Investing IRA in physical gold

[moonshot]

Anyone doing this? Is physical gold and silver even acceptable investments for an IRA per the IRS rules?

I'm considering moving IRA funds to an allocated gold vaulting facility like GoldMoney or BullionVault. As far as I understand, those companies don't manage any IRA related paperwork, so I think I'd have to manage that myself. Any advice on this would be appreciated.

[grapejelly]

Re: Investing IRA in physical gold

yes it's acceptable. You need to buy gold coins that are currently minted, not collectibles, OR you can buy bullion that is used for delivery in the futures exchanges. The custodian has to hold the gold.

The real key is to roll your IRA over to a solo 401K which is far better. You can be your own custodian and hold the gold yourself that way. And if you want to get a little aggressive you can hold collectible gold that way too. See http://www.financialsuccessinstitute...gold-your-ira/

[thriftyandboringinohio]

Re: Investing IRA in physical gold

... You can be your own custodian and hold the gold yourself that way. ..

Thanks grapejelly. I followed the link and read the article. I'm still a little dubious that the IRS will accept me being my own trustee and holding the physical gold in my possession. But then again I've always focused on a self-directed IRA, not a 401K, the distinction may hold the key. I'll do more research, because I've been wanting to achieve exactly this for more than ten years.

Do you know, grapejelly, if this has ever been tested in court and been allowed?
Do you have further links?

[skidder]

Re: Investing IRA in physical gold

www.irafinancialgroup.com You'll talk to a tax attorney right off the bat, the relevant tax laws are on the web page so you can read their research and the fees are all upfront and inclusive. good luck

[switters]

Re: Investing IRA in physical gold

Also check out the Entrust Group. They have precious metals IRAs, and you can open a Bullion Vault or Gold Money account in the IRA.

[swgprop]

Re: Investing IRA in physical gold

Another option is to utilize Guidant Financial. They will facilitate a structure whereby your self directed IRA custodian FBO your IRA will be the single member of an LLC with you as the LLC manager. This gives you checkbook control of the funds. The LLC can then invest in anything that isn't specifically disallowed by IRS rules, so you can buy real estate, notes, gold eagles, etc.

[thriftyandboringinohio]

Re: Investing IRA in physical gold

Another option is to utilize Guidant Financial. They will facilitate a structure whereby your self directed IRA custodian FBO your IRA will be the single member of an LLC with you as the LLC manager. This gives you checkbook control of the funds. The LLC can then invest in anything that isn't specifically disallowed by IRS rules, so you can buy real estate, notes, gold eagles, etc.

Thanks swgprop. I'm just curious if these types of arrangements have ever been tested in court. The clear purpose of a custodian is shown here in the definition from investopedia:

Definition of 'Custodian'

A financial institution that has the legal responsibility for a customer's securities. This implies management as well as safekeeping.

No offense, but the whole structure described sure looks vulnerable to being declared a sham transaction. If I have all control and zero effective involvement of a third party that simply rubber stamps my actions after the fact, there is not really any "trustee" or "custodian". Whats to keep me from buying gold coins with the IRA checkbook today, then next Tuesday selling them for cash to buy groceries and gasoline and pay the mortgage? It could become just a tax dodge masquerading as a retirement plan.

I'm all for it and would be the next guy to set one up if I can be confident I won't land in jail for tax fraud.

[Ellen Z]

Re: Investing IRA in physical gold

Sterling Trust is a passive self-directed IRA custodian specializing in self-directed IRAs, and these accounts can be invested in bullion.
http://www.sterling-trust.com/

No offense, but the whole structure described sure looks vulnerable to being declared a sham transaction. If I have all control and zero effective involvement of a third party that rubber stamps my actions after the fact, there is not really any "trustee" or "custodian". Whats to keep me from buying gold coins with the IRA checkbook today, then next Tuesday selling them for cash to buy groceries and gasoline and pay the mortgage?

The coins are within your IRA account. If you take them out to sell for cash, then they are recorded as a disbursement from you IRA account, and you pay the usual taxes on IRA disbursements.

