Buying Precious Metals in IRA using LLC to hold metals locally - anyone know about this

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Mozy's picture
Mozy
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Buying Precious Metals in IRA using LLC to hold metals locally - anyone know about this

I'm looking into investing some of my $ into metals and exploring all options.

I have some money in an IRA and been talking to people about self-directed IRAs.  This one company - Republic Monetary Exchange -
www.republicmonetary.com claims that I can open a LLC with a cusodian and this allows people to legally hold my own IRA metals.  Anyone have any experience with this type of arrangement or this company?  Here is a link about IRA LLC - they seem real - http://www.ehow.com/how-does_6175509_ira-llc-work_.html.

This company also says that if you get certain privacy grade metals that were minted by the US (like $20 Libery, $2.5 Indian, ... etc) that you can have those in your IRA and remove the risk of confisiscation.  Anyone know this if is true or not?  

Also interested in best practices people have learned from investing in precious metals with IRA.

 

 

juice's picture
juice
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yes you can

Yes you can hold physical precious metals in your control in your possession in your IRA LLC or your Solo401k.

www.401kliberty.com 

juice's picture
juice
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yes you can

sorry  -double post

Mozy's picture
Mozy
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Thanks for your response.

Thanks for your response.  Have you done this?  Other people tell me this approach is risky, if you are audited, the government will probably count this siutation as a distribution and you'll have to pay taxes on it including the the extra 10% for early withdrawal. 

juice's picture
juice
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 yeah - I currently hold

 yeah - I currently hold physical in my own self directed retirement account.  Some laywers say it is legal and some say it is a distribution.  What's new?  2 lawyers arguing opposing sides of an issue.

I ran some calculations as follows...

purchase $100,000 in PM with IRA.  suppose 5 years later, get audited and it is determined that the $100k is a distribution.  10% penalty = $10k;  28% tax = $28k;  late penalty = $14k;  total due = $52k.  Ouch!

In the past 10 years, gold has gone from $300 to $1500 (approximate) which is an average annual ROR over 10 years = 17%

Assume 17% annual ROR on our hypothetical IRA investment into PM's...$100k with 17% annual ROR = $219,000 after 5 years.  Subtract out the IRS bill and the $100k investment has become $167k free and clear after taxes and penalties.  Average annual ROR = 10.75%.  Not so bad.

Then I calculated the same hypothetical investment after taking the retirement account hit up front.

$100k distribution;  10% penalty = $10k;  28% tax = $28k;  $62k left to invest after penalty & taxes

$62k over 5 years with a 17% average annual ROR = $136k

My conclusion is that the $167k after distribution taxes & penalties is better than $136k especially when the metals may not actually be a distribution in the first place.  The extra profit of $31k more than offsets the risk of running afoul of the IRS regulations as unclear as they are.

juice's picture
juice
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 yeah - I currently hold

double post again - I think I have a disorder of some sort.

Mozy's picture
Mozy
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Thanks for your inisghts.  

Thanks for your inisghts.   I'm strongly considering this option.   

Mikey SF's picture
Mikey SF
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Be Careful

http://blogs.phoenixnewtimes.com/valleyfever/2012/09/republic_monetary_e...

Maybe you can but be careful what you buy!!

robbie's picture
robbie
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Posts: 100
juice wrote: yeah - I
juice wrote:

 yeah - I currently hold physical in my own self directed retirement account.  Some laywers say it is legal and some say it is a distribution.  What's new?  2 lawyers arguing opposing sides of an issue.

I ran some calculations as follows...

purchase $100,000 in PM with IRA.  suppose 5 years later, get audited and it is determined that the $100k is a distribution.  10% penalty = $10k;  28% tax = $28k;  late penalty = $14k;  total due = $52k.  Ouch!

In the past 10 years, gold has gone from $300 to $1500 (approximate) which is an average annual ROR over 10 years = 17%

Assume 17% annual ROR on our hypothetical IRA investment into PM's...$100k with 17% annual ROR = $219,000 after 5 years.  Subtract out the IRS bill and the $100k investment has become $167k free and clear after taxes and penalties.  Average annual ROR = 10.75%.  Not so bad.

Then I calculated the same hypothetical investment after taking the retirement account hit up front.

$100k distribution;  10% penalty = $10k;  28% tax = $28k;  $62k left to invest after penalty & taxes

$62k over 5 years with a 17% average annual ROR = $136k

My conclusion is that the $167k after distribution taxes & penalties is better than $136k especially when the metals may not actually be a distribution in the first place.  The extra profit of $31k more than offsets the risk of running afoul of the IRS regulations as unclear as they are.

IRS regulations are not unclear. Start here:

http://www.irafinancialgroup.com/

 

CheckBookIRA - Jordan's picture
CheckBookIRA - ...
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Joined: Oct 16 2012
Posts: 1
Legal, but Tricky...

Hi Juice,

 

It's certainly legal for an IRA LLC to purchase metals and for the Manager to hold those metals in his/her physical possession.  There are some ins and outs to it though.  The Operating Agreement of the LLC must be written in such a way as to allow this, while still limiting the Manager according to IRA rules.

 

Also, there are restrictions on the types of metals that can be purchased through an IRA LLC.  There are many types of metals you can buy through an IRA, that you cannot buy with an IRA LLC.  It's a area that most people are unfamiliar with, including attorneys and CPAs, but I'd be happy to go over some of the particulars with you.  

 

We have clients in 50 States and 21 countries, and many of them purchase metals through an IRA LLC.  Many of them even ship those metals overseas to be held in Switzerland or Hong Kong.  Feel free to contact me if you have any questions.

 

Regards,

Jordan Sheppherd

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