Gold is often referred to as a hedge against Inflation but discerning investors want to understand why that is the case
That question is answered in this short video
Can I Rollover My 401k Into Gold
Can I Rollover my 401k into Gold
There are several exceptional reasons to purchase Gold:
- Protection against declining Purchasing Power
- Security against Rising cost of living
- Diversity for a conventional Profile of Stocks and Bonds
- Opportunity for dramatic capital growth as investor participation in the Precious metals bull market increases
If you recognize the benefits of owning physical Precious metals but wish to do so inside a tax-advantage Investment account then rolling an eligible 401(k) into a Gold IRA may be the solution you are seeking.
There is a big caveat, however, on transferring a 401(k) into a Gold IRA. Unfortunately, only ‘eligible’ 401(k) accounts can be moved to another tax-advantaged account. ‘Eligible’ in this case means the 401(k) was provided by a previous employer. The active 401(k) you have with your current employer is not eligible for a rollover or transfer.
Eligible 401(k)
Any 401(k) account from a previous employer is eligible for a rollover or transfer to another IRS-approved Retirement account. Investors are allowed to perform one penalty-free rollover or transfer in any given tax year.
non-Eligible 401(k)
Active 401(k) accounts are a mixed blessing. Using pre-tax money to invest for retirement is great (especially if the company matches your contribution!), but most 401(k) plans offer very few choices for where this retirement money is invested. Unless you have a unique 401(k) Plan Provider your only options in an active 401(k) are Mutual funds which hold some mix of equity (Stocks) and debt (Bonds) instruments.
You only have two choices for accessing the funds in your active 401k account:
- 1You can change companies and your 401(k) will then be eligible for rollover or transfer without taxes or penalties.
- 2You can take a loan against your 401(k) account. Your company will have guidelines about when a loan is or isn’t permissible. In general, a 401(k) loan is intended to be used for major purchases like buying a house or responding to a financial emergency. If you tell your Plan Administrator that you intend to purchase Precious metals with the proceeds of the loan they will most likely look at you as if you have three or more heads on your shoulders and then they will disapprove your loan.
Gold Coins for retirement
Gold has played a role in human economics for literally thousands of years.
An interesting fact is that every human civilization in recorded history has used Silver as currency during some point in the civilization’s existence. In most cases, Gold in these societies was used as a store of value while Silver circulated among the people facilitating small transactions like buying groceries or gasoline.
Based on our human history, investing in Gold Coins for retirement makes a lot of sense.
Here’s why:
- Gold tends to increase in price as other financial Investments decline. This diversification provides a stabilizing effect for your overall Portfolio.
- Gold is considered a hedge against Inflation, although some argue that this is only true in the long-term. If we focus on specific periods of intense Inflation like the 1970s, we can see that Gold definitely acted as an Inflation hedge by rising in price from $35 an ounce to $850.
- Capital gains taxes on your Precious metals are not due until you sell or take a distribution from your Gold IRA.
- Ownership of physical Gold (when you hold it in your personal possession) is private. Only you know how much you do or don’t have. This is in sharp contrast to most Investment accounts where your Trustee sends a 1099 form to the IRS every year documenting exactly what you hold in your account.
- Gold tends to protect against both economic turmoil and geopolitical tension. As investors become nervous about the economic environment for whatever reason many of them seek safety in Precious metals.
Like most Investments, there are some downsides to Gold Coins for retirement:
- If you are not careful a thief might take your personally-held Gold. Never talk about your Precious metals Investments – it is nobody’s business, not even your drinking buddies. Remember the World War II adage, “Loose lips sink ships”, and keep your business to yourself.
- Precious metals do not pay dividends or interest. In fact, it costs money to securely store physical Silver and Gold in any tax-advantaged Retirement account.
Convert 401k to physical Gold
Start your Precious metals Portfolio with physical Gold that you have ready access to.
Focus on acquiring Bullion products, not Numismatic or Collectible Coins.
Grab a few 1/10th ounce American Gold Eagle coins and keep them in your ‘grab-and-go’ bag along with the rest of the survival gear. You will pay a premium on these fractional-ounce Coins but they are more useful if you actually have to use them in a barter situation.
After you have a foundation of physical metal in place you can then look for additional ways to gain exposure to the Precious metals.
For many conservative investors it makes sense to convert at least some portion of their traditional Retirement accounts into a self-directed Precious metals IRA.
They understand that their tax-advantaged retirement savings are essentially stuck inside IRS-approved accounts until they reach age 59 ½.
Moving some of these funds into a Gold IRA lets them gain the diversification and protection that physical Gold Investment offers.
How to move 401k without penalty
The process for establishing a physical Gold Individual Retirement Account (IRA) is fairly simple.
You begin by opening up a self-directed IRA account with an IRS-approved Broker-Dealer.
When the IRA account is open you perform a transfer or rollover from your eligible 401(k) to the new self-directed Gold IRA.
Funds inside the Gold IRA may be used to acquire permitted types of Gold and various other Precious metals.
Benefits of Gold IRA
There are several primary advantages of Gold IRAs:
- They provide a way for investors to purchase physical Gold with their tax-advantaged funds.
- They provide diversification for a conventional Portfolio of Stocks and Bonds.
- They hedge against the rising cost of living as Inflation takes its toll.
- Distributions from the account can be taken as cash or the physical metal in the IRA can be securely delivered to the investor.
Can I buy Silver with my 401K
To acquire physical Silver with 401(k) funds you have to first move that money into a Precious metals IRA account.
The Taxpayer Relief Act of 1997 clearly specified that investors could hold physical Silver and Gold in their Individual Retirement Accounts (IRAs). Platinum and Palladium were added in 1998.
Like Gold, the Silver in an IRA has to be of Bullion quality (99.95% pure, or better) and originate from an IRS-approved source like a government mint or third-party refinery.
Best Gold401k
The best Gold 401(k) is a Solo 401(k) but that Investment vehicle is only available to small business owners with no employees.
In fact, a Solo 401(k) is the only type of 401(k) that allows investors to hold physical Precious metals.
Solo 401(k) plans were created in 2001 by the Tax Relief Reconciliation Act and they provide more flexibility than even self-directed IRAs (SDIRA). In addition to the alternative asset classes permitted in an SDIRA, Solo 401(k) investors are allowed to hold insurance products in their accounts.
Unless you are a small business owner with no employees there is no “best Gold 401k” – it simply doesn’t exist.
Gold IRA rollover guide
The most straightforward way to gain tax-advantaged ownership of Precious metals is to perform a Gold IRA rollover.
As a reminder, Precious metal IRAs are the only way (other than a Solo 401k) for investors to purchase physical Precious metals using tax-advantaged funds. It isn’t a matter of whether a Gold IRA is the best way to purchase physical metal or not, the question at hand is how to invest in Gold using our retirement savings without paying taxes or penalties.
The only way to do that is with a Gold IRA or Solo 401(k).
In general, funds can be rolled into a Precious metals IRA from these types of Retirement accounts: eligible 401(k), 403b, 457, Traditional IRA, SEP IRA, TSP, Annuities, Pension plans.
Best way to buy Gold in IRA
The best way to buy Gold in an IRA is to focus on Bullion products over proof Coins or special edition Coins.
If you spend some time reading customer reviews for Gold IRA companies you will notice that most of the complaints involve customers who purchased proof or special edition Coins and then lost money when they liquidated their account.
It is super-simple to avoid this potential problem by NOT buying proof Coins!
One ounce of Gold is worth exactly one ounce of Gold.
