Gold and starting solo 401k

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gregoryhughes's picture
gregoryhughes
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Gold and starting solo 401k

I'm new.

I have developed exact same thoughts, as Chris and others on this site, over many years of observing the house of cards that some mistake for a stable economy, so nice to find people who see clearly. I'm 40yrs old. Moved to WA state from New Zealand. Have built small green home, have solar PV, solar hot water, line dry clothes, etc etc. Currently developing large orchard/veggie area and chicken coup.

My Question: As a sole proprietor of my own massage therapy business I would like to take advantage of the tax savings benefits of a solo 401k. Is it possible to include gold/silver in a 401k? What is the best way to include it? 

Different question: i have run the numbers on current 400k loan (4.99% for 30yr) to purchase land and build the above mentioned green home, and concluded that instead of really going for it and paying off this mortgage fast (as is my instinct) I should be able to beat the savings in interest by instead putting all that money/effort into growing it's value in other ways. Am I essentially right about that?

Davos's picture
Davos
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Re: Gold and starting solo 401k

There are a few companies that offer bullion with 401K's, there are storage fees. Myself I wouldn't go this route, first, the tax on what you put in verses getting taxed on what comes out doesn't make sense.

I don't know how they tax bullion capitol gains in your neck of the woods, but here it is insane.

Second, I myself foresee them looting these accounts a la Argentina style.

Welcome to CM's site.

suesullivan's picture
suesullivan
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Re: Gold and starting solo 401k

I have really come to rethink the value and efficacy of 401Ks as well. I'm actually pulling my retirement funds *out* of ours, year by year, because I'm convince that the 15 pc tax plus 10 pc penalty we pay now (as underearning homeschooling parents) is going to be much less than the tax burden by the time I retire (in a theoretical 20 years). And as Davos notes, the rules can always change. Even if you invest your 401k savings in gold, you could well end up paying 40+ percent in taxes on withdrawls come retirement time...

Fwiw,

Sue

SteveW's picture
SteveW
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Re: Gold and starting solo 401k

Gregory welcome to the site. Being Canadian I can't help with your questions but I'm somewhat intrigued as to why you left New Zealand since from what I know of that country it would be my prime choice to locate if I were somewhat younger than my 67.

It seems to me that the small population yet fairly large land mass, location in the temperate zone and the protective effect of isolation could make the country one of the few refuges of humanity if things go really bad, short of nuclear armageddon. On the brighter side as a resident of BC I know that Western WA offers a very viable opportunity for self sufficiency as you seem to have well in hand. The interior like BC could become even dryer as the climate shifts. 

Woodman's picture
Woodman
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Re: Gold and starting solo 401k
gregoryhughes wrote:

 

Different question: i have run the numbers on current 400k loan (4.99% for 30yr) to purchase land and build the above mentioned green home, and concluded that instead of really going for it and paying off this mortgage fast (as is my instinct) I should be able to beat the savings in interest by instead putting all that money/effort into growing it's value in other ways. Am I essentially right about that?

If you have that mortgage at a fixed rate, I would not pay it off early but be disciplined to save the money you would have used to pay it off early.  then you have more flexibility to use it to pay off the mortgage early in the future or use it for something else.  But don't be tempted to spend the savings on just consumption.  However, if you can pay the off the mortgage very quickly though then that would save a lot of interest payments.  Chris Martenson recently commented you either want to owe a lot or nothing on your house and I agree with that logic.  Oh, and do not speculate with borrowed money. 

Tom

gregoryhughes's picture
gregoryhughes
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Posts: 4
Re: Gold and starting solo 401k

Hi Steve,

We certainly have had plans all a long to move back to NZ. My wife is from Spokane and is a CRNA which is not a job she can follow in NZ.

It is a great career that she wants to pursue, so in the meantime we decided not to keep putting dreams off like many do and pursue the good life right here and now. We will undoubtly repeat the efforts in NZ in the future. Thanks for your interest.

 

ccpetersmd's picture
ccpetersmd
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Posts: 799
Re: Gold and starting solo 401k

Gregory,

First, welcome to the site!

Second, if your CRNA wife can ultimately find a job in NZ, see if she can work some connections for a surgeon (me)!

Third, and to address your questions, you might want to look into a self-directed IRA or 401K. The self-directed 401K would only work if you are the owner of your business and have no regular employees (spouse is okay as an employee, and contract workers are okay). Otherwise, a self-directed IRA (either pre-tax or post-tax) would be available. A self-directed IRA or 401K allows you multiple investment options, to include precious metals that can be kept in your possession. There are some caveats, to include restricted persons and transactions, but these seem to be a much more flexible investment strategy than a traditional IRA or 401K. I have been looking at this for a while, and decided just yesterday to begin the process. After doing some checking (online, discussion with an investment guy, etc.), I decided to go with IRA Club as the facilitator (the one who sets up the account, essentially) and IRA services as the custodian. Once opened, I'll roll in an old IRA and my current 401K, closing the later, and go from there. Both are certified by the Better Business Bureau and have A ratings with no history of complaints. I wish I could tell you more, especially that I have had success with this venture, but I'm just getting started. Still, you might want to check it out. Here are some links to get you started:

Facilitators:

http://www.iraclub.org/

http://www.nabers.com/

Custodians:

https://www.iraservices.com/

http://www.sunwesttrust.com/self-directed-iras

By the way, you don't need a facilitator, but the custodians won't start up an account without the help of either a facilitator or an attorney. I chose the former, as it seemed simpler and perhaps less expensive. Dennis, the owner of IRA Club, has an offer to set up one account for full price (just under $2000), and a second spousal account for half price.

