Buying Physical Gold Within an IRA Custodian Account

[MiniB]

Currently 100% of my savings are within tax sheltered accounts.  This is by design and will continue for many years as money beyond the annual tax-sheltered contribution limits will be used to pay off student loans and prepay a mortgage.

I have a strong distrust of Gold ETFs for reasons that will sidetrack this thread.  For this thread lets assume I refuse to use gold ETFs or that they dont exist.

I did some research into IRA custodian accounts, and it appears the IRS only allows a 3rd party to hold the gold in your IRA.  If you held the gold yourself, it would be considered "self-dealing."

The few places that did serve as IRA custodians for gold that I found, were not trustworthy enough to me.  I never heard of them before my search.

I believe Harry Brown is right that gold is there as insurance in case of crazy crazy times.  During those crazy times, I dont trust an IRA custodian that I never heard of before to "do the right thing" with my gold.

I realize that physical gold ownership in taxable is the ideal way to do this part of the PP but that's just not possible for me at this time, or within the next 15 years.  I think the lesser of two evils between Gold ETF and Gold IRA Custodian is the Custodian.

I think the fees were around 1% annually for the custodian account.  The downside is that rebalancing will be a logistical nightmare.  The 1% fee must come from within the IRA.  All of the gold custodian accounts only had something like a 0% savings account built in.

So I would basically have to transfer extra cash, earning nothing, to sit in my IRA, but with the Gold Custodian, to handle annual fees.  Also the annual fees are unpredictable because they are based on the spot price of gold one year from now.  And I have to keep in extra, because what if I forget to send over more cash the next year, and they liquidate my gold to pay their fees.

Also In order to move money from one IRA to another, it requires an IRA to IRA transfer (typically).  This takes a week or two.  So lets say I want to buy 5 ounces worth of gold to start off my IRA.  I wont know what the spot price of gold in 2 weeks is to transfer that correct amount from my first IRA.  So I have to transfer extra just to be sure, and thats going to be sitting in 0% at the gold custodian.

I havent researched redemptions, but I assume when I turn 59.5, if its a Roth IRA custodian account, I can just have them ship the gold directly to me, for another 1% fee or so.  Then no taxable event occurs because I am just withdrawing my Roth IRA money.  My concern is that the gold shipment is part of the business terms, and I believe those are subject to change at any time.  Another factor to worry me.

Is Gold IRA Custodian a reasonable solution for someone with 100% assets in Tax Sheltered?  If so, which companies are worth looking into?

[rickb]

I bring it up only since you don't mention it, but something else you might consider is GTU, which is a closed end fund that holds allocated, unencumbered, audited gold.  It definitely has its own issues (discussed in other threads here and the giant bogleheads thread), but avoids the custodian issues. 

[MediumTex]

I'm sure there are good gold IRA companies.  I just haven't researched it enough to speak to it intelligently.

Bear in mind that an IRA custodian is also holding the government's money (since they are pre-tax assets).  I always felt like fraud by an IRA custodian would be a lot riskier than normal fraud, since the IRS would also have a claim on the stolen assets.

[Libertarian666]

My understanding is that if you own a corporation, you can create a profit sharing plan in which you are the trustee. Then you can hold any assets yourself.

Note: this is not tax or accounting advice, just my understanding of the possibilities. Check with your tax or accounting professional before taking any action.