Being shiny (proof) or limited in quantity (special edition) or having a certificate of authenticity (who cares?) does NOT increase the value of the Gold Coin. Regardless of how fancy the Coin is, it is worth one ounce of Gold, period. Don’t waste your Investment Dollars on over-priced proof and limited edition Coins.
Another factor to consider when looking for the best Gold to buy in an IRA is the premium that mints and refineries charge for fractional-ounce Gold Coins. In general, the smaller the Coin, the larger the premium will be on a percentage basis.
For example, if we look at APMEX today (05/03/2022) we find that a one-ounce American Gold Eagle will cost us $1988.29. With spot Gold currently at $1870 the premium on the one-ounce Coin is about 6.3%. If we drop down to the 1/10th ounce version of the same Coin we have to pay $281.75 which represents a premium of 50% over spot.
As you can see, these fractional ounce Coins are quite expensive. In a Gold IRA it probably makes sense to avoid these small Gold Coins and stick with one ounce bars and Coins.
Conclusions
Relocating your eligible 401k to Gold without paying taxes or penalties is easy. Simply pick a Gold IRA company and they will walk you through the process.
With all of the economic headwinds currently blowing there has never been a better time to implement the protection that Precious metals have always represented.
Shield your retirement savings today by moving your eligible 401(k) to Gold without penalty.
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Where can I store my IRA gold
Where can I store my IRA Gold
The 1997 Taxpayer Relief Act established the rules governing Precious metals and how they are held in self-directed IRAs.
One of the rules specifies that only an IRS-approved Custodian can hold the IRA metals.
These Custodians are called depositories and they provide secure, insured storage for Precious metals.
Home storage Gold IRA
There are companies online that claim you can set up a home storage Gold IRA and act as your own depository.
In a home storage Gold IRA the investor establishes an LLC to act as the third-party Custodian for their IRA. This Custodian stores Precious metals in a safe in the investor’s home.
The IRS has warned and advised against this strategy for several years saying that investors cannot do indirectly (i.e., via an LLC) what they are not allowed to do directly.
A US Tax Court ruling in November, 2021 (Andrew McNulty et al. v. Commissioner) clarified that home storage is not allowed in self-directed IRAs.
In an opinion issued after the ruling, the Tax Court described home storage Gold IRAs as a “questionable internet scheme” that would be ripe for abuse if it were allowed.
A couple stored IRA Gold at home they owe the IRS more than $300,000
Andrew McNulty et al. v. Commissioner
In November, 2021 a US Tax Court ruled in favor of the IRS over a man and his wife (Mr. & Mrs. McNulty) who had set up a home storage Gold IRA in 2015 and then got audited a few years later. In the audit the IRS had disallowed the McNulty’s IRA.
The couple sued over the matter and lost their case. After the Tax Court ruling the couple owed the IRS over $300,000 in taxes and penalties.
One of the interesting aspects of this case is that the couple’s entire IRA (almost $750,000) was invalidated on the day they purchased their first Gold Coin.
The IRS rules covering IRAs state that when any disallowed transaction occurs, all of the assets in the IRA are considered to be distributed.
In the McNulty’s case, a single Gold Coin purchase was treated by the IRS as a distribution of the entire $750K IRA!
The McNulty’s owed $270,000 in back taxes and about $50,000 in penalties. That is a serious, and probably unrecoverable, financial hit for this retired couple.
Precious metals Custodians
While we may not like the IRS requirement for third-party Custodian storage it is one of the rules that we have to accept if we want to invest in Precious metals using tax-advantaged money.
And, if we think about, this custodial arrangement is no different than the one we have with the Broker-Dealer who currently holds our Stocks, Mutual funds, ETFs, etc. This Broker-Dealer holds securities in our name but we never receive anything physical from them except an account statement each month.
Gold IRA Custodians
In a self-directed Precious metals IRA there are three key roles to be aware of.
First, there is a Trustee who establishes and maintains the IRA account. We refer to these Trustees as Gold IRA companies.
Next, we have the Broker-Dealer who handles the buying and selling of physical metals.
The final role of interest is the Custodian who securely stores the physical metal.
All of these roles are licensed and monitored by the SEC and/or State securities regulators.
Each of the Gold IRA companies has one or more Custodians that they regularly work with. They will recommend that you use one of these Custodians but in most cases they will work with any Custodian that you specify.
Location of the depository is the primary reason you might want to specify a particular Custodian over the ones suggested by the Gold IRA company.
An investor living in San Antonio or Austin, Texas, for example, might like to have their Precious metals vaulted at the Texas Precious Metals Depository in Shiner, Texas because it is within easy driving distance. If the investor wanted to, they could drive to the depository and take physical possession of their metal. With a depository in Delaware or California, the investor in Texas would have to rely on the US Mail or commercial shippers in order to put their hands on the metal in their account.
Gold IRA
Individual Retirement Accounts (IRA) and self-directed IRAs (SDIRA) were created in 1974 by the Employee Retirement Income Security Act (ERISA).
Self-directed IRAs were allowed to invest in a broader range of assets, but the Investment management firms of the day only offered investors Stocks, Bonds, and Mutual funds inside their IRA accounts. Investors gained powerful tax benefits from ERISA but they were still limited to the standard offerings from Wall Street.
The IRA industry changed significantly in 1997 after the Taxpayer Relief Act was passed. This massive tax-reduction legislation added Gold and Silver to the list of assets that could be held in self-directed IRAs. The Act also introduced the child tax credit, the Roth IRA, and lower capital gains taxes.
With ERISA in place, the Investment management companies began to offer self-directed IRAs for Precious metals, Real Estate, and other alternative Investments. Investors were finally able to take full advantage of the tax benefits that were first created by ERISA in 1974.
Gold IRAs made it possible for investors to move retirement savings from existing IRAs and eligible 401(k)s into physical Precious metals.
How does a Gold IRA work
Opening a Precious metals IRA is simple and all of the Gold IRA companies have IRA Specialists to walk you through the process.
These are the simple steps you will follow when you are ready:
- Open an account with a Precious metals IRA company
- Specify whether the account will be a standard IRA (tax-deferred) or Roth IRA (tax-exempt)
- Fund the account with a rollover or transfer from your existing Retirement accounts or deposit new funds directly
- Specify a Custodian where the physical metal will be stored
- Choose the specific bars and Coins you want to hold in the IRA
At this point your Gold IRA is set up and you don’t have to do anything else until you reach retirement age (usually 59 ½).
Distributions from the IRA can be taken as cash, which requires selling the Precious metals, or the Custodian can securely mail the physical metal to you.
This ability to take distributions of physical Silver and Gold creates some interesting possibilities. Once you receive the metal in retirement it is fully outside of the Financial system. If keeping your family wealth private is a priority for you, give some thought to how you might take advantage of this Gold IRA feature.
For example, you could gift the distributed metal to individuals of your choice or leave the metal in a secure location for your beneficiaries to inherit. The metal could also be sold as needed for income or large expenses. It goes without saying that you should follow appropriate IRS rules for disposing of valuable assets.
Benefits of Gold IRA
There are several benefits of Gold IRAs that are typically mentioned on the internet:
- Hedging against Inflation
- Diversifying a Portfolio of Stocks, Bonds, and Mutual funds
- Investing in an asset with zero counter-party risk
- Capital gains on the Precious metals are taxed as regular income instead the 28% rate for Collectibles
The ability to distribute physical metal from a Gold IRA isn’t discussed online, although this could be an important benefit for some investors.
In the current economic environment investors are seeking the first three bennies listed above. Inflation is raging, the Stock markets are correcting (rolling over?), interest rates are rising sharply, and world powers are choosing sides for a potential kerfuffle.
