There’s gold and silver in them thar IRA’s

  • By Todd Colucy
  • July 1, 2013
  • 390
                        
There’s gold and silver in them thar IRA’s Pop quiz to start off this column. What does IRA stand for? Most people would say to themselves, that’s easy it stands for Individual Retirement Account. That would be what I’d expect to hear anyway. The correct answer is, Individual Retirement Arrangement. For the real book worms in the group it’s IRS Topic 451 Individual Retirement Arrangements. The key to it being an arrangement is that the IRS allows an individual to establish retirement accounts with banks, insurance companies or other financial institutions. It’s the other financial institutions that allow the financial adventurous types like myself to get a little outside the norm when it comes to saving for retirement. As I’ve mentioned in past columns, I have more than one rollover IRA account from more than one former employer. I’ve taken one of my rollover IRA’s and placed it with one of the “other financial institutions” in order to diversify my retirement dollars. I believe retirement money is like cow manure. Spread it around and it does a lot of good and helps my retirement grow, but leaving it all in one pile it begins to stink and get ugly. Diversification is one of the keys to successfully saving for one’s retirement. By the way, diversification doesn’t mean picking a few different mutual funds and a bond fund doing so still leaves retirement vulnerable to the overall market. Case in point, most people’s 401K’s are just now back to where they were prior to the stock market crash in 2008/2009 and this unfortunately also takes into account all the money that’s been put in over those 4 ½ years. During this time, when most people didn’t even want to open their quarterly retirement statements because every time they did the account value was lower than the last time, gold and silver were in the middle stages of their 12-year bull run. Through 2012, physical gold was up for 12 straight years. Don’t be surprised if it’s up again this year, but that’s another story for another time, maybe December. Anyway, IRAs can hold physical precious metals as a way to save for retirement. There are a handful of “other financial institutions” that will do this for you. I personally use Gold Star out of Texas. I have three different precious metals in this IRA: gold, silver and palladium. It’s very simple to setup a precious metal IRA. Here are a few things that people need to be aware of before doing so. The IRA will hold the actual metals not a paper certificate that say the owner has the right to the metals. Once my account was set up and funded with Gold Star they called to ask me who I wanted to purchase the metals from and what type of metals I wanted. Most IRA’s will charge an annual maintenance fee. With a precious mental IRA, they charge a storage fee for housing the metals. I can’t take position of my precious metals until retirement age. I don’t have to take possession. I can sell the metals as needed at retirement age and take the cash or if I do take position, I’ll pay income tax at that time based on the current value per ounce compared to what I purchase it for originally. I’m a big fan of having a portion of my savings in physical precious metals and holding them in an IRA is a very good and disciplined way to own them. One final thought, in purchasing precious metals, stay away from “collectable” coins. The markup is extraordinary compared to bullion coins.


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