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 Replies: 17 / Views: 3,052 |
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Pillar of the Community
United States
655 Posts |
I've seen ads from dealers saying this is legal but I've wondered exactly how it's done. Maybe, someone out there is doing it or someone is a dealer who does it for others, and can share the process. Specifically, does the bank or holding company of your IRA or 401k actually take possession of these coins or bars, or, is the trade just a promissary note? How would the dealer get his money from your account without you facing a tax consequence for early withdrawal?
As an aside, does anyone know if there's a regulation regarding investing in rare coins, in general, from one's IRA? It would be a pretty good way to afford some of the super expensive coins and a good way to hold them for a while.
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Pillar of the Community
 United States
4590 Posts |
Yes you can invest in bullion. No to rare coins. Unless the dealers are also qualified as custodians they can't hold the assets for you. Fees are paid from pre-tax funds (possibly deductible) But as always consult your tax advisor. https://www.irs.gov/retirement-plan...-investmentsQuote:What types of investments can I make with my IRA? The law does not permit IRA funds to be invested in life insurance or collectibles. If you invest your IRA in collectibles, the amount invested is considered distributed in the year invested and you may have to pay a 10% additional tax on early distributions. Here are some examples of collectibles:  Artwork, Rugs, Antiques, Metals - with exceptions for certain kinds of bullion, Gems, Stamps, Coins - (but there are exceptions for certain coins), Alcoholic beverages, and Certain other tangible personal property. Dig in and bullion coins are allowed, nothing numismatic. Quote:
If my IRA invests in gold or other bullion, can I store the bullion in my home?
Gold and other bullion are "collectibles" under the IRA statutes, and the law discourages the holding of collectibles in IRAs. There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved nonbank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion. IRA investments in other unconventional assets, such as closely held companies and real estate, run the risk of disqualifying the IRA because of the prohibited transaction rules against self-dealing. -----Burton 50+ year / Life / Emeritus ANA member (joined 12/1/1973) Life member: Numismatics International, CONECA Member: TNA, FtWCC, NETCC, EveryCountry (online) coin club Owned by three cats and a wife of 40+ years (joined 1983) Author: 3rd Edition of the Sample Slabs book, https://www.sampleslabs.info/Edited by BStrauss3
04/01/2018 09:29 am
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Rest in Peace
United States
17900 Posts |
My wife and I use a investment firm that is operated by her brother. We pay no fees for anything, buying or selling. One of the accounts uses the profits for bullion purchases held by them. We can see the physical metal simply by asking and it is fully insured for any loss.
They are instructed to sell at $26 & $1500. We pay taxes if that happens.
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Valued Member
United States
97 Posts |
It seems this is a growing investment area right now for reasons that escape me. I listened to several NCAA games this year on the radio since we cut the cord years ago. There were many ads throughout the broadcasts for Gold and Silver based IRAs as alternatives to traditional stock/bond based vehicles. No idea how they work though-couldn't keep up with the 1000 word a minute disclaimer at the end.
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Pillar of the Community
United States
1068 Posts |
I would not invest anymore than 10% in precious metals IRA's, and, I would always request to have the physical metals in my hand and possession. I would never buy it on paper.
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New Member
United States
4 Posts |
It is fairly simple to put bullion in your IRA. I filled out the forms with Provident metals and my financial advisor at my bank. I ordered myself and Provident shipped directly to the bank. I have a monster box of silver Eagles and a few Gold Eagles I have never seen. I agree with the 10 percent rule. Silver was $30 an ounce when I bought so it is a risk! However I could pay taxes on the spot price today if I took it out. I WILL probably leave it alone and let my kids worry about it. Ha
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Pillar of the Community
United States
4590 Posts |
Standard IRA (vs. Roth) rules apply... if you withdraw the asset (sell or take possession) before you are 59 1/2 you also owe a 10% penalty.
-----Burton 50+ year / Life / Emeritus ANA member (joined 12/1/1973) Life member: Numismatics International, CONECA Member: TNA, FtWCC, NETCC, EveryCountry (online) coin club Owned by three cats and a wife of 40+ years (joined 1983) Author: 3rd Edition of the Sample Slabs book, https://www.sampleslabs.info/ |
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New Member
United States
4 Posts |
BStrauss3 you are correct on the age penalty. Sometimes I forget everyone is not old as dirt like me. I have played with bullion for several years. It is dangerous if you can't afford to lose don't mess with it. I don't like the market right now I am buying some 90 percent. You always have numismatic value with 90 percent. Everyone loves Morgans. I wonder if the ETF (paper silver) market has not damaged the physical silver market for ever.
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Pillar of the Community
United States
3479 Posts |
Small physical bullion holding companies that claim to have bullion in their vaults scares the heck out of me. It seems ripe for fraud.
There are ETF's that you can easily add to your portfolio with a click of a mouse such as the SLV and GLD but I'm sure you will hear warnings from folks on this forum about ETF's having similar risks.