* kerfuffle: a commotion or fuss, especially one caused by conflicting views
Gold IRA reviews
When we want to research potential Gold IRA companies or Gold IRA Custodians, an excellent resource is provided online by companies that compile customer reviews.
These reviews are provided by customers who were motivated to write a review on the company. Whether their experience was good or bad, they wanted to tell people about it.
It is well worth the time spent to look at the reviews posted on these sites, BBB in particular:
Better Business Bureau (BBB)Consumer AffairsTrustLinkTrustpilot
If you read enough Gold IRA reviews you will realize that most of the negative reviews involve the same issue.
The most common complaint comes from customers who purchased proof Coins, limited edition Coins, or fractional-ounce Gold Coins and then lost money when they liquidated their account.
It is super simple to avoid these potential problems. All you have to do is NOT buy proof or special edition Coins, and when possible, stick with one-ounce bars and Coins instead of fractional weights.
Here’s another tip: premiums on American Gold Eagles are very high, regardless of the size of the Coin. Before purchasing Eagles compare them against prices for the Canadian Maple Leaf, Australian Kangaroo, or Austrian Philharmonic.
One last point on Gold IRA reviews: a few negative reviews are OK as long as the company is working to resolve the issue. It is the companies with lots of negative reviews that we want to avoid, especially if they ignore their dissatisfied customers.
Conclusions
In this short post we’ve covered these main points:
- The Precious metals in your IRA have to be stored with a third-party Custodian. Home storage Gold IRAs are not permitted by the IRS.
- You can choose the Custodian who will hold your Precious metals. Some investors opt for the depository closest to their home.
- Setting up a Gold IRA is simple and the Specialists at your Gold IRA company will walk you through the process.
- Online customer reviews are a useful resource when you are evaluating Gold IRA Custodians or companies.
Hopefully you now understand that storing your Gold IRA at home is not allowed. If a Precious metals IRA still makes sense to you, check out the other resources on our website. We provide informative Precious metals content for free as a service to investors and consumers.
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Easily convert IRA to Gold IRA
Easily convert your IRA into a Gold IRA
Investors are facing several significant risks in 2022:
- Inflation is at 40-year highs and continues to rise
- Interest rates are rising sharply on both the short and long end of the duration curve
- Supply chains are strained across the planet
- Geopolitical tensions are mounting as global superpowers square-off and take sides
With all of these crosscurrents happening at the same time conservative investors are seeking safety for their retirement savings.
Unfortunately, the current economic environment is unprecedented for most investors because they weren’t adults during the 1970s. They don’t understand how Inflation and rising interest rates represent a double-whammy for both Stock and Bond markets.
The traditional 60/40 Investment Portfolio is intended to balance risk and reward based on the assumption that when Stocks are falling, Bonds will rise. Unfortunately, that assumption is not valid during current economic conditions.
With the exception of Precious metals, all of the Financial markets have become correlated bubbles due to massive central bank money creation. The markets have inflated based on money printing, not fundamental factors supporting organic growth.
Some financial analysts refer to the current investing world as the “everything bubble” and they discuss possible pins that could cause the bubble to pop.
Alternative Investments
To protect their retirement savings conservative investors are exploring alternative Investments like Precious metals and Real Estate.
Real Estate tends to act as an Inflation hedge but investing successfully in rental property, whether it is residential or commercial, requires specialized knowledge in order to succeed. Most investors should avoid rental properties and limit their Real Estate Investments to just a primary residence for themselves and their family. Rising interest rates are a significant risk factor in current Real Estate markets, both residential and commercial. This is another reason for investors to be cautious with Real Estate.
Precious metals offer two levels of hedging:
- 1They hedge against Inflation by rising in price as Inflation erodes Purchasing Power. This is exactly what happened during the Inflation of the 1970s.
- 2They act like an insurance policy against economic turmoil whether it is caused by collapsing Financial markets or geopolitical tension which escalates into outright conflict.
Gold IRA vs physical Gold
There are at least two ways to convert your IRA to physical Precious metals.
The first method is to take a distribution from your existing IRA. If you do that you will pay a 10% early withdrawal penalty (if you are under the age of 59 1/2) and then pay income taxes on the distribution based on your existing tax rate. After giving the IRS their share of your retirement savings you can then use what’s left to purchase Gold bullion bars and Coins at a local Coin shop.
The second method involves moving some or all of the funds from your existing IRA into a self-directed IRA which holds physical Gold.
The significant difference in a Gold IRA vs physical Gold is whether pre-tax or after-tax funds are used to purchase the metal.
Ideally a Precious metals Portfolio is built on a foundation of physical Silver and Gold purchased with after-tax money. To do this with an existing IRA you have to close the IRA and suffer the tax consequences mentioned above. This doesn’t make sense for most investors.
The alternative is to use the tax-advantaged funds from the existing IRA to purchase physical Gold and Silver inside an appropriate self-directed IRA.
How does a Gold IRA work
When you decide to transfer some of your retirement savings into a Precious metals IRA the process is relatively simple.
If you are a DIY investor you can probably walk through the steps on your own.
All of the Gold IRA companies have IRA Specialists who will walk you through the transfer process and provide as much or as little help as you want.
Step 1
The transfer process starts when you open a Precious metals IRA account with the Investment management company of your choice.
Like all financial accounts, opening the Gold IRA account will involve a little bit of paperwork that can easily be handled online.
Step 2
Now that the Gold IRA account is established you can contact the administrator of your existing IRA account and request a transfer.
The administrator will clarify with you whether you want to perform a rollover or a transfer.
In a rollover the funds are wired directly from one account to the other. The investor never receives the funds as a distribution.
In a transfer funds are distributed from the IRA to the investor and the investor then sends money to the Gold IRA company.
The investor has 60 days to deposit the distributed funds into the new account or the IRS treats the money as regular income and imposes a 10% early withdrawal penalty on investors under the age of 59 1/2.
Unless you want to withdraw some cash from your IRA and pay the taxes and penalties on that cash, it makes a lot more sense to do a rollover. With a rollover the 60-day IRS rule never comes into play and you will not be subject to any taxes or penalties.
After determining whether you want a rollover or a transfer your IRA administrator will have some paperwork for you to complete to get the process started.
Step 3
This is the “hurry up and wait” stage while money is transfered from one account to another or distributed directly to you.
A wire transfer from your IRA to the Gold IRA should be completed within 72 hours.
If you are receiving a distribution the overall process may take longer.
Step 4
After the Precious metals IRA account has been funded you will be able to select the specific bars and Coins you want to hold in the account.
When you are picking from the products offered by the Gold IRA company, always get the most metal for the least amount of money.
This means you want bullion products and you do not want proof Coins, Numismatic Coins, or special edition Coins.
Gold is Gold.
It does not matter whether an ounce of Gold is a shiny proof American Eagle (with a certificate of authenticity, oh boy!) or a scratched-up Maple Leaf – they are both worth one ounce of Gold.
Any premium paid for proof, Numismatic, or special edition Coins is money wasted if your focus is strictly on making a good Investment.
If you want to purchase pretty Coins because you enjoy looking at them, keep in mind that the Coins in your Gold IRA will be held by a third-party Custodian.
You won’t see these Coins until you receive them as a distribution during your retirement. And if you take cash distributions from the account the Coins will be sold and you will never see them in person.
Home storage Gold IRA
There are claims on the internet that investors can store physical Gold at home in an IRS-approved IRA.
