platinum American eagles, a few rolls of silver eagles, Spice it up with a few proofs and PCGS 70s.

DoubleEagle59

SDB and liquid = GOLD

derryb

<< <i> Spice it up with a few proofs and PCGS 70s. >>


TPG certification, even 69s, could become a major issue down the road if the price gets to the point where the authenticity of American Eagles becomes questionable. Already seeing bogus silver maples hit the market.

secondrepublic

Texas, in your position I would take at least half and use it to pay down the mortgage. Use the rest for PMs, and allocate more to platinum because it's lagged behind AG and AU. Just my 2 cents. I am thinking of cashing out my 410(k) this spring if I switch jobs and will try to do the same.

Timbuk3

My preference is 60% cash, 25% silver bullion, 15% gold Saints !!!

mariner67

I wish you very well and the best of luck!
With all due respect, you paid a heavy price already with the 10% penalty.
Don't forget you also owe fed tax on it all in addition to the penalty.
Kind of makes me think your best odds are 60% PM(I agree with the 40/40/20 G/SP)
Then put the other 40% into lotto scratchers to really increase your odds of success!



PS: only kidding with that old joke.
Best of luck to you.
I admire your conviction.

BAJJERFAN

<< <i>American Eagles seem to be fairly liquid. Remember that there are higher premiums for a reason, but historically you pass on your premium (if not more) when you sell.
The higher dollar metals require less storage space per dollar of value. I'm thinking platinum is going to be a big winner, may take a while.

My personal preference:
40% silver
40% gold
20% platinum

If you didn't have taxes withheld from your withdrawal make sure you keep enough cash to cover taxes. Also keep in mind that IRS expects taxes to be paid at least quarterly or you will be hit with a penalty at the end of the year. If your withdrawal requires you to still pay taxes you can and should probably make a one-time estimated quarterly tax payment. Seek professional advice or do-it-yerself using the IRS website as a source of information and forms.

Be sure to check tulving.com prices if buying quantity. They are usually very competitive and offer free fast shipping and sometimes a reduction for wired payments. >>




If you are still maintaining a job which it looks like you are since you still have the new 401k, you shouldn't have to file quarterly as long as you have regular income. I'd have an accountant prepare an estimated return for 2012 which includes your regular income and that from your ex 401k. You are required to pay at least 90% of your tax obligation before the end of 2012 or face a penalty on the shortage. I assume that your 401k custodian is withholding at least 20%. Also check with your state tax dept as well. They may not be as concerned for small amounts, but could get excited over larger amounts.

TexasNationals

I figure I am way ahead, the 20ve paid%% is for taxes I would have paid if I took as income. Capital gains is what it is. Much of the money was put in at 6k-7k level so the penalty doesn't mean much to me as I pretty much doubled my money. I just don't have any confidence in the market or fed any longer. Cut ties, pay the piper and run like hell. If I loose the other stock market stuff it is far less than half. If I am wrong I am young enough to rebuild easily. Remember I am not buying beer and burgers here.

derryb

<< <i>If you are still maintaining a job which it looks like you are since you still have the new 401k, you shouldn't have to file quarterly as long as you have regular income. I'd have an accountant prepare an estimated return for 2012 which includes your regular income and that from your ex 401k. You are required to pay at least 90% of your tax obligation before the end of 2012 or face a penalty on the shortage. I assume that your 401k custodian is withholding at least 20%. Also check with your state tax dept as well. They may not be as concerned for small amounts, but could get excited over larger amounts. >>


IRS expects estimated quarterly payment of taxes for any income that has not had taxes withheld, irregardless of the fact that other income received has had income tax payments withheld. The quarterly payment of estimated taxes is only for income that has not had taxes withheld. Failure to do so will show up when the annual taxes are filed and the filer shows a large amount of taxes due because he failed to pay them earlier. In such cases not only does the IRS collect the tax at the end of the year, but they will also hit the taxpayer with a penalty. Anyone who has not had enough taxes withheld will also be hit with a penalty.

