Precious metal IRA ?

PhilllyEagleFan

I'm thinking of opening a precious metal IRA. Any suggestions with who? Should I buy gold, silver? Coins, bullion? Any advise would be appreciated. Thanks

nibanny

Derryb posted a link about PM IRA. Check the thread at the below link.

LINK

DorkGirl

If I can't hold the metal in my hand, I don't want it.

derryb

will metals still be strong when you are old enough to cash it out? There is also counterparty risk when you do not hold the metal (google MF Global). IRAs are subject to IRS changes between now and retirement.

jmski52

I guess that my initial question would be - why would you want to put your precious metals into an IRA?

What would be the advantages? (Full disclosure - I don't believe that there are any advantages.) I am not being facetious, but if you know something, we all need to know more.

Added: I did think of one reason - as a tax deferred trading vehicle in paper gold or silver. Other than that, I still don't see any advantages.

derryb

even the tax advantages aren't great unless it's a roth. you may defer taxes now on what you contribute, but you're gonna pay them eventually upon withdrawal - probably at a much higher rate the way things are looking.

jmski52

you may defer taxes now on what you contribute

............and on your trading gains or price gains in your asset when you decide to cash out, but that's my question - what's the advantage?

If you hold the physical metals, you "defer taxes" on any gains until you sell. And you don't have to jump through hoops or pay penalties if you want to cash out sooner than retirement.

PhilllyEagleFan

Forgot to add details. The company I work for has a tax deferred profit sharing retirement plan. They allow us, at age 55, to roll over up to 25% into an IRA. Rather than put all of my eggs in one basket I thought about diversifing some. Look at how presious metals shot up in the last two years. What will it be in the next ten years. Dorkgirl has a good point, I would rather have the metals in hand. Can I trust these companys holding them. As far as the IRS, they already know of this money, its part of me retirement. thanks for your advise.

BAJJERFAN

<< <i>Forgot to add details. The company I work for has a tax deferred profit sharing retirement plan. They allow us, at age 55, to roll over up to 25% into an IRA. Rather than put all of my eggs in one basket I thought about diversifing some. Look at how presious metals shot up in the last two years. What will it be in the next ten years. Dorkgirl has a good point, I would rather have the metals in hand. Can I trust these companys holding them. As far as the IRS, they already know of this money, its part of me retirement. thanks for your advise. >>



I believe that precious metals in an IRA are required to be held by a custodian other than yourself and that they are allowed to charge a fee for their services. How do you plan to acquire these PMs? By yourself and turn them over to a custodian or let the custodian do it? Frankly, if it was me I'd stay the hell away.

jmski52

This is the type of thing that would drive me crazy. Your firm will only let you roll over 25% into an IRA? What's the advantage in doing that, since your plan is already tax-deferred? Diversification into metals can be accomplished on paper in an ETF. Does the plan allow for investment into an ETF or are the choices restricted?

If you want full control, the only way is to liquidate and pay the penalty. Otherwise, having another 3rd party holding your metals and dealing with the extra management hassles is exactly that - just another hassle.

You simply have to ask yourself why they make it so difficult for the actual owners to get at their own money. It's not like people are going to go out and blow their retirement on booze, gambling, women and drugs. At least, not all at once.

derryb

roll the 25% into an online brokerage reg. IRA. With this, trade in out of paper metals using short and long ETFs. Upon retirement, roll the remainder into the brokerage IRA or pay the penalty and convert the remaining 75% into a roth online IRA. Note that a conversion to a Roth is a taxable event (amount converted) and converted amounts cannot be withdrawn for five years,.

PhilllyEagleFan

It will be healed by a custodian and I must roll it over into another IRA to avoid penalty. I don't know much about EFTs.

TwoSides2aCoin

I always believed metal was heavier than paper. Yet it's paper that holds metal down, not vice versa. Or so it seems lately.

derryb

ETFs and ETNs are a lot like mutual funds but trade like stocks. You can buy and sell them with an online brokerage IRA. I use Scottrade.

theDabbler

If you decide to use ETFs, then you can probably open an IRA at any large brokerage (I know Fidelity and Schwab have IRA accounts; I can't imagine that any large brokerage doesn't.). Once you've opened the IRA and had the money transferred to it, you can purchase ETFs using your computer to make the trades.

If you decide that you prefer physical gold and/or silver, it gets a bit more awkward. As far as I know, as others have said, YOU can't hold the asset owned by your IRA - you need a custodian. As an example, look at what APMEX says.

That said, there are companies selling "checkbook IRAs" that let you open an IRA, name yourself as custodian, and send you a checkbook that you can use to make purchases for your IRA. You can purchase gold, silver, real estate, etc. this way. I know of one company that says you can buy gold and silver for your IRA and keep it at home, as long as it is segregated from non-IRA owned assets. I'm neither a lawyer nor an accountant - you are responsible for doing your own research and determining what is legal.

A couple caveats: First, there are two types of checkbook IRAs. One of them has the company acting as administrator - you tell them what to do, they do it, and charge you for every transaction. The other opens the account and sends you the checkbook. Second, depending on what you want to buy, you may need to form a LLC inside the IRA. This adds to your overhead.

derryb

Also, be very clear on the "settled funds" trading restriction when self trading with an IRA, States that basically you cannot sell a position until the funds used to buy the position have "settled" (the sell transaction that gnerated the funds and made them available for the next purchase). This can take 3-4 days from the time of the initial sale that made the funds avaiable for trading. Safest way to play this rule is to not buy the next position until the funds have settled. This allows one to immediately liquidate the position if necessary. It also means that it will be a couple of days before you make your next purchase after selling your current position.

By trading only with settled funds one can avoid being stuck in a declining position awaiting the funds to settle. Purpose of this IRS rule is to prevent IRAs from being used for daytrading,.

Yukoncornelius1

<< <i>If I can't hold the metal in my hand, I don't want it. >>



Agree 100% with her, IMHO there is to much risk in having an IRA dedicated to PM's.

Not only do you not have physical control of it you also have fairly large market fluctuations and depending on your age could see your "investment" worth much less when you hit retirement age.
Buy physical PM's as an inflation hedge for current conditions but invest in equities or park it in cash for now if you think the market is overpriced and enjoy the bonus of tax savings on your contribution plus whatever percentage gain you get from your employers matching contribution.

Yukoncornelius1

<< <i>Forgot to add details. The company I work for has a tax deferred profit sharing retirement plan. They allow us, at age 55, to roll over up to 25% into an IRA. Rather than put all of my eggs in one basket I thought about diversifing some. Look at how presious metals shot up in the last two years. What will it be in the next ten years. Dorkgirl has a good point, I would rather have the metals in hand. Can I trust these companys holding them. As far as the IRS, they already know of this money, its part of me retirement. thanks for your advise. >>



Whe you say tax deffered profit sharing retiement plan I assume it is invested in a mix of stocks and bonds?

Hopefully it isn't all invested into the companies stock that you work for as I have heard some horror stories associated with that type of investment (Enron).