The strategy being suggested is that the Investor set up an LLC to act as a third-party Custodian for their IRA. This third-party Custodian holds Precious metals on behalf of the investor and elects to store those metals in a safe in the investor’s home.
This strategy involves a great deal of risk because the IRS may disallow the IRA account when it is distributed.
Instead of appreciating the benefits of a Gold IRA you could end up paying back taxes and penalties assessed by the IRS. On top of that you could be taxed at the 28% rate for collectibles regardless of your current tax rate.
Be very careful if you decide to pursue this Investment strategy.
Benefits of Gold IRA
Gold IRAs provide a way for investors to own physical Precious metals using tax-advantaged funds. That is the primary benefit of a Gold IRA.
Gold IRAs have the same tax benefits as traditional IRAs holding Stocks and Bonds.
The key difference between the two IRAs is that when we take a distribution from our Gold IRA we can choose to distribute either cash or the physical Precious metals. If we want to we can have our metal shipped to us or go pick it up ourselves.
Distributing physical metal from the Gold IRA is a unique benefit for investors who don’t need cash. The distributed metal can then be gifted to your recipients of choice (following IRS rules for gifting, of course), passed-on to your beneficiaries, or sold as needed for income.
In summary
The process of converting an IRA to a Gold IRA is relatively straightforward and it can easily be accomplished by most investors.
To make the process go smoothly you make these decisions ahead of time:
1. Do you want to perform an account rollover or do you need to do a transfer?
2. Which Precious metals products will you hold in the Gold IRA?
With these decisions made the Specialists at your Gold IRA company will help you convert your IRA to Gold.
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Does it make sense to invest in Gold
Does investing in Gold make sense
When we want to decide whether a Gold IRA Investment makes sense or not, we have to first define what “good Investment” means.
You and I, along with every other investor, have unique Investment preferences, time horizons, and tolerances for risk. A “good” Investment for you might not be a “good” Investment for me and vice-versa.
Deciding what a “good” Investment looks like is also closely tied to our outlook on the economic future.
An investor who believes that Inflation is the most significant factor in their Investment decisions may define a different “good Investment” than the investor who thinks Inflation is a transitory phenomenon.
Because there are an infinite number of variables in the ‘Good Investment or not’ question this article will focus on a hypothetical Investor who has one or more tax advantaged retirement accounts (IRA, 401k, 403b, TSP, etc.). Their Investment Portfolio consists of Stocks, ETFs, and Mutual funds.
This investor has assessed the economic future and decided that these are the major factors they need to address in their Investment Portfolio:
- Rapidly rising Inflation that is not transitory
- Rampant money printing by global central banks
- A Global Economic Reset by the year 2030
- Stock and Bond markets in multi-decade long bubbles
- Physical Gold is the only asset with zero counter-party risk
- Precious metal prices have been suppressed while all other Financial markets have been inflated with printing press money
For all of these reasons our theoretical investor has decided that Gold, while it may or may not be a “good” Investment, is the only Investment that makes sense in the current economic environment. Instead of focusing on making a “good” Investment our investor is focused on the financial security that Precious metals have always represented.
In other words, this investor has decided that a “good Investment” at this point in time has more to do with financial protection than it does with trying to increase their net worth through investing. They are choosing to focus on a return OF their Investment rather than a return ON their Investment.
Based on their assessment of the economic future and the current economic environment, our hypothetical investor reaches the conclusion that it does make sense to invest in Gold at the current time.
Having reached this decision, our investor is ready to purchase Precious metals but still has some decisions to make.
Ideal Precious metals Portfolio
The ideal Silver and Gold Portfolio is built on a foundation of physical metal that the Investor has easy access to. The metal can be stored in a local vaulting facility (in larger cities), a home safe, or a hole dug in the back yard.
These personally-held Precious metals form the foundation of an ideal Portfolio and they are purchased with after-tax income outside of any tax-favored retirement account.
After taking personal possession of some physical Silver and Gold we can then build the rest of our Precious metals Portfolio using tax-advantaged funds from our retirement savings. Self-directed Precious metals IRAs (also known as Gold IRAs) give us a way to purchase physical Silver and Gold using our existing retirement savings.
What is a Gold IRA rollover
In a Gold IRA rollover you take funds from a qualifying Retirement account (IRA, 401k, 403b, 457, TSP, etc.) and “roll them over” to a Gold IRA account.
The IRS allows us to move retirement money from one account to another without taxes or penalties but we can only perform a single move in any given tax year. As long as account types are maintained there are no tax consequences from performing an IRA rollover.
Account type refers to tax-deferred vs tax-exempt. Funds from a Roth IRA (tax-exempt) can only fund a Gold Roth IRA and funds from a Traditional IRA (or 401k, etc.) (tax-deferred) can only fund a Traditional Gold IRA.
The term “rollover” is often used generically to refer to both rollovers and transfers. There is a key difference between an account rollover and an account transfer but each process accomplishes the same objective: moving existing retirement savings into the Gold IRA account.
Rollover
When an account is rolled over the Investor never personally receives their retirement funds. Instead, the money is transferred directly from one account to another.
Transfer
In an account transfer the Investor takes a distribution from their retirement account and personally receives a check or wire transfer. The distributed funds have to be deposited into another IRS-approved retirement account within 60 days.
Any funds that aren’t redeposited within 60 days will be treated as normal income by the IRS and early withdrawal fees will be assessed on Investors under the age of 59 ½.
The 60-day countdown and potential penalty can be avoided by performing a rollover instead of a transfer.
Roth Gold IRA vs Traditional Gold IRA
Roth IRAs are typically used when an investor believes their taxes will be higher in retirement than they are today.
A Traditional Precious metals IRA appeals to Investors who expect their tax rate to be lower during retirement. Pre-tax income is set aside today with the expectation that is will be distributed at a lower tax rate during retirement.
Gold IRA Pros and Cons
Like all Investments, Gold IRAs have pros and cons.
As mentioned above, the ideal way to own Precious metals is to use after-tax money for the purchase and then take personal possession.
Gold IRAs, while not ideal, provide the only way to purchase Precious metals using tax-advantaged retirement savings.
Pros
- Gives Investors a way to purchase physical Gold using tax-advantaged Retirement accounts
- Provides diversification for traditional Portfolios of stocks and bonds
- Acts as an Inflation hedge
- Funds in the IRA can be distributed as Gold or cash
- Capital gains accrued in the IRA are taxed as regular income, not the 28% rate for Collectibles
Cons
- Gold must be purchased inside the IRA account. It isn’t possible to move already owned Gold into the IRA
- There are fees for buying and selling Gold
- There are fees for storing Gold
How does a Gold IRA work
These Gold IRA tax rules help explain how a Gold IRA works:
- Precious metals in an IRA are not taxed at the 28% rate for collectible items.
- When distributions are made from the account capital gains are taxed as regular income at the investor’s current rate.
- Account transfers and rollovers must be completed within 60 days or the distributed funds will be treated as regular income and the 10% early withdrawal penalty will be assessed on investor’s who are under age 59 1/2.
- Investors can have as many IRA accounts as they want but the combined annual contribution to these accounts is limited to $6,000 ($7,000 over age 50) total in any given tax year.
- Only IRS-approved forms of Gold, Silver, Platinum, and Palladium are allowed. Bullion bars and Coins of specified fineness (99.5% pure, or better), along with government minted Coins. Numismatic Coins are not allowed.
- Metal that is already owned by the investor cannot be transferred into a Precious metals IRA.
- Distributions can be taken in the form of cash or physical metal.
- Capital gains distributed from a Precious metals IRA are taxed as ordinary income – not the 28% rate for collectibles.