Justacommeman

I agree with Weiss. MJ

HalfStrike

You are better off with very low mintage moderns that also have the chance to appreciate if PM prices tank.

bluelobster

Holy tax bite batman! Pulled out a mid six figure 401k, because the Fed and the market scare you and you want to put it in a single asset class. I must say that kind of thinking scares me, but to each his own. Good luck to you

pf70collector

You are better off with very low mintage moderns that also have the chance to appreciate if PM prices tank.

I agree, but the time to buy low mintage moderns is directly from the mint when they are offered. Most of the time it is too late to buy into a low mintage coin later because it has reached its price saturation point. For example, I would not touch a $10 2008 W Gold Eagle or a 2009 Gold UHR right now. These coins have reached their price saturation.

I took a loan out for half of my 401K last year. Right now I have not closed my 401K, but am 100% cash in it right now. Half of my 401K loan went into PMs, mostly silver last year. I am cautious buying PMs right now. If the stock market drops it may pull down PMs along with it like it did 2008, the reason I am in 100% cash. If the dow drops to 6-7K I will buy back in. Same goes for PMs. Right now I have more than enough in PMs, mostly in low mintage moderns bought directly from the mint in gold and platinum and self graded certified PCGS 70s and also raw.

DrBuster

Hookers and blow.




Wait, sorry, this isn't jeepforum. I like silver so I'd lean more toward that due to the % gain possibilities, but I'd throw some gold at the pile too. No platinum for me, seems too stagnant...but that might be a good thing?

slinc

<< <i>Hookers and blow.




Wait, sorry, this isn't jeepforum. I like silver so I'd lean more toward that due to the % gain possibilities, but I'd throw some gold at the pile too. No platinum for me, seems too stagnant...but that might be a good thing? >>



HaHa about a month ago I asked a guy at work who is big into pm's where he would put 10k with a straight face he said coke and whores.

Downtown1974

Wow...thats a bold move Texas. I think I would have tried this with the smaller of the two 401ks. JMO

DrBuster

<< <i>
HaHa about a month ago I asked a guy at work who is big into pm's where he would put 10k with a straight face he said coke and whores. >>



Nice!

Any time on the jeep board someboday asks what to do with cash there's always a 'hookers and blow' comment in there.

roadrunner

As much as plat is undervalued it's liquidity and public recognition pales next to gold. It's just not a money substitute. There's also the tricky
issue of the huge premiums dealers charge to handle these. It's not like the smaller 1-5% premiums you will see on gold and silver.

I'd keep the silver to 90% coin and ASE's. Old US gold coins should also be considered as part of the mix since most of those are trading
at fairly small premiums to bullion and still considered numismatic coins. I like being able to buy slabbed MS63/64 Saints for only a 8-13% premium to spot.
On the next sharp move up in gold those premiums will expand. Probably not to the 30-80% levels that we saw in 2010, but probably multiples of the current 8-13%.
And if you go with beaned Saints in those grades there is no more than a $0-$100 premium for a far superior coin. Beaned 64's don't look much different
than lower end generic 65's. But I have seen that as the price of MS64 saints escalates, the bean premium shrinks. That bean premium is maximum when gold prices
are weakest. Generic gold like anything else moves in cycles. After basically 26 months of losing gains and consolidating, they are at very
attractive levels vs. bullion. Same probably goes for proof AGE's if they are still priced near MS64 saints.

guitarwes

Don't forget to take some of that cash and get a good TL rated safe.

At current levels:

60% silver (90% and/or SAE)
40% gold (GAE and graded Saints for little premium)

Get a couple of nice collector guns with some of those new funds, if you're 31 and already are this far ahead in life, you deserve it.

gsa1fan

<< <i>Don't forget to take some of that cash and get a good TL rated safe.

At current levels:

60% silver (90% and/or SAE)
40% gold (GAE and graded Saints for little premium)

Get a couple of nice collector guns with some of those new funds, if you're 31 and already are this far ahead in life, you deserve it. >>



I think OP has more $$ in guns than that 401K

BAJJERFAN

<< <i>Wow...thats a bold move Texas. I think I would have tried this with the smaller of the two 401ks. JMO >>



FWIW he said that he had no option other than cashing it out. Apparently he could not transfer it to the new 401k or roll it over into an IRA.