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Pillar of the Community
 United States
655 Posts |
Quote:
Yes you can invest in bullion.
No to rare coins.
Unless the dealers are also qualified as custodians they can't hold the assets for you.
Fees are paid from pre-tax funds (possibly deductible)
But as always consult your tax advisor. Thanks for the helpful info, everyone. BStrauss3, I assume the rules you posted are fed laws. It's a shame we can't invest in slabbed coins, as well. Still, bullion seemed like the type of boring investment one would buy and then just sock away for years- kind of perfect for a retirement plan. I'm still not too clear if the IRA custodian one is using will let you take possession of the bullion. I guess not because then it would be considered "distributed". So, for example, if Valley Bank were my IRA custodian, they would pay Provident Metals directly for whatever gold/silver coins I wanted and then Valley would hold the coins for me until I retired. Do I have this about right? |
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Pillar of the Community
United States
4590 Posts |
Yup. As long as it's in the hands of a custodian, you don't have CONSTRUCTIVE receipt and it's safely deferred. In a Traditional IRA you deposit PRE-TAX funds and pay tax on the distribution(s). In a ROTH IRA, you deposit POST-TAX funds and pay no additional tax on the distribution(s). Either way you are taxed once. Another trap to watch for is that some IRA Custodians will bill you for the costs yearly (especially holding physical metal). That might be considered an additional contribution and you would have to reduce your yearly contribution by that amount to prevent over contributions. That can get murky. To MikeF's point - if SOMEBODY isn't paying for the expenses of the vault and security and insurance and property taxes and electric... you have to wonder what you really invested in... tchar888 - what you paid for the silver is irrelevant since it's tax deferred. You bought 100 oz at 30 or $3,000. Upon which you paid no tax at the time (it was deducted from your income - if you had no income, you couldn't have contributed to the IRA). If you had not contributed, you would have paid (say) a marginal tax rate of 25% or $750. The assumption was always that you would be in a lower bracket when you withdrew the value of the account and that it would have grown over time. In reality, if you sell 100 oz at $17, that's a distribution of $1,700 and you pay tax at ordinary income rate (say 17% or $289) on that (plus 10% or 170 if you are under 59 1/2). The fact that it wipes out the IRA is irrelevant. As is the fact that the asset lost value. For a ROTH IRA, you paid the $750 at the time and pay no tax (except the penalty, if applicable) when you sell. Which is why a Roth IRA is not ALWAYS a great investment. Again consult a (competent) tax advisor. Not some fool you 'met' on the Internet. -----Burton 50+ year / Life / Emeritus ANA member (joined 12/1/1973) Life member: Numismatics International, CONECA Member: TNA, FtWCC, NETCC, EveryCountry (online) coin club Owned by three cats and a wife of 40+ years (joined 1983) Author: 3rd Edition of the Sample Slabs book, https://www.sampleslabs.info/ |
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Pillar of the Community
7234 Posts |
I don't know if you can call silver or gold bullion an "investment" - if you bought it 15 years ago, OK, then yes it would have been but at todays prices and considering the markup over bid - it/they would have to increase in value considerably to make any profit. Forget the commercials on TV that say silver is going to be $50 an ounce and Gold is going to $5000 an ounce "This Year". Been hearing that for years.
Edited by Mark1959
04/01/2018 6:27 pm
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Bedrock of the Community
United States
20753 Posts |
Keep with standard investments. Using metals of any kind is so chancy. If your young, maybe a little but if old, keep what you have.
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Bedrock of the Community
United States
17884 Posts |
Quote:
They are instructed to sell at $26 & $1500. We pay taxes if that happens. if this funds stay in the IRA and are not actually turned over to you I wouldn't expect you have to pay taxes. The funds in the IRA or simply invest in something else. Quote:
I'm still not too clear if the IRA custodian one is using will let you take possession of the bullion. no you cannot take physical possession of the bullion. A lot of these ads on the radio try and promote a self-directed gold IRA where they claim that if you form an LLC that it can hold the gold the bullion and since you own the LLC you can hold it. This is not legal no matter what the ads say. Quote:
In reality, if you sell 100 oz at $17, that's a distribution of $1,700 and you pay tax at ordinary income rate (say 17% or $289) on that (plus 10% or 170 if you are under 59 1/2). yes you sold the metal that the IRA is holding but as long as you don't take possession of the money it stays in the IRA why would be a distribution? Wouldn't it just be a reallocation of assets within the IRA? |
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Moderator
 United States
54280 Posts |
@conder  |
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Pillar of the Community
United States
3469 Posts |
You would be wise to spend some time with a financial planner. The information provided here may, or may not, be accurate. An internet message board is probably not the best place to get retirement planning advice.
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Replies: 17 / Views: 3,052 |
Posted 04/01/2018 11:55 am