If anyone has any negative experiences with self-directed IRA or 401K, I'd certainly appreciate hearing about them, before I get too far along!

Chris

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Ken C
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Re: Gold and starting solo 401k
ccpetersmd wrote:

Gregory,

First, welcome to the site!

A self-directed IRA or 401K allows you multiple investment options, to include precious metals that can be kept in your possession.

Chris

Chris,

 

Are you sure about having a self-directed IRA that allows you to some how keep the precious  metals in your possesion?  I had such an account with Sterling Trust and the PM had to be kept with a custodian. When I took possession of the PM it was a distribution and became a taxable event. I checked other companies besides Sterling Trust and they all worked the same way.

Tell us how you can have an IRA and have possession of the PM

Thanks,

Ken

 

ccpetersmd's picture
ccpetersmd
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Joined: Oct 12 2008
Posts: 799
Re: Gold and starting solo 401k

Ken,

My understanding is that is the case, and I have heard the same from several sources. It is apparently different with these self-directed IRAs and 401Ks. For the ones that I tentatively plan to set up (one for me, and one for my wife), an LLC will be formed, the funds will be deposited in the banking institution of my choice, and I will have checkbook control of the funds. The funds can be invested in typical securities, real estate, business ventures, precious metals, etc. The caveats are essentially that any investing I do in the "now" can only benefit "future me" (in retirement), and transactions with close family members are prohibited. As for precious metals, it is my understanding that I can take possession, or have them held on my behalf, but if I were to sell them at a later date, the proceeds from the sale must go directly back into the LLC account. The same would apply to rental properties; rental income would go back into the LLC account.

I looked at IRAs through Sterling (and, I think, another group), and you are correct, that in that case (since they are essentially a typical IRA), you cannot take possession of precious metals.

From what I have researched, this certainly seems legit. However, as I mentioned, I am new to this concept, and would appreciate hearing from any who have other viewpoints!

ccpetersmd's picture
ccpetersmd
Status: Martenson Brigade Member (Offline)
Joined: Oct 12 2008
Posts: 799
Re: Gold and starting solo 401k

Damn, I killed a thread prematurely, again!

Seriously, anyone out there have experience, or even second-hand knowledge, about self-directed IRAs and 401Ks?

Montana Native's picture
Montana Native
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Posts: 166
Re: Gold and starting solo 401k

Gregory,

Welcome to the site, Im sure youll find it very helpful. I'm a little younger than you and just up the road in North Idaho. Havent made the great lifestyle changes you have accomplished yet. Housing is still dropping like a rock up here. Taking my 3 year old down to see the BBC Walking with Dinosaurs show in Spokane next weekend, cant wait!

I can personally understand why youd seek shelter from punitive tax brackets. After thinking about the possibilities for the future, my wife and I have decided that PM's and cash with a little personal stock trading makes sense for us now. I cashed out our only 401k  and moved so my wife could get her Pharmacy degree back  in 2002.

 I think the rules of investing will likely change greatly considering actual national debt and the employment prospects for the future.  When things look safer I'll expand our horizon on investments. If the gains of last year are sustainable, hell this will be easy, lol.

As far as that mortgage is concerned, mine will be minimum down and no hurry to pay it off. I think monetization will at some point have real results. 

A bird in the hand is worth two in the bush.                    

 Cheers, TJ

gregoryhughes's picture
gregoryhughes
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Joined: Mar 30 2010
Posts: 4
Re: Gold and starting solo 401k

Chris,

Thanks for the info. Sounds perhaps a little complicated  right now, plus I am still learning all the monetary lingo.

FYI I think 'self-directed 401k' is just another name for 'solo 401k'. It works in my situation- no employees and no plans to do that.

I am sure you could find a job in NZ, see you there :)

gregoryhughes's picture
gregoryhughes
Status: Member (Offline)
Joined: Mar 30 2010
Posts: 4
Re: Gold and starting solo 401k

Thanks Sue,

I guess I will do more reading.

Looks like there is some thought that with deficit, a worthless dollar, inflation, peak oil, climate change etc  (financial collapse) on the horizon that taxes and rules for 401k could change drastically and that any advantages gained 'now' would be completely lost in the ensuing mess. Will read some more...

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