Investing in Silver

[BISHOP]

I have collected silver bars and roundsfor years. Traiding them in when cash gets low.
But this time I want to cash-in an unused IRA that isn't doing anything sitting in the bank. Its not alot because I never actually set up anything.
I have over just over $5000. in the bank.
I want to buy those stackable 1oz or 10oz bars, but it really doesn't matter as long as they are bars. I like bars more than rounds.

My actual question is when I go to sites that sell gold and silver I see the phrase "IRA acceptable".
What does that mean exactly?
I know that if I decide to take out the $5K that I will have to pay taxes and fees. but the "IRA acceptable" thing sounds like I won't.

What do you think?


BISHOP

[smcharchan]

PM me.

Edit. I mean Private Message, not send me Precious Metals.

(Unless you want to)

[Blaubart]

PM IRA's are an interesting, but bastardized, animal.

Yes, it's possible to buy PM with your IRA money. *BUT* - You will never hold them in your hand. You buy them, the dealer sends them to somewhere for storage, usually Brinks or the like. They store them (for a fee of course) until you retire. When you do, you'd think they would give you your PM, but no. They send them back to a dealer where they are sold and you get cash monies.

I can see where this would make sense for a traditional IRA where you have to pay taxes on what you withdraw upon retirement, but for Roth IRA's?

One of the things I like about PM is having them on hand. Unlike all of my paper investments, which most of them aren't even paper anymore, my PM stockpile will be there in the event of an economic collapse. In such an event, do you suppose Brinks is going to do the right thing? Or are they going to cash in your PM and head for the hills? I suppose much depends on their confidence that order will ultimately be restored. If they believe it will and they are right, if they keep your valuables secure through such a collapse, their reputation for future business would be golden. Oh the other hand, it would take them a looong time to earn what they could get away with taking...

[johndoe3]

What Blaubart stated is correct, that the older type precious metals IRA involves a custodian holding the precious metals.

There is a newer type self directed IRA where you CAN be the custodian of precious metals. It involves setting up an IRA LLC and IRA LLC bank checking account, and having an interim IRA custodian who allows self directed IRAs. Once set up the assets are transferred to the IRA LLC. Once there, you can make most any kind of investment (brokerage account, pm account,etc.) except prohibited ones. Examples of prohibited transactions are real estate investments in a house or vacation home where you or your family use it even 1 day a year--that is a prohibited investment. You cannot self-deal or commingle personal and IRA assets. If you have precious metals, they have to be kept securely and separate from personal assets. There are many people who have done it already, although it is not worthwhile for a tiny IRA since there is additional paperwork issues above a normal IRA. The plus side is that you as manager of the IRA LLC can hold the precious metals. There are a number of companies who advertise online who will help you set it up and they clearly warn of the possible pitfalls. Here is one of many.

http://www.selfdirectedira.org/

Google "IRA LLC" or "self-directed IRA LLC" for links to many firms that will assist you in setting up the self-directed IRA LLC and many are also interim IRA custodians to facilitate transfer of assets to your IRA LLC.

[Blaubart]

There is a newer type self directed IRA where you CAN be the custodian of precious metals. ... The plus side is that you as manager of the IRA LLC can hold the precious metals.

Actually, the rules expressly state that the custodian must be someone other than the owner, or virtually anyone in the owner's family, or a company that the owner has more than 50% ownership of, etc.

I guess it's possible for the custodian to be a close friend that allows you to bend the rules and keep your PM's in your safe, or something along those lines.

Basically, Uncle Sam REALLY doesn't trust us to keep stuff we bought using pre-tax money. Too much risk that we'll commit fraud and sell that stuff and pocket the money...

[johndoe3]

Blaubart,
The checkbook IRA is unique and complies with the rules you cited. Here is how it is done (kind of hard to wrap your head around it when new to you). It's kind of like many people we see here on this website who are amazed that a person can buy silencers with a trust and avoid the LEO signoff, fingerprints, etc.

There is a self-directed IRA custodian. The IRA establishes an IRA LLC, and the OWNER of the IRA LLC is the IRA. The IRA LLC needs specific language in it that is different than for a regular LLC to meet Federal IRA regulations. The sole asset of the IRA is the IRA LLC, held by the self-directed custodian. The checking account is owned by the IRA, and the IRA applies for and gets an EIN tax number from the Feds.

You are not the owner of the IRA LLC. You are appointed as sole manager of the IRA LLC and appointed checkbook writing and control. You as Manager act as a Fiduciary for the IRA LLC and maintain possession of the investments for the IRA LLC. In the case of gold and silver (non-collectables, and some other rules too like bullion coins meeting certain levels of purity, so you cannot invest in Chinese gold Pandas, etc.) you maintain physical possession as Manager, or you can use a safe deposit box if you choose.

Here is a third party website for a firm that does the checkbook IRA LLC.
http://www.checkbookira.com/01/Check_Book_IRA.html

About 20% of the way down that page is a section labeled: Imagine The FREEDOM To...
4th item
** Buy approved gold and silver coins and take physical possession, finally no more "paper ETF" gold or "third party risk."

The checkbook IRA LLC does not file an annual tax filing with the Feds, but as Manager, you have to submit an annual report of all transactions to the "self-directed IRA custodian" so that as IRA custodian, they can review it for any prohibited transactions and make any tax filing necessary for the IRA. Some States require an annual tax filing for an LLC even if the Feds don't require it for IRA LLCs. So...this checkbook IRA LLC is not something that anyone can or should do on their own, you need to use a service to set it up properly for all Federal rules, etc. That said, prices vary a lot for this service, so it is wise to price shop.

So yes, unlike a self-directed IRA, the checkbook IRA LLC does enable the Manager to make gold and silver transactions and take physical possession as Manager. Check out some of the checkbook IRA LLC websites online, since they all explain how you can take physical possession of gold and silver as Manager.

In the eyes of the Feds, corporations are people too (as Mitt Romney said).

[BISHOP]

WHOA. Ok thanks everybody.
But Now I'm possibly buying a house so no more investing problems... All my money is going into that hole.


BISHOP