BAJJERFAN

<< <i>

<< <i>If you are still maintaining a job which it looks like you are since you still have the new 401k, you shouldn't have to file quarterly as long as you have regular income. I'd have an accountant prepare an estimated return for 2012 which includes your regular income and that from your ex 401k. You are required to pay at least 90% of your tax obligation before the end of 2012 or face a penalty on the shortage. I assume that your 401k custodian is withholding at least 20%. Also check with your state tax dept as well. They may not be as concerned for small amounts, but could get excited over larger amounts. >>


IRS expects estimated quarterly payment of taxes for any income that has not had taxes withheld, irregardless of the fact that other income received has had income tax payments withheld. The quarterly payment of estimated taxes is only for income that has not had taxes withheld. Failure to do so will show up when the annual taxes are filed and the filer shows a large amount of taxes due because he failed to pay them earlier. In such cases not only does the IRS collect the tax at the end of the year, but they will also hit the taxpayer with a penalty. Anyone who has not had enough taxes withheld will also be hit with a penalty. >>



In this case the custodian withheld 20% so there is no need to file quarterly. If twas me, some time in mid- December I'd be sending them a check big enough to take me past the 90% requirement and avoid the penalty on the unpaid obligation. I don't see any reason to pay it now.

erickso1

I like the idea of land but instead of using cash I would use as much financing as you can. W/ rates where they are you might as well and redeploy your cash down the path you are going w/ PM's.

BAJJERFAN

<< <i>I like the idea of land but instead of using cash I would use as much financing as you can. W/ rates where they are you might as well and redeploy your cash down the path you are going w/ PM's. >>



Make sure that you have a year's worth of payments on hand for the land so you don't have to sell PMs at a loss to meet the payment.

KUCH

I'll chime in here. Certainly many replies stressed diversification whether it's coins, bullion etc. This is a fundamental strategy in protecting wealth/income.

If you have serious money invested in coins and precious metals, it may be time to look at other options.

Yes, real estate is usually a sound investment. I agree, with interest rates so low, take a loan and if you use your money to create a return you could cover the payment, I would only do this if can cover the payment. I hate interest payments. Why not buy a small home for rental income? You get to depreciate it, have monthly income and when you go to sell, you just might be able to show a loss.

You know the the pitfalls of renting

I know of a person, who recently passed away (74 yrs), when he was in his early 30's, he started purchasing 1 car every few years, as an INVESTMENT. Some cars were new, some were used and he just kept stacking. When he passed away last year, he had 20 cars and the lot sold for 1M.

Bottom line, just invest in real assets that you enjoy stacking whether it's gold, guns or ammo. I totally agree with your recent cash out!!! It's a great time to invest and speculate because deflation is still here.

GOT CASH? I have no doubt you'll do well because you made the first correct move.

alifaxwa2

<< <i>

<< <i>Wow...thats a bold move Texas. I think I would have tried this with the smaller of the two 401ks. JMO >>



FWIW he said that he had no option other than cashing it out. Apparently he could not transfer it to the new 401k or roll it over into an IRA. >>



I don't think thats what he was saying when he said no option. Its a 401K, its always transferable. He was not forced to cash it out.

TWQG

Since you've asked, this is not a move I would have made. Good luck.

Baley

derryb

<< <i>Since you've asked, this is not a move I would have made. Good luck. >>


depends on what investment limitations he was facing with the 401k. If he was limited to US equities, converting to cash was the best move he could have made. I believe many retirement plans tied up in US equities are going to see a much harder hit than they did in 2008.

I personnally would not make the move to PMs until I saw clear indication that the bull market has kicked back in. There may be better PM buy opportunities before that occurs.