Gold IRA reviews
Picking a Gold IRA company to work with can be a daunting task. There are numerous companies to choose from and they all claim to be the best.
A good place to start your research on candidate Gold IRA companies is the online customer reviews that are gathered by these companies:
Better Business Bureau (BBB)Consumer AffairsTrustLinkTrustpilot
These reviews are written by actual customers whose experience with the given company was either good enough or bad enough that it motivated them to write a review. Seeing what they have to say is well worth the time spent.
We want to see that most of the reviews about a company are positive. If there are negative reviews we want to see a response from the company indicating their attempt to resolve the issue.
Negative reviews can be particularly informative because they demonstrate how a Gold IRA company works (or doesn’t work) to keep their clients happy. There is nothing wrong with a negative review as long as the company is working to resolve the issue.
After reading Gold IRA reviews for several companies you may notice that most of the negative reviews involve customers who purchased proof Coins and subsequently lost money when they liquidated their account. You can avoid this potential scenario quite simply – do not buy proof or special edition Coins inside an IRA.
Conclusions
In this short article we used a theoretical investor to illustrate that it does make sense to invest in Gold today.
All investors can benefit from allocating a small percentage of their Investment Portfolio towards Precious metals. Portfolio models show that the traditional 60/40 Portfolio of Stocks and Bonds will perform better throughout all market cycles with a 3% to 10% allocation of Gold.
An ideal Precious metals Portfolio is built on a foundation of physical metal that the investor has personal control of.
With that foundation in place, Gold IRAs make sense for investors who want additional exposure to physical Silver and Gold.
Tax-deferred retirement funds (IRA, 401k, 403b, TSP, etc.) are essentially stuck inside some kind of IRS-approved account until you reach age 59 ½. Moving some of these funds into a Precious metals IRA provides diversification and protection for your overall Investment Portfolio.
Hopefully this missive has helped you decide that it does make sense to invest in Gold. The only question is how you, personally, want to make your Investment. You are invited to explore all of the resource here on the Satori Traders website as you continue your Investment journey.
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Holding Gold in an IRA
Can I take physical possession of Gold in my IRA
Investors are scanning the current economic environment and feeling nervous.
Stock markets have been inflated to nosebleed levels over the past decade but that run appears to be ending.
Interest rates are rising sharply while the Federal Reserve is threatening additional increases at the next several FOMC meetings.
The traditional 60/40 Portfolio of Stocks and Bonds is facing a two-pronged attack as both asset classes fall in value at the same time.
Economic conditions are further threatened because geopolitical tensions are rising dramatically and supply chain issues are worsening.
Investors are understandably anxious about their retirement savings. They are looking for ways to diversify and protect their Portfolio of Stocks and Bonds.
Unfortunately, most asset classes have been inflated to bubble levels in recent years so there are very few choice when it comes to alternative Investments.
Gold and Silver have been mostly out of favor since 2012 which leaves them tremendously undervalued today relative to other asset classes.
Many conservative investors are considering Precious metals as an alternative Investment and currently asking this question:
“Can physical Gold be held in an IRA?”
Because of the 1997 Taxpayer Relief Act, the answer is,
“Yes! Physical Gold can be held in an IRA.”
This sweeping tax relief Bill allowed investors to purchase and hold physical Gold and Silver in their self-directed IRAs. In 1998 Platinum and Palladium were added to the list of permitted metals.
How does a Gold IRA work
IRAs (Individual Retirement Accounts) were created in 1974, including self-directed IRAs which had a wider range of permitted asset classes.
Despite the IRS rules, self-directed IRAs were limited to just Stocks, Bonds, and Mutual funds because those products were the only ones offered by the Investment management companies. Investors were unable to take full advantage of self-directed IRAs until 1997.
After 1997 asset classes like rental Real Estate and Precious metals were permitted in IRAs and Investment management companies started to offer IRA accounts that could hold these assets.
One of the most important IRS rules to understand is that the physical metal held in an IRA must be held by an IRS-approved third-party Custodian. This
That means you won’t be able to hold your Gold at home if you want to purchase it using money from your existing Retirement accounts. A Gold IRA is the only way to purchase physical Precious metals using tax-advantaged funds.
In a self-directed Gold IRA the investor purchases physical Gold and that metal is held in their name by a third-party Custodian. This is the same arrangement as you have with the Broker-Dealer who holds your Stocks, Bonds, and Mutual funds. Whether the asset is Precious metals or a security, it is held in your name by the Custodian or Broker-Dealer.
Gold IRA tax rules
The Taxpayer Relief Act enacted several important Gold IRA tax rules:
- Gold, Silver, Platinum, and Palladium Coins and bars were now allowed
- Metals must be of Bullion quality (99.5% pure) or better
- Collectible or Numismatic Coins are not allowed
- Metal that the Investor already owns cannot be moved into the IRA. Only newly purchased metal can be held in the account
- Physical metal can be distributed from the account or the metal can be sold to make a cash distribution
- Distributions are taxed as ordinary income at the investor’s current tax rate instead of the 28% tax rate for Collectible Coins
Besides these rules that apply specifically to physical Precious metals, the IRS treats Gold IRAs the same as a traditional IRA holding Stocks and Bonds.
Precious metal IRA rules
These points relate to the Precious metal IRA rules and how they interact with other Investment accounts.
- Investors are allowed to have more than one IRA account open at any given time
- Opening a Gold IRA does not affect existing Retirement accounts
- Investors can move funds from one tax-advantaged account to another without penalty
- Only one account rollover or transfer is allowed in any given tax year
The bottom-line is that Gold IRA investors can move some or all of their existing retirement savings into physical Gold without paying any taxes or penalties in the process.
Gold IRA fees
There are several fees that occur in a Gold IRA that don’t occur in traditional IRAs. The difference is caused by the physical metal held in the Gold IRA.
Precious metals can only be bought and sold by licensed Broker-Dealers and these agents charge a fee for their service. To set up a Precious metals IRA the investor will pay a Broker fee to purchase the metal that will be held in the account.
After they have been purchased these valuable physical assets have to be securely stored. And, as a reminder, the IRS requires that a third-party Custodian hold the metal. That means somebody (the investor) has to pay an annual fee to securely store the Precious metals held by the IRA.
When it is time to make a distribution from the Gold IRA account the investor has two choices. They can elect to receive the physical metal held in the account or they can sell the metal and take a cash distribution. To sell the metal the investor will pay another Broker fee but this fee can be avoided by distributing the metal instead of cash.
Here are the three Gold IRA fees to be aware of:
- Broker fee to purchase metal
- Secure storage fee
- Broker fee to sell metal
Because all of the Gold IRA companies have to charge these fees (or absorb them as an overhead expense) we can use the fees as a comparison factor when we are selecting the best company to work with.
Home storage Gold IRA
As you are researching Gold IRAs you may see advertisements for Home Storage Gold IRAs.
In a home storage Gold IRA the investor is supposed to create an LLC to act as the third-party Custodian who holds the metal in the IRA. This Custodian then elects to hold the metal in a safe in the investor’s home.
Obviously this strategy is intended to skirt around the IRS rules governing Precious metals IRAs.
If you choose to walk down this path understand that it is an extremely high-risk strategy and be very careful using it. The IRS will be looking for any reason to disqualify the Custodian (the LLC) of the IRA and if they succeed in doing so the entire IRA will be void and the investor will be subject to back taxes and penalties.
Benefits of Gold IRA
The primary benefit of a Gold IRA is that it represents the only method for purchasing physical Precious metals using tax-advantaged funds.
