gold/PMs in an IRA

unadilla
By unadilla on Wed, May 29, 2013 - 2:03pm

First time posting on PP here, and not exactly sure if this belongs in the 'investing' group or in the 'gold' group...  I'll try here first!

I've been thinking about buying gold/PMs for several years now, but I'm only now getting around to doing the research on it.  I stopped funding my IRA a couple years ago, partly because my income has dropped considerably since the 'collapse' of 2008-09, and partly because I, like most here, neither trust nor particularly want to 'support' the current system.  The majority of money I have in my IRAs (I've got two- one a regular, and one a SEP) is in cash/MM, as I don't have confidence in the market, or in my ability to play it- so I've been doing some research on buying gold or PMs with the IRA.*  I don't particularly like the idea of buying gold/PMs through an IRA custodian and having no real practical access to it, and my research is suggesting that there are ways to set up an IRA LLC which would allow me to hold approved gold/PM coins in a safety deposit box at my local bank.  I find this to be a very appealing possibility, allowing me to preserve some of my already accumulated wealth in gold/PMs, and in a location I can access should a real crisis arise.  Can anyone advise if this is in fact correct?  Anyone here set something like this up?  I'm finding some websites of financial service companies offering to set such a thing up, but the fees seem a bit steep (at least for me- I don't have huge amounts in my IRAs).  Any advice/experience appreciated.  Thanks!

* Just to head-off a discussion that gets way off-topic (and as a partial introduction, I guess):  I already have owned-outright property and am actively engaged in permaculture development of the property, investing in community, personal skills/resiliency, etc. 

7 Comments

Brady's picture
Brady
Status: Member (Offline)
Joined: Apr 24 2013
Posts: 3
Wondering the same thing

First time poster here too! Thanks for starting this discussion. I have the same questions about LLC IRAs and how feasible such an account would be. The way I understand it, the IRA would only hold one thing: an LLC that you control. Then within the LLC, you could conceivably hold PMs, art, or any other tangible asset in any location of your choosing, including at home. This is different from Gold IRAs where PMs need to be held with a custodian. 

Unadilla: what are the fees you have seen for setting up something like this?

unadilla's picture
unadilla
Status: Member (Offline)
Joined: Feb 16 2009
Posts: 6
@Brady:  Well, there were

@Brady:  Well, there were only a couple sites that had an upfront quote- one was somewhere around $1300, the other was $800 or so, but had some sort of 'subscription/monthly fee' component.  Possibly the first did, too.  I'm highly suspicious of the 'financial services' industry on the whole, and particularly elements of it that google coughs up, though.

It does seem like an IRA LLC is a (legally/regulatory) complex arrangement, probably by design- gotta keep barriers in place for the little people, but if you're 'high net-worth' and have a full-time financial staff you're good to go.  But at least with a superficial understanding of how it all might work I'm finding it quite attractive- particularly the ability to buy land/real-estate/PMs, and even invest in local business, through an IRA LLC.  The amounts I'm dealing with make most of that beyond PMs unlikely, but its still a possibility, and I'd really like that pool of money (however small) in my IRA to be in something tangible, rather than the fiction of 'the market.'

As far as holding art, and holding assets in one's home, my rudimentary understanding is that that isn't allowed… but I could be wrong about that.  I'm hoping someone who has already blazed a trail will chime in….

mutschler's picture
mutschler
Status: Bronze Member (Offline)
Joined: Mar 7 2009
Posts: 26
PM IRA

Unadilla,

I have not heard about being able to have precious metals in your own hands for a PM IRA.  I do have experience with PM IRA's and would advise you to steer clear of them.

When I decided to convert my IRA into a precious metal Roth IRA when conversions from Traditional to Roth IRAs were first available in 2010, I found that most companies charged both an annual storage fee of about $100 and an additional fee based on the market value of the metals.  There was one company, Sterling Trust Co. in Texas that did not charge the market value fee so I filled out a lot of paperwork, bought a bunch of APPROVED coins and bars at my local dealer, and arranged for shipment to their depository in Deleware (where most companies store the metals).  Shortly after sending the PM to the depository, Sterling Trust changed their policy and started charging a 1% of market value fee, with a minimum charge.  I was mad and not happy with their service so I changed to another firm with the same policies and better customer service, Goldstar Trust Co., again in Texas.

Since I only have seven more years until I can take the money out at age 60, I will suffer and pay the fees rather than pay the 10% penalty to withdraw the precious metals, IN KIND (get the goods).  If I knew then what I know now, I would just pay the penalty and withdraw my IRA funds to buy the PM then store it where ever is most accessable and convenient and inexpensive. 

Looking at precious metals as investments, consider it solely a growth investment.  As precious metals do not generate compounding returns of interest or dividends, all additional value is due to reduction in the value of dollars thus there is no advantage to keeping them in a government-controled environment hoping to have tax-deferred compounded growth of principle.  Most importantly, once it is out of a government controlled account, there is less chance of rule changes to take your gold, such as a new tax on the EXCESSIVE investment returns of those prudent enough to invest in precious metals.

Good luck,

Mark

unadilla's picture
unadilla
Status: Member (Offline)
Joined: Feb 16 2009
Posts: 6
@mark-I've considered just

@mark-

I've considered just cashing out the IRAs and paying the penalty, but I estimate that the penalty + income tax would consume 30-40%.  As I understand the self-directed IRA LLC structure, the LLC becomes the custodian of the IRA, so it isn't exactly the same as having a PM IRA through a custodian with the PMs at a depository, etc.  With the IRA LLC (again, as I understand it, and I am NOT a legal, tax or financial professional), the LLC could rent a safety deposit box in a local bank and the PMs could be stored there (though perhaps not as safely as at an insured depository).  An IRA LLC also has mechanisms that would allow investing in local businesses, real estate, etc.  One example I'd read about was using the IRA LLC to buy a second house and renting that house out (you couldn't live in the house until after 59 1/2, and I'm not sure exactly how one would portion out the 'dibursements' of a house....).  It seems to me a way, albeit complicated, to adhere to the letter of the law and minimize government controll of the accounts while greatly increasing personal control.

mutschler's picture
mutschler
Status: Bronze Member (Offline)
Joined: Mar 7 2009
Posts: 26
Promising!

Thanks for bringing it to our attention. Seems like a very promising possibilty so I will look into it. 

robbie's picture
robbie
Status: Bronze Member (Offline)
Joined: Jul 16 2008
Posts: 99
Search the archives for "IRA:

Search the archives for "IRA: LLC" to find a comprehensive discussion of your questions and concerns. The account can be set up in 30 days. Set up the LLC in a state with reasonable fees and reporting requirements. All States are *not* created equal. 

For the structure of IRS-sanctioned accounts and a competitive facilitator:  

http://www.irafinancialgroup.com

For a reliable custodian at the lowest cost:

https://www.iraservices.com/

You're on the right track. Keep reading!

robbie's picture
robbie
Status: Bronze Member (Offline)
Joined: Jul 16 2008
Posts: 99
Forgot the most important

Forgot the most important part:

I have no relationship with, nor receive anything of value from either company mentioned. 

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