Justacommeman

<< <i>

<< <i>Since you've asked, this is not a move I would have made. Good luck. >>


depends on what investment limitations he was facing with the 401k. If he was limited to US equities, converting to cash was the best move he could have made. I believe many retirement plans tied up in US equities are going to see a much harder hit than they did in 2008.

I personnally would not make the move to PMs until I saw clear indication that the bull market has kicked back in. There may be better PM buy opportunities before that occurs. >>



Put protection is your friend. Taxes and penalties are not. You can buy put protection outside of your 401K. There are days I wish the market would crash while being invested in stocks. MJ

BAJJERFAN

<< <i>

<< <i>

<< <i>Wow...thats a bold move Texas. I think I would have tried this with the smaller of the two 401ks. JMO >>



FWIW he said that he had no option other than cashing it out. Apparently he could not transfer it to the new 401k or roll it over into an IRA. >>



I don't think thats what he was saying when he said no option. Its a 401K, its always transferable. He was not forced to cash it out. >>



I guess then he felt that the investment options/choices were not to his liking.

secondrepublic

I think the real risk is keeping your money in a 401(k). People with significant savings in these accounts are like sheep getting constantly sheared by Wall Street. How do you think Wall Street makes its billions? It's from being on the winning side of a lot of trades and transactions mainly involving retail investors like J6P with his 401(k).

I won't even get into the risk of the government eyeing these accounts... they could easily pass a law or regulation requiring 401(k) plan participants to be invested in "safe" government Treasuries. For the peoples own good, of course.

Justacommeman

There is risk every time you cross the street to get to the other side. MJ

derryb

<< <i>There is risk every time you cross the street to get to the other side. MJ >>


How you cross dictates how much risk.

Justacommeman

<< <i>

<< <i>There is risk every time you cross the street to get to the other side. MJ >>


How you cross dictates how much risk. >>



Precisely. MJ

pf70collector

I did a little better in my 401K keeping it all in cash last year. Compared to my janus twenty fund which did exactly zip. The dips and increases in the DOW is very deceiving thinking you are really earning money when it fact you are not. It's the daily traders and their micro second trades siphoning off the 401K little by little. I am sure individual stocks do better but overall the general funds in 401K get wiped little by little.

RGJohn

<< <i>I am finally scared enough that I cashed out my larger 401k (still have a newer one I have under $100k in, which I will keep) and now have to decide what to do. I am dealing with mid-low six figures and need a good allocation or avenue. I won't pop all in PM, but 60% or so will go (10% stays cash, 10% in outstanding debt, 10% in coins and 10% in primers, powder, dies, etc.). So what I am looking for is many opinions on what you would do. Let's just say it is $200,000, where do you put it?

Platinum
Palladium
Silver
Gold
Copper
something else

1) I would like to hold the metal, not paper promissory notes
2) I would like to do as much local as possible ( I know several bullion dealers including NTR and Dillon)
3) It won't be at the house, but in SDB or other undisclosed locations, so storage size may become an issue.
4) The more liquid the better

So what say you? >>



-----------
I say, regarding point #4 that silver is the most 'liquid' although gold is close. Pt and Pd are considerably less so.
As for point #2 I suggest that you call them up, tell them you have $120K (60% of $200K) in CASH and ask what will they sell you for that. In my world that kind of money commands respect.
--------
Congratulations on your decision. I did the same thing although I was then much closer to avoiding the 10% surcharge than you are now. I have never regretted it. Money is a tool to buy oneself the things you want and need. Also, NOBODY loves your money as much as you do. You earn it, you spend it, and when you do something that later proves to have been dumb or at least unwise you are the beneficiary to the extent of garnering an education.

TexasNationals

I think the real risk is keeping your money in a 401(k). People with significant savings in these accounts are like sheep getting constantly sheared by Wall Street.

And B I N G O was his name-o. I am not one who gets kicks by playing it safe. I have been and will continue to be gainfully employed with several talents paying well. To me it was obvious enough that this was the smart and sound move, but what the hell do I know (seriously), but I am gonna have some fun.

TN

Justacommeman

Zero surprises by the replies. A consistent group we have here. MJ