A Gold IRA is NOT the best Gold Investment available.
Unfortunately for investors in tax-deferred retirement plans (401k, 403b, 457, TSP, IRA, etc.) their money is essentially stuck inside some kind of IRS-approved Investment vehicle until they reach retirement age (59 ½ in most cases).
Typically the only Investment products offered in these retirement vehicles are Mutual funds of one flavor or another. Investors have very few choices and zero opportunity to diversify their accounts into alternative Investments.
Because tax-advantaged retirement funds are going to be stuck somewhere, a Precious metals IRA represents an opportunity for investors to diversify and protect their retirement savings.
What is a Gold IRA rollover
A Gold IRA rollover is the simplest ways to gain tax-advantaged ownership of Precious metals.
In general, funds can be rolled into a Gold IRA from these types of Retirement accounts: eligible 401K, 403b, 457, Traditional IRA, SEP IRA, TSP, Annuities, Pension plans.
Unfortunately, only funds from an eligible 401K account can be used to fund a Gold IRA. “Eligible” means the 401K account is from a previous employer that the investor no longer works for. 401K accounts provided by a current employer are not eligible for the Gold IRA rollover process.
Gold IRA reviews
Investors can perform due diligence by reading online Gold IRA reviews.
Gold IRA reviews can be found on these sites:
Better Business Bureau (BBB)Consumer AffairsTrustLinkTrustpilot
Negative reviews are OK as long as the company is working to resolve the issue.
Best Gold IRA
These factors can be used to select the best Gold IRA company to work with:
- A+ rating at Better Business Bureau (BBB)
- 10+ years in business
- Insured storage
- Segregated storage for metals
Conclusions
Rising Inflation and mounting World tensions make it more important than ever to hold Precious metals.
Investors are finding that they can hold Gold in an IRA and they are moving their retirement savings into physical Precious metals.
A self-directed Gold IRA lets investors purchase physical Precious metals using money from their tax-advantaged Retirement accounts.
This is a great solution for investors who want to gain the protection of physical Gold without adding any new money to their retirement savings.
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Regal review
Regal Assets Review 2022
With the Regal IRA from Regal Assets investors can diversify into Precious metals and Crypto in the same account.
This unique Investment vehicle combines the security of physical Gold with the dynamic growth potential of digital assets.
Investors in 2022 are facing a perfect economic storm. As Inflation rages and interest rates rise, Financial markets are teetering on the edge of a very tall cliff. The traditional Investment Portfolio of Stocks and Bonds is unlikely to weather the coming storm without significant damage. Diversifying into alternative assets like Precious metals and Crypto is not just good Investment advice at this point, it may be critical to financial survival. The Regal IRA from Regal Assets provides investors with the security of Precious metals while giving them exposure to the unlimited growth potential of Crypto.
diversity
A combination of physical Precious metals and digital assets provides both protection and growth
security
Gold acts as financial insurance by increasing in price during periods of persistent Inflation and economic uncertainty
dynamic growth
Overall market cap of digital assets is growing rapidly as Crypto gains wider adoption among retail and institutional investors
Diversified Investment Portfolio
Diversifying into alternative assets protects a Portfolio from unexpected shocks in any one sector
Exposure to digital assets
Growing adoption of Crypto as an Investment vehicle could lead to higher prices for all digital assets
Inflation hedge
Gold holds its value while Inflation causes currencies to lose purchasing power
Here’s what people are saying about Regal Assets on Birdeye
Polite, Professional, Personal Touch
I would Definitely recommend Investing with Regal Assets, Christian and his Team are Polite, Professional and make Investing not only an Easy experience but their Personal Touch let’s you feel Confident that you are in Great Hands for the Future.
John G. on Birdeye 12/16/2021
Did my due diligence – selected Regal Assets
I did my due diligence and selected Regal Assets to work with in establishing my self-directed IRA. Christian Howard was great to work with in making the process easy! He is experienced and informative. I’m confident that I made a good strategic decision.
George S. on Birdeye 12/14/2021
Good job Regal Assets
My first time doing a SDIRA. Christian and Jannette helped me setup a crypto IRA. Had lots of questions for Christian which he patiently answered. Now that the process is complete I can relax. Good job Regal Assets.
Lc R. on Birdeye 11/29/2021
Birdeye Regal Assets
Regal Assets Gold IRA
Customer-first focus emphasizes the value of Bullion products over expensive Proof and Special Edition Coins
Historic protection of Gold
- Gold is the only asset with zero counter-party risk
- Gold consistently performs well in times of economic turmoil
- Central banks continue holding Gold in their reserves
- Central banks have been on a Gold buying spree since the Financial Crisis in 2008
Portfolio diversification
- The Traditional 60/40 Portfolio of Stocks and Bonds performs better throughout all market cycles when it is diversified with a 3% to 10% allocation towards Gold
- With the exception of Precious metals, all Financial markets have reached bubble territory – Gold is the only safe-haven currently available
Hedge against Inflation
- Gold tends to increase in price as the purchasing power of currencies is eroded through Inflation
- Gold rose over 25 times in price during the Inflation of the 1970s ($35 to $850)
- The price of Gold tends to increase rapidly when interest rates are being raised in a fight against Inflation
Regal Assets Crypto IRA
The Regal Assets Crypto IRA was the first self-directed IRA to offer digital assets
Cutting edge
- First Crypto IRA
- First Crypto IRA to offer Coins and Tokens other than Bitcoin
- Continually adding the latest qualified digital assets
Wide array of choices
- Currencies: Bitcoin, Dogecoin, Ethereum, Litecoin, Zcash
- DeFi: Aave, Chainlink, Maker
- Protocols: Cardano, Cosmos, EOS, Stellar, XRP
Digital revolution
- Crypto is gaining acceptance across the World
- Values stand to increase as adoption spreads
- Central banks are moving towards digital currencies
Unique Benefits ofRegal IRA
The Regal IRA is unique because investors can hold both Precious metals and digital assets (crypto) in this single Investment vehicle.
There are two distinct benefits provided by this feature of the Regal Assets IRA:
Compound growth of trading profits
Active crypto traders can perform their trades inside the Regal IRA without having to pay capital gains taxes on their profits in the tax year those profits are earned.
Capital gains inside a tax-advantaged Retirement account are not taxed until those funds are distributed to the investor.
That means the active Crypto trader can re-invest both their original capital plus 100% of their profits allowing for compound growth of their tax-advantaged savings.
Move trading profits into Precious metals
Profits from Crypto trading inside the Regal IRA can easily be moved into physical Precious metals without having to perform an account-to-account transfer.
This feature of the Regal IRA gives investors the ability to move retirement savings into, or out of Gold and Silver as frequently as they wish throughout the tax year.
The IRS only allows one account-to-account rollover or transfer per year so the Regal IRA dramatically increases the flexibility that investors have with their tax-advantaged savings.
Regal Assets Fees
Regal Assets fees on the Regal IRA are $250 per year, regardless of account size.
This annual fee covers account maintenance, secure storage of Precious metals, and insurance for the full value of the account’s assets.
Regal Assets Crypto IRA fees
Crypto trading fees vary but most cryptocurrency exchanges charge between 0.1% and 1.0% per trade. Trading fees are usually implemented on a sliding scale where large trades pay a lower percentage than small trades.
Regal Assets uses Kingdom Trust as their Custodian for Crypto assets and together the companies work to minimize the fees that Regal IRA investors are charged.
Regal Assets BBB
Customer reviews of Regal Assets – whether they are posted on BBB, Trustlink, or Birdeye – consistently mention the outstanding service provided by the IRA Specialists at Regal.
