IRA Rollover into Physical Gold?

[melveyr]

Hey guys:

So I managed to pry my parents retirement money away from their overpriced broker. My dad really likes the Permanent Portfolio and so we are in the process of severing the relationship with the broker (he doesn't have a clue yet).

I know exactly what I want to do. VTI for stocks, TLT for bonds, SHY for cash, and some GLD/IAU for etfs.

The only problem is that I want some physical gold for them as well. I have never used physical gold in a tax deferred space, but I imagine it is very simple for new contributions. But how does a rollover work? How can we use money from their IRA with their current broker, to buy gold after we make the switch?

Thanks

[MediumTex]

Given the expense and inherent counterparty risk involved in a gold IRA, I would stay away from it.

With that said, however, you might consider GTU as an alternative to GLD/IAU (it's a lot cheaper and simpler).  If I was seriously considering a physcial gold IRA, I would almost certainly go with GTU instead.

[melveyr]

Hmmm. So there is no way to hold the gold yourself with the tax benefits of an IRA? I didn't know that

What about new purchases. I mean, what if for new purchases of gold, one just deducted that from their income and treated the purchase as part of their maximum IRA contributions?

[MediumTex]

Hmmm. So there is no way to hold the gold yourself with the tax benefits of an IRA? I didn't know that

It has to be held by a custodian.

What about new purchases. I mean, what if for new purchases of gold, one just deducted that from their income and treated the purchase as part of their maximum IRA contributions?

The IRA rules require that the IRA's assets be held by an approved custodian/trustee.

One of the reasons for this is to prevent people, for example, from buying classic cars for their IRA and driving them around on the weekends. 

As a general rule, I view gold bullion IRAs as a bad idea, even though the advertising for them makes it sound simple and easy.

[melveyr]

Ah. Ok that makes sense.

Guess I will probably go with a GLD,IAU,SGOL, and GTU split. Does that sound reasonable? Thanks for your help MT

[MediumTex]

Ah. Ok that makes sense.

Guess I will probably go with a GLD,IAU,SGOL, and GTU split. Does that sound reasonable? Thanks for your help MT

If you cannot own bullion in your own possession, some combination of the above is probably the next best thing.

If you go with GTU, make sure you understand the premium and how it expands and contracts and the tax issues that may arise.

[l82start]

i had a gold IRA for a few years and was fortunate that the price of gold jumped as much as it did during that time, the storage fees were $160.00 per year, and when i rolled it over to a vanguard IRA, it took almost a month to get the paperwork back and forth between me the IRA/custodian, the buyer, and vanguard,

i got very lucky in several ways so i don't have to count this as a "learning the hard way" experience but it could have easily gone the other way, i got lucky that gold went up more than enough to cover cost, it might not have, i got lucky that the counter-party risk didn't become a problem with the company's i picked, i got lucky that the month it took to transfer the funds out didn't end up costing to much. and i probably got lucky in ways i don't even realize, i jumped into the gold IRA as a gold bug before i had even begun to study investing and long before i found the pp

[MediumTex]

l82start,

Do you generally agree with my comments on the gold IRA isssue?

I've never done it and you have, so your opinions on it are worth a lot more than mine.

[l82start]

yes... i wouldn't recommend them to anyone either, to much cost, to hard to calculate the counter-party risk, and i was completely floored by the complexity and time it took to roll it over to a traditional IRA, the distance this type of IRA puts between you and your gold is completely counter to the pp understanding of how and why you hold gold. 

[murphy_p_t]

you may wish to review this thread, http://gyroscopicinvesting.com/forum/in ... opic=243.0


for the stocks, you may wish to look at the equivalent mutual fund from vanguard (you're not trading, so no benefit to the etf, only potentially more risk from what i can tell)

i outline some reasons in that thread to stay away from GLD also

[AdamA]

 
As a general rule, I view gold bullion IRAs as a bad idea, even though the advertising for them makes it sound simple and easy.

I've never done this myself, but I have heard that a certificate from the Perth Mint is a reasonable alternative.  It's essentially a gold voucher from the Austrialian government...again, there's counterparty risk with this, so I guess it would depend on how much you trust the Australian government to fork over the actual gold when you retire. 

Anyone have any experience with this?

[AlanT]

@ AdamA

Hey, Prince of Eternia (I've been watching HeMan with my 4 year old for the last 6 months, lol, I forgot how awesome that show is), I don't have any experience with a certificate from the Perth Mint, but realistically, there's counterparty risk in any investment...right?

It's like anything else in the investment arena, or in life in general, you have to weigh your risk to reward ratios before getting involved in anything.

This is an older post, but the process of holding physical gold in your retirement account has become an extremely simple process over the last couple of years.  And, in my opinion, anyone who doesn't hold physical metals is leaving themselves in an extremely vulnerable position considering the current economic climate.

Just my 2 cents.

[iSixty]

@AlanT

Agreed.  It may have been a bit confusing a few years ago, but I just completed a custodian to custodian transfer of part of my IRA to a precious metals IRA, and it was a simple process.

As with everything, there is always some risk, but IRAs are strictly regulated by the IRS, and the custodian is holding your gold in a segregated account.  That's about as good as one can do short of having physical possession of the metals, which is not allowed in the context of an IRA.

[MediumTex]

@AlanT

Agreed.  It may have been a bit confusing a few years ago, but I just completed a custodian to custodian transfer of part of my IRA to a precious metals IRA, and it was a simple process.

As with everything, there is always some risk, but IRAs are strictly regulated by the IRS, and the custodian is holding your gold in a segregated account.  That's about as good as one can do short of having physical possession of the metals, which is not allowed in the context of an IRA.

Are you satisfied with the fees you will be paying compared to simply using GTU or IAU?

[yankees60]

@AlanT

Agreed.  It may have been a bit confusing a few years ago, but I just completed a custodian to custodian transfer of part of my IRA to a precious metals IRA, and it was a simple process.

As with everything, there is always some risk, but IRAs are strictly regulated by the IRS, and the custodian is holding your gold in a segregated account.  That's about as good as one can do short of having physical possession of the metals, which is not allowed in the context of an IRA.

This is from almost seven years ago? Am I correct in assuming that the process may now be even more simple?

Vinny

[ochotona]

Nope! Goldstar Trust Co. is still complicated to deal with! Still manual processes. But I'm satisfied with them. I'm not changing. It's still my own physical gold held in a secure facility.