[thriftyandboringinohio]

Re: Investing IRA in physical gold

Sterling Trust is a passive self-directed IRA custodian specializing in self-directed IRAs, and these accounts can be invested in bullion.
http://www.sterling-trust.com/



The coins are within your IRA account. If you take them out to sell for cash, then they are recorded as a disbursement from you IRA account, and you pay the usual taxes on IRA disbursements.

Thanks Ellen. My point is that "...they are recorded..." only if i choose to tell the custodian it happened.

How would Equity Trust Company, the custodian for my self-directed IRA, know that I ever sold some gold coins from my basement stash? The rental property in my current fund with them names them on the deed and the note, they'll know for sure if i sell that, and it will be recorded.

But I can sell coins from my basement stash for cash anywhere, no trace until after I die and someone settles my estate.

I've called them to ask (but not in the last couple years), and Equity Trust told me I can have gold bullion in my account if two things are true. 1.) the bullion is in a third party location like a bank or commercial warehouse (not my own house, or the gas station down the road) and 2). The warehouse or bank signs paper naming both Equity Trust and me as the owner of the gold, and requiring we both get a letter if they give it to anybody.

[Ellen Z]

Re: Investing IRA in physical gold

How would Equity Trust Company, the custodian for my self-directed IRA, know that I ever sold some gold coins from my basement stash?

I researched this quite a while ago, and I only learned enough to answer my own personal questions... but at that time, the way it worked was, you get a check from your IRA account, you use it to buy whatever you are buying... you ship it to a repository in Delaware or some place like that. When you want to withdraw it from your IRA, you let them know and the respository ships it back to you. So, there is a paper trail the whole way (and you pay fees to both the IRA custodian and the repository).

This subject was discussed on iTulip about a year ago and someone said you could take funds from an IRA account and use them to invest in PMs through BullionVault. I don't recall whether all the minute details were discussed and posted... it's on my personal list of things I'd like to research when I get some spare time.

Combining funds from an IRA account with BullionVault really strikes me as the way to go, but you need to have a large enough amount to invest that you can absorb the fees.

[thriftyandboringinohio]

Re: Investing IRA in physical gold

I researched this quite a while ago, and I only learned enough to answer my own personal questions... but at that time, the way it worked was, you get a check from your IRA account, you use it to buy whatever you are buying... you ship it to a repository in Delaware or some place like that. When you want to withdraw it from your IRA, you let them know and the respository ships it back to you. So, there is a paper trail the whole way (and you pay fees to both the IRA custodian and the repository).

This subject was discussed on iTulip about a year ago and someone said you could take funds from an IRA account and use them to invest in PMs through BullionVault. I don't recall whether all the minute details were discussed and posted... it's on my personal list of things I'd like to research when I get some spare time.

Combining funds from an IRA account with BullionVault really strikes me as the way to go, but you need to have a large enough amount to invest that you can absorb the fees.

Ellen, my ununderstanding is exactly like yours, thanks.

Grapejelly is a very smart guy, so is swgprop, and they think there might be a way to actually hold the gold myself in a pickle jar buried in the back yard. I'm keenly interested in doing it that way if I can just find confirmation that the deal stands on a sound legal footing. I really, really don't want to find out at retirement that the IRS thinks I broke my IRA with a disapproved transaction and owe penalties and tax on the whole amount.

[swgprop]

Re: Investing IRA in physical gold

Ellen, my ununderstanding is exactly like yours, thanks.

Grapejelly is a very smart guy, so is swgprop, and they think there might be a way to actually hold the gold myself in a pickle jar buried in the back yard. I'm keenly interested in doing it that way if I can just find confirmation that the deal stands on a sound legal footing. I really, really don't want to find out at retirement that the IRS thinks I broke my IRA with a disapproved transaction and owe penalties and tax on the whole amount.

Your concern is understandable. I would suggest you spend a little time on Guidant's website and possibly call them if you are really interested. They've been facilitating these IRA structures since 2003 or so, I've had mine since 2007. That's not to say the IRS couldn't declare war on the concept tomorrow. There are no guarantees in life, no?