“… the team at Regal Assets were very helpful answering all my questions…”
“… Everything went smooth as clockwork from account creation to funds transfer to purchasing of the cryptos itself…”
“… acted in a professional, courteous, and helpful manner…”
There are a few Regal Assets BBB reviews where customers express dissatisfaction about delivery delays that occurred in 2021.
While these delays are obviously frustrating for investors they were occurring throughout the industry during 2021.
Retail and institutional demand for physical Silver and Gold has overwhelmed the available supply.
Longer than normal delivery times continue in 2022 as investor demand continues to exceed supply.
Regal Asset reviews on Trustlink
Set up with Crypto IRA
Christian Howard was very helpful in getting me set up with my Crypto IRA. Between him and Jannette Compton, I was able to get my account set up in a very timely manner and the transfer of funds was seamless. As soon as my account was set up and the funds transferred I was able to execute my trade.
Gerald M. – 04/22/2018
Smooth as clockwork
We were looking for the option to purchase cryptocurrencies within a Roth IRA. After researching a few options we settled on Regal Assets. Everything went smooth as clockwork from account creation to funds transfer to purchasing of the cryptos itself. All fees were fully disclosed prior to purchasing and Christian thoroughly explained the process and was on top of everything the entire way.
Stephen B. – 08/11/2018
Superior customer service
Once again, I received superior customer service from Regal Assets. Christian and Jeanette were very helpful and prompt answering my questions and assisting me with my precious metal acquisition.Thanks again Christian and Jeanette!
Rick J. – 04/19/2020
Frequently askedquestions
About Satori Traders
Satori Traders LLC is a California-registered Investment Advisor specializing in the Precious metals.
Bryan V Post is a California-registered Investment Advisor Representative and the founder of Satori Traders.
Bryan has worn numerous hats during his life: Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
Types of self directed retirement plans – Satori Traders
The easiest way to diversify an Investment Portfolio is to open a self directed IRA or Solo 401(k)
With either of these retirement plans you can invest in alternative assets like Precious metals, Real Estate, Tax liens, and Crypto
Gold Bullion IRA
Gold Bullion IRA
Investors have a lot to consider these days because of rampaging Inflation, grossly overvalued equity markets, and rapidly rising interest rates. On top of all that they have to factor in the geopolitical situation and heightening tension among the World’s superpowers.
With this background of uncertainty investors are turning to physical Gold as a way to protect their retirement savings.
As they discover the benefits of owning Precious metals many of them ask, “Can physical Gold be held in an IRA?”
These discerning investors are pleased to find that the answer is, “Yes!”
The IRS has allowed physical Gold in self-directed IRAs since the Taxpayer Relief Act was passed in 1997.
Investors can hold Gold Coins and bars produced by government and third-party mints.
Gold IRA vs physical Gold
Investing in a Gold IRA vs physical Gold is a question that Precious metals investors have to consider.
A Gold IRA is not the ideal way to own Precious metals because of the IRS requirement that a third-party Custodian holds the metal. While Gold IRA investors enjoy the benefits of accumulating Gold, they don’t get to take personal possession of the metal until after retirement (age 59 ½ for most investors). Physical Gold investors, in contrast, take personal possession of their metal and store it where it is readily accessible.
While a Precious metals IRA is not the best way to own Gold, it is the ONLY way to own Gold using tax-advantaged funds. Unless an investor is willing to liquidate their Retirement accounts (and pay the subsequent penalties and taxes) their money is stuck inside tax-advantaged vehicles until they retire and that money needs to be protected. A Precious metals IRA is one way to provide that protection.
At Satori Traders we believe that every Investment Portfolio can benefit from an allocation towards Gold. We encourage our clients to own the physical metal inside both their tax-advantaged accounts and, more importantly, to purchase physical Gold outside the financial system using after-tax money.
This two-pronged strategy hedges an Investment Portfolio against Inflation and economic turmoil while also diversifying the Portfolio away from Stocks, Bonds, and Mutual funds. A combination of before-tax and after-tax money is used to construct the ideal Precious metals Portfolio based on the investor’s objectives and tolerance for risk.
It is vitally important right now to diversify retirement savings into alternative Investments like Precious metals. The traditional Portfolio of 60% stocks and 40% bonds is actually 100% paper Investments that have counter-party risk.
In a significant economic setback like the Financial Crisis in 2008 this 60/40 Portfolio is going to suffer losses on both stocks and bonds. Physical Gold, on the other hand, has no counter-party risk and shows almost no correlation to either stock or bond prices.
Benefits of Gold IRA
The biggest, and most important, benefits of Gold IRA Investment are Portfolio diversification and hedging. There is a perfect storm of economic factors heading towards investors and their retirement savings:
• Inflation• Hyper-extended equity markets reverting to historic levels• Rising interest ratesAny one of these factors is enough to make a serious dent in an investor’s long-term Wealth and now they have to deal with all three storm fronts at the same time.On top of this raging economic storm World leaders are butting-heads and making ultimatums.Now is definitely the time for investors to protect their Wealth with physical Gold – and a Gold IRA is only way to do that with tax-advantaged savings.
Gold IRA tax rules
Knowing the Gold IRA tax rules helps investors understand how a tax-advantaged Investment in physical Gold works:
- Coins and bars of Silver, Gold, Platinum, and Palladium are allowed
- Metal must be at least Bullion quality (99.5% pure)
- Metal must be produced by IRS-approved government and third-party mints
- Distributions from a Gold IRA can be taken as cash or physical metal
- Distributions are treated as ordinary income at the Investor’s current tax rate when they take the distribution
- Precious metals held inside an IRA are NOT subject to the 28% tax rate for collectibles
Gold IRAs are subject to the same age restrictions as traditional IRAs. Investors can begin taking distributions at age 59 ½ and must begin taking minimum distributions at age 72.
What is a Gold IRA
These important facts relate to what is a Gold IRA and how it interacts with other Investment accounts.
- Investors may have more than one IRA account open at any given time
- Opening a Gold IRA has no affect on existing Retirement accounts
- The IRS allows investors to move funds from one tax-advantaged account to another without penalty
- Only one rollover or transfer of funds is allowed in a single tax year
The bottom-line is that Gold IRA investors can move some or all of their existing retirement savings into physical Gold without paying any taxes or penalties in the process.
Most Retirement accounts are eligible for a rollover or transfer into a physical Gold IRA.
Whether you have a traditional IRA, an eligible 401(k)*, or a TSP, 457, 403b, Pension, Annuity, etc., it can probably be moved into a Gold IRA.
* An “eligible 401(k)” is a Retirement account setup with a previous employer. Currently active 401(k) accounts are not eligible for rollover or transfer.
Home storage Gold IRA
One of the IRS requirements for Gold IRAs is that a third-party Custodian holds the physical metal in the account.
There are articles floating around the internet suggesting that investors can create an LLC to act as this third-party Custodian.
In this scenario the Custodian (the LLC) then stores the IRA’s Gold in a safe in the investor’s home.
This setup is usually referred to as a home storage Gold IRA.
While this tax strategy is believed to be permissible under IRS rules, the IRS explicitly warns investors against using it. Investors should be very careful using it.
If the IRS invalidates the LLC or invalidates the management of the LLC for any reason, the Gold IRA account could lose its tax-advantaged status leaving the investor with an expensive tax mess to untangle.
What is a Gold IRA rollover
Investors are allowed to move money from one Retirement account to another and the change does not trigger any IRS penalties or taxes. Only one move per tax year is permitted. These events are referred to as “rollovers” or “transfers”.
In a physical Gold IRA rollover the investor uses tax-advantaged savings in an existing Retirement account to purchase physical Gold and other Precious metals. The investor gains the benefits of owning physical Gold without adding any new funds to their overall Investment Portfolio.
There are no taxes or penalties for performing a Gold IRA rollover because the investor’s funds simply move from one IRS-approved Trustee to another.
Gold IRA rollovers can be performed on all of these Retirement account types: eligible 401(k)*, IRA, 403b, TSP, 457, Annuities, Pensions.
In a Gold IRA transfer the investor takes a distribution from their existing Retirement account and then deposits that money, or some portion of that money, into a Gold IRA account. The IRS requires that the transfer be completed within 60 days or the distribution will be treated as regular income and investors under age 59 ½ will have to pay a 10% early withdrawal fee. This risk of owing taxes and penalties can be avoided by performing an account rollover instead of a transfer.
One of the primary benefits of a Gold IRA rollover is the diversification it provides for a traditional Investment Portfolio consisting of nothing but Stocks, Mutual funds, and Bonds. Computer studies show that the diversified Portfolio will perform better throughout all phases of the market cycle if it is diversified with a 3-to-10% allocation of Gold.* An “eligible” 401(k) means the account was created at a previous employer, not a current employer. A currently active 401(k) is not eligible for a Gold IRA rollover.
Funding the Gold IRA
There are two options for funding a Gold IRA account.
In a Gold IRA rollover the Trustee of the existing Retirement account wires funds to the Trustee of the new account. The investor never takes possession of the funds involved in a rollover.
When the Gold IRA account is funded using a Transfer the investor first takes a cash distribution from their existing Retirement account and then deposits some or all of that money into the new account. The IRS requires that the Transfer is completed within 60 days or the distribution will be taxed as regular income and the investor will owe a 10% early-withdrawal penalty if they are under age 59 ½.
Gold IRA fees
Investors need to be aware of Gold IRA fees that don’t exist in Retirement accounts holding only Stocks, Bonds, and Mutual funds.The first fee is paid to the Broker (usually the Gold IRA company) who buys the physical metal that will be held in the Gold IRA account. This Broker fee is a standard part of operating in the physical Precious metals markets, it is not unique to Gold IRAs.The second fee covers the cost to securely store the account’s Precious metals. Investors pay a storage fee to ensure that their metal is stored in a secure location with more-than-adequate insurance, regular audits, guards, etc. All of these security features cost money.When it is time to take a distribution after age 59 ½ the investor has two choices with a Gold IRA. Distributions can be taken as cash or physical metal. Converting physical Gold back to cash involves another Broker fee to sell the metal. This fee can be avoided by taking a distribution of physical Gold instead of cash.
Gold IRA reviews
Investors face a challenging task when it comes to picking a Gold IRA company to work with. There are lots of these companies and they all claim to be the best.Online Gold IRA reviews are a good way to research the wide array of choices. Ideally, most of the reviews for a candidate company will be positive and the company will be actively working to resolve any negative reviews.The sites listed here provide resources where we can find Gold IRA reviews before investing our hard-earned money:
Better Business Bureau (BBB)Consumer AffairsGoogle ReviewsTrustLinkTrustpilot
Negative reviews about a company can be particularly informative. These negative reviews demonstrate how a Gold IRA company works (or doesn’t work) to support their clients and keep them happy. There is nothing wrong with a negative review as long as the company is working to resolve the issue.At Satori Traders we have found that most of the negative Gold IRA reviews are related to purchasing proof Coins and subsequently losing money when the Coins were sold. There’s an easy way that investors can avoid this potential problem: Don’t buy proof Coins! Always purchase the most amount of metal possible for the least amount of money. That means choosing Bullion bars and Coins over proof Coins. If we stay away from proof Coins most of the negative Gold IRA reviews become irrelevant.
Gold IRA companies
The table below provides a starting point as you research the available Gold IRA companies.
|
Gold IRA |
Year founded |
BBB rating |
Proof Coins |
Minimum deposit |
|---|---|---|---|---|
|
Fidelity |
1946 |
C- |
No |
$2,500 |
|
Patriot Gold Group |
1990 |
A+ |
Yes |
$15,000 |
|
Noble Gold |
1995 |
A- |
Yes |
$2,000 |
|
Birch Gold |
2003 |
A+ |
Yes |
$10,000 |
|
Goldco |
2006 |
A+ |
Yes |
$25,000 |
|
Regal Assets |
2010 |
unrated |
Yes |
$10,000 |
Best Gold IRA
Using the word “best” in an internet search attracts affiliate marketers and lead generators the way that blood in the water attracts sharks.
These marketers publish “reviews” about the “Best Gold IRA” companies yet most of them don’t have a clue about either Precious metals or investing.
Instead of starting with a search for the “best” Gold IRA, it is better to start by determining what criteria will be used to select the best Gold IRA company.
There are several ‘must haves’ for candidate companies to be on the Gold IRA list:
- The company must be listed with the Better Business Bureau (BBB) and have an A+ rating. If there any unresolved negative reviews it should be obvious that the company is working to resolve them. Having negative reviews is not a bad thing – not every customer is going to be happy, regardless of what the product is – what matters is the company working with these unsatisfied clients and attempting to satisfy them.
- The company must have an insured depository. Some of the better-known depositories brag about having a billion Dollars worth of insurance or being insured by Brinks.
- Physical metal must be stored in segregated (allocated) accounts. Pooled (unallocated) accounts are not acceptable. Never invest in a pooled Precious metals vehicle whether it is an IRA or some kind of certificate program.
- The company must perform regular audits of the metal in the depository.
In addition to the must-haves investors can filter Gold IRA companies based on these criteria:
- Years in business. Fly-by-night companies don’t survive for 10 years.
- Transaction fees (Broker fees to buy and sell metal).
- Storage fees.
The best Gold IRA is the one that the Investor feels comfortable with based on their own unique Investment objectives and tolerance for risk. The criteria listed above will help narrow the wide field of candidate companies to choose from.
Some Investors will choose their “best Gold IRA” based on positive customer reviews or the location of the depository, while other Investors might give the ‘best’ designation to the candidate offering the most valuable promotional offer.
Conclusions
With rising Inflation and the current World geopolitical situation holding Precious metals is more important than ever.
On top of these major economic factors investors have to consider how higher interest rates are going to impact the currently overvalued equity markets, not to mention Real Estate values!
If you want to move some of your existing retirement savings into Gold, start with physical metal that you purchase with after-tax money and store locally. Once this foundation is laid, your Precious metals Portfolio can be expanded with a physical Gold IRA where tax-advantaged funds are used to buy Gold, Silver, Platinum, and Palladium.
Protect your retirement savings with physical Gold today. If you have an existing Retirement account give some thought to converting part of it into Precious metals held in a Gold IRA.
Bryan V Post is a California-registered Investment Advisor Representative specializing in the Precious metals.
He is the founder and CEO of Satori Traders LLC, a California-registered Investment Advisor.
Bryan has worn numerous hats during his life:
Engineer, Portfolio manager, Precious metals Investor, Technical analyst, Proprietary trader, Swing trader.
https://satoritraders.com/precious-metals/gold/ira/physical/
Physical Gold IRA – Satori Traders
At Satori Traders we believe that every Investment Portfolio can benefit from an allocation towards Gold. We encourage our clients to own the physical metal inside both their tax-advantaged accounts and, more importantly, to purchase physical Gold outside the financial system using after-tax money.
Satori Traders 